Transcript Chapter 3

Design of Services
To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved.
Service Design Definitions
• Service
–Something that is done to, or for, a customer
• Service delivery system
–The facilities, processes, and skills needed
to provide a service
• Product bundle
–The combination of goods and services
provided to a customer
Service Design
Begins with a choice of service strategy, which
determines the nature and focus of the service, and
the target market
– Key issues in service design
• Degree of variation in service requirements
• Degree of customer contact and involvement
Characteristics of Services
(1 of 3)
1. Services are acts, they are intangible but highly
visible to the customers
2. Most services contain a mix of tangible and
intangible attributes
3. Services have customer contact
4. Service performance can be affected by workers’
personal factors
5. Services are created and delivered at the same time
and are not consumed but experienced, cannot be
inventoried.
Characteristics of Services
(2 of 3)
6. Services are idiosyncratic
7. Everyone is an expert on service
8. In service business quality of work is not quality of
service
9. Services have low barriers to entry
10. Services are perishable
11. Location is important for service
Characteristics of Services
(3 of 3)
12. Services are inseparable from delivery
13. Service requirements are variable
14. Services tend to be decentralized and dispersed
15. Services are consumed more often than products
16. Services can be easily emulated
17. Services often take the form of cycles of encounters
involving face-to-face, phone, Internet,
electromechanical, and/or mail interactions
Service Businesses
A service business is the management of
organizations whose primary business requires
interaction with the customer to produce the
service
• Facilities-based services: Where the customer
must go to the service facility
• Field-based services: Where the production and
consumption of the service takes place in the
customer’s environment
Internal Services
Internal services are the
ones that are required to
support the activities of
the larger organization.
Services including data
processing, accounting,
etc
Internal Supplier
Internal
Customer
External
Customer
Internal Supplier
Service Demand Variability
 Demand variability creates waiting lines and idle
service resources
 Service design perspectives:
Cost and efficiency perspective
Customer perspective
Attempts to achieve high efficiency may
depersonalize service and change customer’s
perception of quality
 Customer participation makes quality and demand
variability hard to manage
Differences Between Product and
Service Design (1 of 2)
 Service design often focuses more on
intangible factors
 Less latitude in finding and correcting errors
before the customer, so training & process
design are important
 As services are noninventoriable, capacity
issues are very important
Differences Between Product and
Service Design (2 of 2)
 Services are highly visible to consumers and
must be designed with that in mind
 Some services have low barriers to entry and
exit, so service design has to be innovative
and cost-effective
 As convenience is a major factor, location is
important to service design
 Service design with high customer contact
generally requires inclusion of the service
delivery package
Service Delivery System
Components of service delivery system:
 Facilities
 Processes
 Skills
Service Design
• Service design involves
– The physical resources needed
– The goods that are purchased or
consumed by the customer
– Explicit services
– Implicit services
Performance Priorities in Service
Design
• Treatment of the customer
• Speed and convenience of service delivery
• Price
• Variety
• Quality of the tangible goods
• Unique skills that constitute the service offering
Phases in Service Design




Conceptualize
Identify service package components
Determine performance specifications
Translate performance specifications into
design specifications
 Translate design specifications into delivery
specifications
Three Contrasting Service Designs
• The production line approach (ex. McDonald’s)
• The self-service approach (ex. automatic teller
machines)
• The personal attention approach (ex. RitzCarlton Hotel Company)
The Service Design Process
Desired service
experience
Service Concept
Service Package
Targeted
customer
Physical
items
Sensual
benefits
Psychological
benefits
Performance Specifications
Customer
requirements
Customer
expectations
Design Specifications
Customer
Activities
Facility
Provider
skills
Cost and time
estimates
Delivery Specifications
Schedule
Deliverables
Service
Service
Provider
Location
Service Systems
 Service systems range from those with little or no
customer contact to very high degree of customer
contact such as:
– Insulated technical core (software development)
– Production line (automatic car wash)
– Personalized service (hair cut, medical service)
– Consumer participation (diet program)
– Self service (supermarket)
Service-System Design Matrix
Degree of customer/server contact
High
Buffered
core (none)
Permeable
system (some)
Reactive
system (much)
Low
Face-to-face
total
customization
Face-to-face
loose specs
Sales
Opportunity
Face-to-face
tight specs
Internet &
on-site
Mail contact technology
Low
Production
Efficiency
Phone
Contact
High
Design for High-and-Low Contact
Services (1 of 2)
DESIGN DECISION
HIGH-CONTACT SERVICE
LOW-CONTACT SERVICE
Facility location
Convenient to customer
Near labor or
transportation
Facility layout
Must look presentable,
accommodate customer
needs, and facilitate
interaction with customer
Designed for efficiency
Quality control
More variable since customer
is involved in process;
customer expectations and
perceptions of quality may
differ; customer present when
defects occur
Measured against
established standards;
testing and rework
possible to correct defects
Capacity
Excess capacity required to
handle peaks in demand
Planned for average
demand
Design for High-and-Low Contact
Services (2 of 2)
DESIGN DECISION
HIGH-CONTACT SERVICE
LOW-CONTACT SERVICE
Worker skills
Must be able to interact well
with customers and use
judgment in decision making
Technical skills
Scheduling
Must accommodate customer
schedule
Customer concerned only
with completion date
Service process
Mostly front-room activities;
service may change during
delivery in response to
customer
Mostly back-room
activities; planned and
executed with minimal
interference
Service package
Varies with customer; includes Fixed, less extensive
environment as well as actual
service
Service Blueprinting
 Service blueprinting
A method used in service design to describe
and analyze a proposed service
 A useful tool for conceptualizing a service
delivery system
Major Steps in Service
Blueprinting
1.
2.
3.
4.
5.
6.
Establish boundaries
Identify sequence of customer interaction
Prepare a flowchart
Develop time estimates
Identify potential failure points
Determine which factors can influence
profitability
Example of Service Blueprinting
Standard
execution time
2 minutes
Brush
shoes
30
secs
Total acceptable
execution time
5 minutes
Seen by
customer
Line of
visibility
Not seen by
customer but
necessary to
performance
Clean
shoes
45
secs
Apply
polish
30
secs
Fail
point
Buff
Collect
payment
45
secs
15
secs
Wrong
color wax
Materials
(e.g., polish, cloth)
Select and
purchase
supplies
Blueprint for an Installment Lending Operation
Loan
application
Branch
Officer
30 min. – 1 hr.
Pay book
W
W
Line of visibility
Receive
payment
Notify
customer
Decline
Deny
Final
payment
Issue
check
Confirm
Print
payment
book
Delinquent
F
F
Verify
income
data
Credit
check
F
Employer
2 days
Credit
bureau
F
3 days
Confirm
1 day
Initial
screening
Accept
Verify
payor
Branch
records
F
Bank
accounts
Accounting
Data base
records
F
Fail point
W
Customer wait
Employee decision
Close
account
Service Blueprint
Service Fail-safing
Poka-Yokes (A Proactive Approach)
• Keeping a mistake
from becoming a
service defect
• How can we failsafe the three Ts?
Task
Treatment
Tangibles
Have we
compromised
one of the
3 Ts?
1. Task
2. Treatment
3. Tangible
Applying Behavioral Science to
Service Encounters
 The front-end and back-end of the encounter are
not created equal
 Segment the pleasure, combine the pain
 Let the customer control the process
 Pay attention to norms and rituals
 People are easier to blame than systems
 Let the punishment fit the crime in service
recovery
Characteristics of a Well-Designed
Service System (1 of 2)
1. Each element of the service system is consistent
with the strategic and operating focus of the firm
2. It is user-friendly
3. It is robust and easy
sustain
FedEx
to
4. It is structured so that consistent performance by
its people and systems is easily maintained
Characteristics of a Well-Designed
Service System (2 of 2)
5. It provides effective links between the back office and
the front office so that nothing falls between the cracks
6. It manages the evidence of service quality in such a
way that customers see the value of the service
provided
7. It is cost-effective
8. It ensures reliability and high quality
Challenges of Service Design
1.
2.
3.
4.
Variable requirements
Difficult to describe
High customer contact
Service – customer encounter
Guidelines for Successful Service
Design
1.
2.
3.
4.
5.
6.
7.
8.
9.
Define the service package
Focus on customer’s perspective
Consider image of the service package
Recognize that designer’s perspective is different
from the customer’s perspecticve
Make sure that managers are involved
Define quality for tangible and intangibles
Make sure that recruitment, training and rewards are
consistent with service expectations
Establish procedures to handle exceptions
Establish systems to monitor service