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Design of Design of Services Services
To Accompany Russell and Taylor, Operations Management, 4th Edition, 2003 Prentice-Hall, Inc. All rights reserved.
Service Design DefinitionsService 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 DesignService 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 ServicesCharacteristics of Services (1 of 3)(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 ServicesCharacteristics of Services (2 of 3)(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 ServicesCharacteristics of Services (3 of 3)(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 BusinessesService Businesses
• 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
A service business is the management of organizations whose primary business requires interaction with the customer to produce the service
Internal ServicesInternal Services
Internal Supplier
Internal Supplier
Internal
Customer
External
Customer
Internal services are the ones that are required to support the activities of the larger organization. Services including data processing, accounting, etc
Service Demand VariabilityService Demand Variability
Demand variability creates waiting lines and idle service resources
Service design perspectives:Cost and efficiency perspectiveCustomer 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 Differences Between Product and Service Design (1 of 2)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 Differences Between Product and Service DesignService Design (2 of 2)(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 SystemService Delivery System
Components of service delivery system: Facilities Processes Skills
Service DesignService Design
• Service design involves– The physical resources needed– The goods that are purchased or
consumed by the customer– Explicit services– Implicit services
Performance PrioritiesPerformance Priorities in Service in Service DesignDesign
• 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 DesignPhases 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 DesignsThree Contrasting Service Designs
• The production line approach (ex. McDonald’s)
• The self-service approach (ex. automatic teller machines)
• The personal attention approach (ex. Ritz-Carlton Hotel Company)
The Service Design ProcessThe Service Design Process
Performance SpecificationsPerformance Specifications
Service
Delivery SpecificationsDelivery Specifications
Physical Physical itemsitems
Sensual Sensual benefitsbenefits
Psychological Psychological benefitsbenefits
Design SpecificationsDesign Specifications Service Provider
Customer
Customer Customer requirementsrequirements
Customer Customer expectationsexpectations
ActivitiesActivities FacilityFacility Provider Provider skillsskills
Cost and time Cost and time estimatesestimates
ScheduleSchedule DeliverablesDeliverables LocationLocation
Service ConceptService Concept Service PackageService Package
Desired service Desired service experienceexperience
Targeted Targeted customercustomer
Service SystemsService 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 MatrixService-System Design Matrix
Mail contact
Face-to-faceloose specs
Face-to-facetight specs
PhoneContact
Face-to-facetotal
customization
Buffered core (none)
Permeable system (some)
Reactivesystem (much)
High
LowHigh
Low
Degree of customer/server contact
Internet & on-site
technology
SalesOpportunity
ProductionEfficiency
Design for High-Design for High-and-Low and-Low Contact Contact ServicesServices (1 of 2) (1 of 2)
DESIGN DECISIONDESIGN DECISION HIGH-CONTACT SERVICEHIGH-CONTACT SERVICE LOW-CONTACT SERVICELOW-CONTACT SERVICE
Facility locationFacility location Convenient to customerConvenient to customer Near labor or Near labor or transportationtransportation
Facility layoutFacility layout Must look presentable, Must look presentable, accommodate customer accommodate customer needs, and facilitate needs, and facilitate interaction with customerinteraction with customer
Designed for efficiencyDesigned for efficiency
Quality controlQuality control More variable since customer More variable since customer is involved in process; is involved in process; customer expectations and customer expectations and perceptions of quality may perceptions of quality may differ; customer present when differ; customer present when defects occurdefects occur
Measured against Measured against established standards; established standards; testing and rework possible testing and rework possible to correct defectsto correct defects
CapacityCapacity Excess capacity required to Excess capacity required to handle peaks in demandhandle peaks in demand
Planned for average Planned for average demanddemand
Design for High-Design for High-and-Low and-Low Contact Contact ServicesServices (2 of 2) (2 of 2)
DESIGN DECISIONDESIGN DECISION HIGH-CONTACT SERVICEHIGH-CONTACT SERVICE LOW-CONTACT SERVICELOW-CONTACT SERVICE
Worker skillsWorker skills Must be able to interact well Must be able to interact well with customers and use with customers and use judgment in decision makingjudgment in decision making
Technical skillsTechnical skills
SchedulingScheduling Must accommodate customer Must accommodate customer scheduleschedule
Customer concerned only Customer concerned only with completion datewith completion date
Service processService process Mostly front-room activities; Mostly front-room activities; service may change during service may change during delivery in response to delivery in response to customercustomer
Mostly back-room Mostly back-room activities; planned and activities; planned and executed with minimal executed with minimal interferenceinterference
Service packageService package Varies with customer; includes Varies with customer; includes environment as well as actual environment as well as actual serviceservice
Fixed, less extensiveFixed, less extensive
Service BlueprintingService Blueprinting
Service blueprintingA 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 Major Steps in Service BlueprintingBlueprinting
1. Establish boundaries2. Identify sequence of customer interaction3. Prepare a flowchart4. Develop time estimates5. Identify potential failure points6. Determine which factors can influence
profitability
Example of Service BlueprintingExample of Service Blueprinting
Brushshoes
Applypolish
Failpoint
BuffCollect
payment
Cleanshoes Materials
(e.g., polish, cloth)
Select andpurchasesupplies
Standardexecution time
2 minutes
Total acceptableexecution time
5 minutes
30secs
30secs
45secs
15secs
Wrongcolor wax
Seen bycustomer 45
secs
Line ofvisibility
Not seen bycustomer butnecessary toperformance
Blueprint for an Installment Lending OperationBlueprint for an Installment Lending OperationLoan Loan
applicationapplication BranchBranch OfficerOfficerPay bookPay book
Line of visibilityLine of visibility
DenyDeny
1 day1 day 2 days2 days 3 days3 days
Co
nfi
rmC
on
firm
Fail pointFail point Customer waitCustomer wait Employee decisionEmployee decision
F
F
F
F
F
F
WW
30 min. – 1 hr.30 min. – 1 hr.
Decline
Receive payment
Final payment
Notify customer
Close account
Confirm
Delinquent
Issue check
Print payment
bookAccept
Verify income
data
Initial screening
Employer
Bank accounts
Credit check
Credit bureau
Data base records
Branch records
Accounting
Verify payor
WWWW
Service Fail-safingService Fail-safingPoka-Yokes (A Proactive Approach)Poka-Yokes (A Proactive Approach)
• Keeping a mistake from becoming a service defect
• How can we fail-safe the three Ts?
Task
TangiblesTreatment
Have we Have we compromised compromised
one of the one of the 3 Ts?3 Ts?
1. Task
2. Treatment
3. Tangible
1. Task
2. Treatment
3. Tangible
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
Applying Behavioral Science to Applying Behavioral Science to Service EncountersService Encounters
Characteristics of a Well-Designed Characteristics of a Well-Designed Service SystemService System (1 of 2) (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 to sustain
4. It is structured so that consistent performance by its people and systems is easily maintained
FedEx
Characteristics of a Well-Designed Characteristics of a Well-Designed Service SystemService System (2 of 2) (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 DesignChallenges of Service Design
1. Variable requirements
2. Difficult to describe
3. High customer contact
4. Service – customer encounter
Guidelines for Successful Service Guidelines for Successful Service DesignDesign
1. Define the service package
2. Focus on customer’s perspective
3. Consider image of the service package
4. Recognize that designer’s perspective is different from the customer’s perspecticve
5. Make sure that managers are involved
6. Define quality for tangible and intangibles
7. Make sure that recruitment, training and rewards are consistent with service expectations
8. Establish procedures to handle exceptions
9. Establish systems to monitor service