Chapter - 13Applications in Service Sector

Book: Waman S Jawadekar

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Introduction to Service Sector• Unlike the manufacturing sector, the service sector does not have physical goods

to be manufactured for the customer.• The mission in a service industry is of providing the most satisfying service of the

customer, while in a manufacturing industry, it could differ from industry to industry and from organisation to organisation.

• In a competitive situation, this industry requires service distinction to create an identity, a position and a growth, to remain ahead of the competition.

• In a service industry, a sensitive market and consumer research is necessary to identify the segment to be served and to study its service requirements, expectations and perceptions.

• The entire managerial effort in a service industry is to create a distinctive service to remain competitive.

• Tom peters in “The Service Edge’ states five principles of a distinctive(Special) service– Listen, understand and respond to the customers– Define a superior service and establish a service strategy– Set standards and measure and performance– Select, Train and Empower the employees to work for the customers– Recognise and reward the accomplishments.

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Creating a Distinctive Service• Creating a distinctive service is a willful management act.• To manage a service effectively, it is necessary to understand the

distinctive characters between the product and the service, the customer expectation and the perception

• Service VS Product– A product is tangible(real, original), but a service is not.– The product can be offered on payment, while services are offered on

demand.– The quality of the product is possible with reference to the determined

standards while the quality control of a service is difficult due to its reference to the customer’s expectations which are difficult to judge and control.

– The product can be demonstrated before the actual sale while the service cannot be demonstrated.

– The product can be produced, sold and consumed in stags while the service has to be produced, sold and consumed simultaneously.

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Creating a Distinctive Service• Service VS Product

– The receiver and provider of the service are very close to each other.

– The quality of service results in the satisfaction or dissatisfaction of the customer.

– The satisfaction is based on the manner in which the service is being offered. If the servicing process is not enjoyable thought it gives what is asked for then dissatisfaction.

– The customer is dissatisfied if the service received is below the expectations and not as perceived by him.

– The service expectations are dynamic and not static– To create a distinctive service, the management of a

service business must understand the customer expectations.

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Creating a Distinctive Service (Contd…)• To summarise, the service conscious management would

create service focused organization, where:– The organisation listens, understand and responds swiftly to the

changing character of the customer wants, needs and expectations.– The organization develops and maintains a ‘customer-friendly’ service

delivery system.– Organization employs, inspires and develops a customer oriented

frontline personnel.– Refer Table 13.1 Service Expectation and Perceptions from

BOOK

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Service concept• Service is an identifiable, intangible (untouchable) activity or a process

designed to fulfill certain expectations of the customer/consumer. • Kotler defines it as ‘Service is an activity or a benefit that one part can

offer to another which is essentially intangible and does not result in the ownership of anything.

• Character or attributes of Service• Intangible

– All services are fully intangible i.e. they lack ‘physical existence’– They can be seen being delivered and being received by the customer but

cannot be displayed.• Inseparability of receiver and provider

– In case of service, receiver and provider must be present. – Service process cannot be executed unless both are present at the site of

service delivery.• Storage

– Service being intangible cannot be stored like goods– For eg. If no patient comes for two hours then the physician is idle and

consulting service potential cannot be stored and made available next day.

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Contd..• Inconsistency

– Service process being intangible, can vary from one service incident to the other service incident.

– Every service experience is different. The inconsistency occurs due to different service providers performing at different times.

– Though service process is the same, service experience varies from incident to incident.

– Service experience remains the same when services are automated. E.g ATM service.

– Service quality parameters are Reliability, Assurance of delivery, Degree of tangibleness, Empathy and level of responsiveness.

– The quality of service has two dimensions:• Quality of resources used: service inputs, equipments, facilities, tools, designs etc.• Functional quality of the process: Empathy, level of responsiveness, and process

design quality– All services has two components, one basic core and second its features.– Basic core offers original functional content of the service like quick solution to

the problem, serving dinner at the table, getting airline ticket etc.– The second component deals with the manner in which a service is provided

such as style, comfort, pleasure and consistent look and feel of the service.– Refer SERVICE QUALITY MODEL FROM THE BOOK

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Service Process Cycle & Analysis• All services are bound by process steps and each step adds value in the

services.• All the steps can be classified in stages based on the role played in the

process.• These stages together build a service process cycle. The stages in the

cycle are– Initiation of service– Transition to service– Pre service– Service– Post-service

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Model of service process cycle for Airline Passenger

Stage in Service Cycle

Steps in stage Example of Airlines: Passenger service

1. Initiation of service

Enquiry, information seeking checking, Assessing

Seeking information on flights, fare, services, timings and facilities

2. Transition to service

Steps towards or prior to effecting the service

Issue of ticket & instructions about check in of baggage. Pre-boarding service

3. Pre-Service Check the cross check of documents, records, vouchers proving guidance, exchange of documents; creation of confidence; assurance of quality

Ticket inspection at the counter. Issue of boarding pass. Movement guidance for security check

4. Service Effecting the service delivery with goods, physical assistance

Finding seat. Provide in flight assistance and services like offer of soft drink, gifts

5. Post-Service Concluding the service, providing existing assistance, service recovery

Baggage arrival and reclaiming, exit guidane

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Service Process Cycle & Analysis• The people who drive the service are to be supported by tools,

information and system assistance so that the customer interaction is quick, responsive and pleasant and leave a feeling of comfort and confidence of service delivery.

• The responsiveness of the service would increase with:– Faster data capture and processing in every interaction– Access to various databases and services– Error free transaction processing and updating– And application processing at each stage of service cycle.

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Customer Service Design• Service process designer designs the “customer

Service” based on the assessment and analysis of customer’s choice, preferences, quality expectations willingness to pay the price and so on.

• Following factors influences the customer service design. – Promotion– Product– Price– Place– Processes– People (Process Drivers)

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Customer Service Design• All these factors are cross-linked to each other. For eg.

Service product formation will decide the nature of promotion, layout of the place and facilities where service product will be delivered.

• Customer service design addresses primarily the ‘service product formulation’ which states:– Who is the customer?– what is the service scope?– How it is delivered?– What is the quality level?– what additional features to provide?– What should be the price of service?– Where it should be offered and what facilities to provide?– Who would drive the service process?– What kind of promotion would enthuse customers to avail the service?– And finally, what process design would deliver the scope?

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Service Management System• The process is best managed through a well – designed system ,termed as

Service Management System (SMS)• Description of each module of SMS, its scope and objective in SMS• Initiation for Service (Front End)

– Scope:• Answer queries, standard and non standard. • Capture the data in standard format to initiate service action• Ascertain the service requirement. Create a bill of service offer.• Give a service job number. Put the service job in a queue.

– Objective: win the customer for availing the service.• Transition to Service (Front End)

– Scope:• Check, assess, validate the service requirement• Ascertain commercial and technical viability, and operational feasibility• Check for submission of any document, or goods, which may be mandatory for services.

– Objective: Establish technical, commercial feasibility and obtain customer acceptance• Pre-Service (Back End)

– Scope:• Inspect all submissions from all points of view• In doubt, clarify and ascertain• Issue service job identity for record, communication, and for reference at a later date.• Update customer database with this service job identity

– Objective: Enlist the service offer with identity

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Customer Service Design• Service (Back End)

– Scope:• Conducting the customer and/or the goods for service after execution.• Execute all necessary transactions, which are part of service process.• Collect transaction results and update the records for reporting• Produce and/or display documents• Collect relevant data for computing cost of service• Close the service process and obtain an acknowledgment of service completion

– Objective: Complete the service execution process efficiently and effectively to the satisfaction of the customer

• Post-Service (Back End)– Scope:

• Collect feedback on service experience, suggestions if any.• Bill the customer for services availed.• Process payment as per terms of services• up-date customer record, job record, and other information databases• Generate a report for examination to close the service offer.

– Objective: collect data and information about service for decision-making and improvement.

– Refer Conceptual SMS architecture Model from the BOOK– Moreover, the Example on the HOTEL is given in the BOOK. IMPORTANT

EXAMPLE

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MIS applications in Service Industry• Airlines• The operative functions of Airlines is to move people and goods from one

location to the other safely on time. • The MIS applications in the Airlines industry would be towards supporting

all decisions which affect the objective of offering a distinctive service to the customers having different expectations and perceptions.

• The service goals could be:– One complaint per 100000 passengers– 95 percent occupancy to conclude that the schedules are convenient– Throughput time, check in to check out, is less than 10 minutes.

• 1. Passenger information– The type, class and purpose of travel– The socio-economic group– The duration of stay at the destination– The food and eating habits– The language and communications needs– The expectations on the service before and after the journey– The traffic flow between the towns, cities and countries.

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Contd…• 2. Information on the Aviation industry

– The best service package for a distinctive service would fail in implementation, if the safety, security and availability of planes is doubtful.

– The MIS would help in the perspective planning, and strategy formulations which would support the implementation of the plan framed for offering a distinctive service.

• Hotels– Hotel is a place where people look for a distinctive service. – The concept of hotel as a place of stay, when you are out station has

undergone a change due to number of reasons– The transition has taken place from convenience to comfort, comfort to

enjoyment, enjoyment to total service• 1. Keep track of the customer profile

– Type of the customer– The nature or purpose of visit– The duration of stay– The service demanded– The socio-economic class of the customer– The religion, the language and the culture of the religion

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Contd…• 2. Monitoring Occupancy level

– It is necessary to control the occupancy at a high level. The MIS should provide the information on a high or low, and the reasons thereof.

• 3. Project future needs– The MIS should provide information on new needs which are emerging in the

foreseeable future. – Now the hotel is not just for stay, it is for business meetings, conferences etc. The

management has to provide necessary infrastructure at all levels to meet such needs.• 4. Monitor the level of expectations

– The customer expectations on the service level norm differs from class to class and service to service.

– The effective and efficient process is a function of training, understanding and knowledge of manpower, while the speed of the process would depend on the strength and competence of manpower.

• 5. Monitor the communication needs– The communication makes interaction with the customer a comfortable exercise. It is

necessary to upgrade the knowledge and skills of the employees to fulfill the changing needs of the customer.

• 6. Customer database– Most of the good hotels create a customer database for handling a variety of

applications. It keeps the data about their room choice, food habits, special likings, record of contacts etc.

– Most of the MIS systems in a hotel are managed as front end and back office systems.

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Contd…• Hospital

– The role of a hospital in today’s world has changed from the medical and clinical assistances to health care with a concern for the people who need it.

– Motto is “Don’t make them sick while they are trying to get Well”.– The scope of the service now include health care guidance, preventive care, post

clinical attention, care and advice.• Front end applications• 1. Patient Database

– To handle the queries on the existing patients and the patients treated and discharged. The queries may come from a visitor, a doctor or any other staff of the hospital.

• 2. Medical server database– Name, addresses, telephones, etc. of all medical staff including Doctors, Nurses,

Technicians. Holidays, work times and locations on weekdays for contact.– Important service centers in the town where support services can be obtained in

emergency.– These are the laboratories, the blood banks, the special clinics and the special facility

centers.• 3. Resource planning and control

– An online query facility to answer the number of queries on the availability, scheduling and rescheduling of the resources and the facilities.

– For judging the usage of the facilities and to put them in proper use.• 4. Medical case history database

– Knowledge database on the case history for the guidance and research– Monitoring the effect of drugs to judge the efficacy in terms of the patient’s response.– Analyse the health care demand and make planning for the health service strategy.

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Contd…• Back Office Applications• 1. Core Applications

– Manpower and personnel planning– Payroll and the employee related applications– Hospital billing and recovery– An inventory control-procurement, planning and control. The expiry data management.– Financial accounting, Capital budgeting and expense control– Maintenance of the service facilities.– Resource utilisation and analysis.

• 2. Critical Control Applications– Patients waiting time and service cycle– Non use of critical resources– Stockouts of the critical drugs, and the time taken to restore supply– The number of patients admitted, treated and cured. Length of the stay, cost and

revenue to the hospital– New trends in the service demands and the service performance in such cases.– Analysis of the delays in terms of duration and causes.– The number of patients turned down or sent to the other hospitals for want of facilities –

analysis and causes.

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Contd…• Banking

– Banking is generally understood as a place where the financial services are offered, viz., checking, savings and providing credit to the customers.

– The customer choose the bank for following three main factors:• The ease of doing business• The quality of personnel and service• The range of the financial service.

• 1. Customer Database– Customer – individuals, company, institutions etc.– Operator – housewife, employee, officer of the organization– Range of service – Savings, credit checking and payment, the other financial services.– Class of customers – income group, corporate bodies, etc.– Working hours – morning, afternoon, evening etc.

• 2. Service to the Account Holders– The MIS should give following reports to the management– The non-moving account– The account having balance more than say Rs. 50000– The account going down below minimum balance– The routine payments not made– The routine credits not arrived– The defaults on loan repayment.– The delays on crediting cheques amounts.– A sudden rise and fall in the account movement– The account holders giving 80 percent business to take personal care of their service expectations

and perceptions.

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Contd…• 3. Service for Business Promotions

– The bank finances can be utilised in a number of ways to increase the banking operations by offering credit to the right kind of customers.

– So necessary to study the trend in the business industry and solicit the customers from the upcoming and growing business sector.

– The MIS should concentrate on data collection from the various sources to analyse and conclude the future business strategy.

• 4. The index monitoring system– One more feature of the MIS is to monitor the variety of indices and ratios

related to banking operations which are internal to the banking business.• 5. Human resource upgrade

– There is a lot of human aspect in banking operations.– Any amount of mechanisation and computerisation is not a substitute to a

service with a smile.– The service may become faster or quicker but still it requires a human touch

and skill. It is therefore necessary to upgrade the skills and knowledge of the bank employees to offer a proper service to the customers.