Transcript The Service Delivery System

Chapter 04
New Service Development
McGraw-Hill/Irwin
Service Management: Operations, Strategy, and
Information Technology, 6e
Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Learning Objectives
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Describe the challenges of service innovation.
Describe the new service development process/cycle.
Describe the components of the customer value equation.
Explain and differentiate what is meant by the divergence and
the complexity of a service process.
Compare and contrast the four approaches to service system
design: production-line, customer as coproducer, and
information empowerment.
Describe the generic techniques to service design
Service blueprint example.
Prepare a blueprint for a service operation.
Explain the difference between direct and indirect customer
contact.
4-2
Challenges for Service Innovation
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Ability to protect intellectual and
property technologies.
Incremental nature of innovation.
Degree of integration required.
Ability to build prototypes or conduct
tests in a controlled environment.
4-3
New Service Development Process
Idea
generation
Suppliers
Product or
service concept
Feasibility
study
Performance
specifications
Form design
Customers
R&D
Marketing
Competitors
Revising and testing
prototypes
Production
design
Functional
design
New product or
service launch
Final design
& process plans
Design
specifications
Pilot run
and final tests
Manufacturing
or delivery
specifications
New Service Development Cycle
• Full-scale launch
• Post-launch review
Full Launch
Development
Enablers
• Formulation
of new services
objective / strategy
• Idea generation
and screening
• Concept
development and
testing
People
• Service design
and testing
• Process and system
design and testing
• Marketing program
design and testing
• Personnel training
• Service testing and
pilot run
• Test marketing
Design
Product
Technology
Systems
Tools
Analysis
• Business analysis
• Project authorization 4-5
Strategic Positioning
Through Process Structure
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Degree of Complexity: Measured by the
number of steps in the service blueprint. For
example a clinic is less complex than a
general hospital.
Degree of Divergence: Amount of
discretion permitted the server to customize
the service. For example the activities of an
attorney contrasted with those of a paralegal.
4-6
Structural Alternatives for a Restaurant
LOWER COMPLEXITY/DIVERGENCE
No Reservations
Self-seating. Menu on Blackboard
Eliminate
Customer Fills Out Form
Pre-prepared: No Choice
CURRENT PROCESS
TAKE RESERVATION
SEAT GUESTS, GIVE MENUS
SERVE WATER AND BREAD
TAKE ORDERS
Salad Bar
Limit to Four Choices
Entree (6 choices)
Sundae Bar: Self-service
Dessert (6 choices)
Coffee, Tea, Milk only
Serve Salad & Entree Together:
Bill and Beverage Together
Cash only: Pay when Leaving
Beverage (6 choices)
SERVE ORDERS
CASH OR CREDIT CARD
HIGHER COMPLEXITY/DIVERGENCE
Specific Table Selection
Recite Menu: Describe Entrees & Specials
Assortment of Hot Breads and Hors D’oeuvres
At table. Taken Personally by Maltre d’
Salad (4 choices)
Expand to 10 Choices: Add Flaming Dishes;
Bone Fish at Table
Expand to 12 Choices
Add Exotic Coffees; Wine list, Liqueurs
Separate-courses; Hand Grind Pepper
Choice of Payment. Including House Accounts:
Serve Mints
4-7
Taxonomy of Service Processes
Low divergence
(standardized service)
Processing
Processing
of goods
Information
Dry
Check
Cleaning
processing
Restocking
Billing for a
a vending
credit card
machine
Ordering
groceries
from a home
computer
No
Customer
Contact
Indirect
customer
contact
Direct
Customer
Contact
No
customerservice
worker
interaction
(selfservice)
Customer
service
worker
interaction
Operating
a vending
machine
Assembling
premade
furniture
Food
service in a
restaurant
Hand car
washing
Withdrawing
cash from
an ATM
Giving a
lecture
Handling
routine bank
transactions
Processing
of people
High divergence
(customized service)
Processing
Processing
of goods
Information
Auto repair
Computer
Tailoring a
programming
suit
Designing a
building
Processing
of people
Supervision
of a landing
by an air
controller
Operating
an elevator
Riding an
escalator
Sampling
food at a
buffet dinner
Bagging of
groceries
Providing
Home
public
carpet
transit
cleaning
Mass
Landscaping
vaccination
service
Documenting
medical
history
Searching for
information
in a library
Portrait
painting
Counseling
Driving a
rental car
Using a
health club
facility
Haircutting
Performing
a surgical
operation
4-8
Generic Approaches to Service Design
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Production-line
• Limit Discretion of Personnel
• Division of Labor
• Substitute Technology for People
• Standardize the Service
Customer as Coproducer
• Self Service
• Smoothing Service Demand
• Customer-Generated Content
Customer Contact
• Degree of Customer Contact
• Separation of High and Low Contact Operations
• Sales Opportunity and Service Delivery Options
Information Empowerment
• Employee
• Customer
4-9
Discussion Questions
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What are the limits in the production-line approach to
service?
Give an example of a service in which isolation of the
technical core would be inappropriate.
What are some drawbacks of customer participation
in the service delivery process?
What ethical issues are raised in the promotion of
sales during a service transaction?
Go to http://www.oecd.org/home and find the
current non-manufacturing share of total business
R&D for the countries listed in Table 1.1. Are there
any surprises?
4-10
Generic Service Design
Techniques
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Simplification
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Standardization
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Modularity
Customer Value Equation
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Re sults Pr oduced  Pr ocessQuality 
Value 
Price  CostsofAcquiringtheService
4-12
Service Blueprint
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A type of process flowchart that
emphasizes customer interaction and
service related items such as failure
points and lines of visiblity.
Why?
Service Blueprint of Luxury Hotel
4-14
Service Blueprint for an Installment
Lending Operation
Source: Lynn Shostack, “Service Positioning through Structural Change,” Journal of Marketing 51
(January 1987), p. 36. Reprinted with permission by the American Marketing Association
100 Yen Sushi House
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Prepare a service blueprint for the 100 Yen
Sushi House.
What features differentiate 100 Yen Sushi
House and how do they create a competitive
advantage?
How has the 100 Yen Sushi House incorporated
the just-in-time system into its operations?
Suggest other services that could adopt the 100
Yen Sushi House service delivery concept.
4-16
100 Yen Sushi House Layout
Dishwashing Counter in Back
CONVERSATION AREA
Miso and Tea Station
CONVEYOR
BELT
CONVERSATION AREA
TAKE-OUT
POSITION
ENTRANCE
= CHEF
4-17