SERVICE PROCESSES

Chapter Nine
McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
 LO9–1: Understand the characteristics of service
processes.
 LO9–2: Explain how service systems are organized.
 LO9–3: Analyze simple service systems.
 LO9–4: Contrast different service designs.

9-2
Goods versus Services: Review

Goods Services

Core Goods Pure Services

Appliances Automobiles University Medical
Data storage systems Investment

Pure Goods
Core Services
Food products
Hotels Airlines
Chemicals
Internet service providers
Mining
1-3
Goods versus Services: Review

Goods Services

Pure Goods Core Goods Core Services Pure Services

Food products Appliances Hotels Airlines University Medical
Chemicals Automobiles Internet service
Data storage systems Investment
Mining providers

Intangible
Tangible Interaction with customer required
Less interaction with customers Inherently heterogeneous
Often homogeneous Time dependent
Not perishable – can be inventoried Defined and evaluated as a package of
features

1-4
The Service Triangle

9-5
The Nature of Services
 The customer is the focal point of all decisions and
actions.
 The organization exists to serve the customer.
 Operations is responsible for service systems.
 Operations is also responsible for managing the
work of the service workforce.

9-6
Service Package
1. Supporting facility
 The physical resources that must be in place before a service can
be offered
2. Facilitating goods
 The material purchased by the buyer or the items provided to the
customer
3. Information
 Data provided to the customer
4. Explicit services
 Benefits that are observable by the senses
5. Implicit services
 Psychological benefits the customer may sense only vaguely

9-7
An Operational Classification of
Services
 Creation of the service: the work process involved
in providing the service itself
 Customer contact: the physical presence of the
customer in the system
 Extent of contact: the percentage of time the customer
must be in the system relative to service time
 Services with a high degree of customer contact are
more difficult to control
High degree of customer contact
Low degree of customer contact
9-8
Major Differences between High- and
Low-Contact Systems in a Bank

9-9
Designing Service Organizations
 Cannot inventory services.
 Must meet demand as it arises.
 Service capacity is a dominant issue.
 “What capacity should I aim for?”
 Marketing can adjust demand.
 Cannot separate the operations management
function from marketing in services.
 Waiting lines can also help with capacity (Chapter
10).

9-10
How Service Design Is Different from
Product Design?
1. The process and the product must be developed
simultaneously.
 The process is the product.
2. A service operation lacks the legal protection commonly
available to products.
3. The service package constitutes the major output of the
development process.
4. Many parts of the service package are defined by the
training individuals receive.
5. Many service organizations can change their service
offerings virtually overnight.

9-11
Structuring the Service Encounter:
Service-System Design Matrix
 Service encounters can be configured in a number of
different ways.
1. Mail contact
2. Internet and on-site technology
3. Phone contact
4. Face-to-face tight specs
5. Face-to-face loose specs
6. Face-to-face total customization
 Production efficiency decreases with more customer
contact.
 Low contact allows the system to work more efficiently.

9-12
Service-System Design Matrix

9-13
Characteristics Relative to the Degree
of Customer/Service Contact

9-14
Virtual Service: The New Role of the
Customer
 Customers no longer just interact with the business.
 Pure virtual customer contact: customers interact in an open
environment.
 eBay
 SecondLife
 Mixed virtual and actual customer contact: customers
interact with one another in a server-moderated
environment.
 YouTube
 Wikipedia

9-16
Managing Customer-Introduced
Variability
 How should services accommodate the variation
introduced by the customer?
 Standard approach is to treat this as a trade-off
between cost and quality.
 More accommodation → more cost
 Less accommodation → less satisfaction

 Standard approach may overlook ways to

accommodate customer.

9-17
Five Types of Variability
1. Arrival variability
 Customers arriving at times when there are not enough service
providers
2. Request variability
 Travelers requesting a room with a view
3. Capability variability
 A patient being unable to explain symptoms to doctor
4. Effort variability
 Shoppers not putting up carts
5. Subjective preference variability
 Interpreting service action differently

9-18
Strategies for Managing Customer-
Introduced Variability

9-19
Service Blueprinting and Fail-Safing

 The standard tool for service process design is the

flowchart.
 May be called a service blueprint
 A unique feature is the distinction between high
customer contact aspects of the service and those
activities the customer does not see.
 Made by a “line of visibility”

9-20
Service blueprint and fail-safing
Poka-Yokes (A Proactive Approach)
 Service blueprint: The flowchart of a service process,
emphasizing what is visible and what is not visible to the
customer.
 Poka-yokes: procedures that block a mistake from
becoming a service defect
 Common in factories
 Many applications in services
 Warning methods
 Physical or visual contact methods
 Three T’s
1. Task to be done
2. Treatment accorded to the customer
3. Tangible features of the service
 Must often fail-safe actions of the customer as well as the
service workers 9-21
22
23
Three Contrasting Service Designs
1. The production line approach
 Service delivery is treated much like manufacturing.
2. The self-service approach
 Customer takes a greater role in the production of
the service.
3. The personal attention approach

9-24
Seven Characteristics of a Well-
Designed Service System
1. Each element of the service system is consistent with the
operating focus of the firm.
2. It is user-friendly.
3. It is robust.
4. It is structured so that consistent performance by its people
and systems is easily maintained.
5. It provides effective links between the back office and the
front office.
6. It manages evidence of service quality so that customers
see the value of service provided.
7. It is cost-effective.

9-25
Group discussion
 Pick up a service and analyze the steps to provide
that service
 Draw the service blueprint
 Identify the most important customer contact and
explain.
 Identify the possible failures and Poka-yokes to
avoid those failures.

26
30
Group discussion
Case: Pizza USA: An Exercise in Translating Customer
Requirements into Process Design Requirements
Pizza USA is a chain of pizza restaurants that
currently offers sit-down and take-out service. Many
customers have said they would buy more pizzas from
Pizza USA if it offered a delivery service.

31
 Divide our class into 2 groups:
 Customer  Store manager
 Make a list of the  Make a list of the “pizza
attributes of pizza delivery process design
delivery that are requirements” that your
important to you AS A pizza delivery process
CUSTOMER! will have to meet. As you
do this, think about
measurable standards.

32
 Design a process that meets your requirements.
Describe it by using a flowchart similar to that
shown in Exhibit 9.5.
 [Link]
 Identify the most important customer contact ->
suggest solutions to improve service efficiency.

33