Service Processes
Operations Management
The nature of services
The customer is (or should be) the focal point of all decisions and actions of the service organization.
The organizations exists to serve the customer, and the systems and the employees exist to facilitate the process of service.
The customer
The service strategy
Employees
Support systems
The nature of services
Every service has a service package, which is defined as a bundle of goods and services that is provided in some environment. This bundle consists of five features:
Concept | Description |
1. Supporting facilities. | The physical resources that must be in place before a service can be offered. |
2. Facilitating goods. | The material purchased or consumed by the buyer, or the items provided to the customer. |
3. Information. | Operations data or information that is provided to the customer, to enable efficient and customized services. |
4. Explicit services. | The benefits that are readily observable by the senses and that consist of the essential intrinsic features of the service. |
5. Implicit services. | Psychological benefits that the customer may sense only vaguely, or the extrinsic feature of the service. |
An operational classification of services
Service organizations are generally classified according to who the customer is.
An operational classification of services
Customer contact refers to the physical presence of the customer in the system
Creation of the service refers to the work process involved in providing the service itself.
Extent of contact the percentage of time the customer must be in the system relative to the total time needed to perform the customer service.
An operational classification of services
High degree of customer contact
Low degree of customer contact
Design Decisions |
Facility location |
Facility layout |
Product design |
Process design |
Scheduling |
Production planning |
Worker skills |
Quality control |
Time standards |
Wage payment |
Capacity planning |
Designing service organizations
In designing service organizations, we must remember one distinctive characteristic of service:
We cannot inventory service
Too much capacity generates excessive costs. Insufficient capacity leads to lost customer.
Designing service organizations
Several major factors distinguish service design and development from typical manufactured product development:
Structuring the service encounter: The service-system design matrix
Service encounters can be configured in a number of different ways:
Structuring the service encounter: The service-system design matrix
The changes in workers, operations and types of technical innovations as the degree of customer / service system contact changes are described by:
Structuring the service encounter: The service-system design matrix
The service-system design matrix has both operational and strategic uses:
Operational uses |
Are reflected in their identification of workers requirements, focus of operations, and innovations. |
Strategic uses |
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Structuring the service encounter: The service-system design matrix
With the advent of virtual services through the internet, we need to account not just for a customer’s interactions with a business, but for his or her interaction with other customers as well.
Pure virtual customer contact.
Where companies enable customer to interact with one another in an open environment.
Mixed virtual and actual customer contact.
Where customers interact with one another in a server-moderated environment such as product discussion groups.
Managing Customer – Introduced Variability
Among the decisions that service managers must make is how much they should accommodate the variation introduced by the customer into a process.
More accommodation implies more cost; less accommodation implies less-satisfied customers.
The standard approach is to treat this decision as a trade-off between cost and quality.
Managing Customer – Introduced Variability
The five basic types of variability are:
Concept | Description |
| The arrival time of customer at a restaurant may be inconsistent with average demand, leading to times when servers are overloaded or underutilized. |
| Travelers requesting a room with a view at a crowded hotel. |
| A patient being unable to explain his or her symptoms to a doctor. |
| Shoppers not bothering to put their shopping carts in a designated area in a supermarket parking lot. |
| One bank customer interpreting a teller addressing him by his first name as a sign of warmth, while another customer feels that such informality is unbusinesslike. |
Variability is the major problem with services that require direct customer contact.
Innovative approaches are needed to manage this variability.
Managing Customer – Introduced Variability
The four basic accommodation strategies are:
Concept | Description |
| Which entails, for example, extra employees or additional employee skills to compensate for variations among customers. |
| Which uses low-cost labor, outsourcing, and self-service to cut the cost of accommodation. |
| Which requires, for example, customers to engage in more self-service, use reservation systems, or adjust their expectations. |
| Which uses knowledge of the customer to develop procedures that enable good service, while minimizing the variation impact on the service delivery system. |
Applying behavioral science to service encounters.
Effective management of service encounters requires that managers understand customer perceptions as well as the technical features of service processes.
Three aspects of the encounter:
Applying behavioral science to service encounters.
Looking at the service encounter from this perspective has led to the following six behaviourally based principles for service encounter design and management:
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Service guarantees as design drivers
Thousands of companies have launched service guarantees as a marketing tool designed to provide peace of mind for customers unsure about their service.
The elements of a good service guarantee are
Service guarantees as design drivers
Thousands of companies have launched service guarantees as a marketing tool designed to provide peace of mind for customers unsure about their service:
Service blueprint and Fail-Safing
Just as is the case with manufacturing process design, the standard tool for service process design is the flowchart.
Also known as service blueprint to emphasize the importance of process design.
Basic blueprint describes the features of the service design but does not provide any direct guidance for how to make the process conform to that design.
An approach to this problem is the applications of poka-yokes: procedures that block the inevitable mistake from becoming a service defect.
Three contrasting service designs
Three contrasting approaches to delivering on site service are:
Seven characteristics of a Well-Designed Service System