Service Delivery Process

Chapter Objectives
• Discuss the stages of operational competitiveness.
• Appreciate the relationship between operations and
marketing as it pertains to developing service delivery
systems.
• Describe the types of operational models that facilitate
operational efficiency.
• Consider the challenges associated with applying peak
efficiency models to service organizations and
recommend strategies that overcome some of these
difficulties.
• Explain the art of service blueprinting as it relates to the
design of service delivery systems
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 Opening Vignette: Netflix

Netflix has done its job well,

and its major competitive
advantage is all in its process.

Netflix process is the Internet-

based ordering, shipping, and
return system. Netflix typically
ships 2.2 million discs a day to
its over 10 million customers.

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 Stages of Operational
Competitiveness

Philosophical viewpoint
where operations move
from “necessary evil” to
the key source of
competitive advantage.

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 Four Stages of Operational
Competitiveness

• Stage 1: Available for Service

– operations are a “necessary evil”
– operations are “reactive”
– the primary mission is to avoid mistakes
– technological investment, training, and
personnel costs are minimize
– management designs skill out of the work

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 Four Stages of Operational
Competitiveness

• Stage 2: Journeyman
– prompted by the arrival of competition
– operations become outward-looking
– investment in technology is linked to long-
term costs savings
– processes are developed, implemented, and
monitored
– operations still viewed as a secondary
function

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 Four Stages of Operational
Competitiveness
• Stage 3: Distinctive Competencies
Achieved
– the firm has mastered the core service
– understands complexity of making changes
– operations are now viewed equal with other
departments
– view of technology changes from “cost
savings” to “enhancing the customers
experience”

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 Four Stages of Operational
Competitiveness

• Stage 4: World Class Service Delivery

– company’s name is synonymous with
service excellence
– become a fast learner and innovator
–technology provides a means to
accomplish tasks that the
competition cannot duplicate

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 Marketing and Operations:
Balance is Critical
• The marriage of customer needs with the
manufacturing and technological capabilities
of the firm
• The marriage involves compromise
– customer needs can seldom be met completely
and economically
• Success in service marketing demands a
much greater understanding of the
constraints and opportunities posed by
operations
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 Thompson’s Perfect-World
Model
• Perfect-World Model
To operate efficiently, a firm must be able to
operate “as if the market will absorb the single
kind of product at a continuous rate and as if the
inputs flowed continuously at a steady rate and
with specified quality”

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The Focused-Factory Concept
• An operation that concentrates on performing one
particular task in one particular part of the plant

• Used for promoting experience and effectiveness

through repetition and concentration on one task
necessary for success

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 The Plant within a Plant Concept
• PWP Concept

– An operation that that breaks up large, unfocused

plants into smaller units buffered from one another so
that they can each be focused separately

– Organizations buffer environmental influences by

surrounding their technical core with input and output
components

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 Applying Efficiency Models to Services

• Servuction system is an operations

nightmare
– impossible to use inventories
– problems with decoupling production from the
customer
– system is directly linked to the market
• demand varies day to day, hour to hour, minute
to minute
– massive problems in capacity planning and
utilization

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 Possible Solutions to Service
Operation Problems
1. Isolate the technical
core
– Different management
philosophies should be
adopted for each unit of
operation
– technical core should
be subjected to
production-ling
approaches
– high contact areas
should sacrifice
efficiency in the interest
of the consumer
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 Possible Solutions to Service
Operation Problems
2. Production-lining the whole system

3. Creating flexible capacity

4. Increasing customer participation

5. Moving the time of demand

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 Service Blueprints

• Blueprints provide a means of

communication between operations
and marketing and can highlight
potential problems on paper before
they occur.
– essentially a flowchart that shows
lines visibility

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 Figure 5.3 Blueprint for
Cafeteria-Style Restaurant

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Components of a Service Blueprint

Identify direction in which processes flow

Identify the time it takes to move from one
process to the next
Identify the costs involved with each
process step
Identify the amount of inventory build-up at
each step
Identify the bottlenecks in the system

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 Blueprinting and New- Product
Development
• Complexity--the number and intricacy of
steps
– Specialization strategy
• decreases complexity
– by reducing the number of steps in the process
– it unbundles the service offering
– Penetration strategy
• increases complexity
– by increasing the number of steps

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 Blueprinting and New- Product
Development
• Divergence--degrees of freedom in
decision making
– Volume-oriented strategy (production-line)
• decreases divergence
– produces standardized output and reduces costs
– but does so at the expense of increasing conformity
and inflexibility
– Niche positioning strategy
• increases divergence
– Tailor the service experience to each customer

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 All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.

Copyright © 2011 Cengage Learning.

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