Introduction to

Service Operations
Management
Chapter
1
Servic
e
 Introductio
n as accounting, banking, cleaning,
Definition - Intangible products such
consultancy, education, insurance, expertise, medical treatment, or
transportation. No transfer of possession or ownership takes place when
services are sold.
 Characteristics of
Servimostly
Services have been characterized ces in terms of how they diff er from goods as
follows:
- Services are intangible where as goods are tangible e.g. Education sector
- Services are instantly perishable
- Services are simultaneously consumed as they are produced e.g. Theater recital
- Services often require closer proximity to the customer e.g. Working out in a gym
- Services come into existence at the time they are bought and consumed
- Services cannot be inventoried e.g. Physiotherapy

The above stated “traditional characteristics” have been found to be only partially
true
 Characteristics of Services -
Intangibility - Most excepti ons with “facilitating goods” e.g. - groceries from a store
services come

Simultaneous production and consumption - Some services are specifically designed

to be produced when the consumer is not present e.g. - Janitorial services

Proximity to the customer - Proximity is not always essential in services e.g. - Internet
based services

Services cannot be inventoried - Notable exception in this instance includes

“Restaurant reservations” - here a service can be backordered
 Service operations
management
The term is used to cover the activities, decisions and responsibilities of
operations managers in service organizations. Though these managers are
often called operations managers, they can also be designated as:

● managing partners in consultancy firms,

● nursing managers in hospitals,
● head teachers in schools,
● fleet managers in transport companies,
● call centre managers,
● customer service managers,
● restaurant managers etc.
 Common characteristics of operations
● managers
Responsible for the service operation - the configuration of resources
and processes that create and deliver service to the customer
● They are responsible for some of the organization's resources
● They are responsible for some or all of the organization's customers
● They are responsible for ‘processing’ their customers or their parcels
or orders
● They are also responsible for the goods and services delivered to their
customers
 Why Study Service
Operations
Management?
 Opportunities in Service
Why study service operations? Operations
- Service firms constitute an overwhelmingly large percentage of the economy
- By far the most likely economic sector in which business school graduates will be employed
- Many services have characteristics that are strongly di ff erent from goods

The bulk of academic training, work and classroom teaching remains in manufacturing, this leads to an imbalance
which represents an enormous opportunity for students of management who wish to focus on service sector as
it’s issues create demand for knowledge about the service sector among potential employers.

E.G -
Service Delivery Jobs
Customer Support Jobs
After Sales Service Jobs
Service Manager Jobs
Technical Support Jobs
Customer Satisfaction Jobs
 The Service
Operation operation
Service Operation

Inputs:
Materials
Equipment
Customers Process
Staff
Technology
Facilities O/p goods
and services
 Service = experience +
outcome

Inputs
Outcomes
Time Value
E ff ort Emotions
Judgements
Cost Intentions

Service Product

Customer
 Examples of Service
Products
Examples of service products might include:

● car insurance

● consultancy advice

● a restaurant meal

● computer maintenance

● healthcare
 The Service
Aspects of the service Experi ence
experience include:

● the extent of personalisation of the process

● the responsiveness of the service organisation
● the flexibility of customer-facing staff
● customer intimacy
● the ease of access to service personnel or information systems
● the extent to which the customer feels valued by the organisation
● the courtesy and competence of customer-facing staff
● interactions with other customers.
Managing Service and Service
Operations
 Different types of
● Services
Business-to-business services (B2B)
● Business-to-consumer services(B2C)
● Internal services
● Public services (G2C)
● Not-for-profit
Types of Services
(Continued)
Let’s look at challenges
faced by each type of
service in some detail!
Shall we?
 Business-to-business (B2B)
servifor
Some of the challenges cesB2B services include:
●Dealing with multiple contacts in the organisation. Consultants may have to
work with a wide range of employees in their client organisations and so
maintain relationships at di ff erent levels in the organisation.
●Working with a complex set of relationships. The users or recipients of a
service will frequently not be the purchasers, and this purchasing group may
in turn be di ff erent from those who commission or specify the service
standards.
●B2B relationships may last for a long time. The challenge here is for the
relationship not to become too ‘cosy’, with the customer or supplier being
taken for granted
 Business-to-consumer (B2C)
The challenges faced servi
cesB2C services include:
by most
●The organisation may deal with many di ff erent customers each day. Each have their
own special needs and expectations of service delivery and, to make matters more
di ffi cult, these may change for the same individual from day to day.
●Because the operation serves so many customers, it faces a major challenge in
keeping the experience fresh for the next new customer. It may be the first and only
time the customer experiences this service, although the customer may be just one out
of hundreds that an individual member of staff sees in a day.
●Many B2C service operations have the added complication of the need for consistency
across many points of contact with customers, frequently spread
nationally if not globally.
 Internal
servi
The particular challenges faced by these ces
service operations include:
● Demonstrating that the internal service provides at least as good ‘value for money’ as an
external alternative. This is a challenge faced by many IT departments, for example, whose
users often feel that they could obtain cheaper equipment more rapidly from the local
computer store or via the internet
● Adapting the service to the business need. If the service provision is effectively a commodity,
it can be outsourced. Internal service providers must demonstrate their ability to tailor their
off erings to the changing business needs in a way that external providers cannot
● Gaining acceptance from their internal customers. Centrally funded
services are frequently viewed with suspicion by local operating units and may
not receive the co-operation required to carry out their tasks eff ectively
 Public services
(G2C)
Specific challenges for public sector services include:
●The provision of ‘best-value’ services. Public services are under continual scrutiny. As a result, aspects of service
operations that might be taken for granted by their private sector colleagues must be carefully justified in these
organizations.
●Rationing supply of service. Public sector organizations cannot use the pricing mechanism to regulate demand.
With essential services, this can be a very sensitive issue. The health service must make policy decisions as to how
much resource can be devoted to heart operations, to maternity services, and so on. Expenditure on intensive care
units and accident and emergency provision are particularly sensitive since lives are at stake, but inevitably there
will be times when demand outstrips supply.
●Multiple stakeholders. Public services su ff er from having many ‘customers’. With B2C services it is reasonably clear
who the customers are, and if this group is satisfied, generally speaking the organization should be successful. This is
not the case with the public sector, where the recipients of the service, as individuals, have little power to
influence. Politicians and service managers themselves may have far more power to decide current priorities.
●A confused service concept. The service concept provides direction for the organization. Some public services are
provided for the good of society at large and are not necessarily greatly loved by those who have to deal with them.
Prisons, police services and tax collectors may fall into this category
 Not-for-profit
servi
Challenges for these services ces
include:
●Managing a workforce of volunteers who, though highly motivated, may not
follow the organisation’s procedures.
●Managing the allocation of resources to ensure that maximum funds flow to
the beneficiaries of the organisation, while developing effective processes and
people.
●Dealing with differences between the activities that might influence and
impress donors, but which might conflict with the requirements of their
‘customers’.
●Working in a highly emotional area, sometimes being overwhelmed by
demand for service.
What challenges do
Service Managers
face?
 Challenges facing service operations
1. managers
Managing multiple customers
2. Understanding the service concept
3. Managing the outcome and the experience
4. Managing the customer
5. Managing in real-time
6. Coordinating di ff erent parts of the organization
7. Understanding the relationship between operations decisions and business/organisational
success
8. Knowing, implementing and influencing strategy
9. Continually improving the operation
10. Encouraging innovation
11. Managing short-term and long-term issues simultaneously
Are there any
frameworks that
Classify services?
 Classification
● Frameworks
Classification frameworks attempt to show where similarities among service firms may yield insights.
● To gain a perspective about which industries share certain characteristics, it is useful to classify service firms,
this helps in viewing the commonalities between businesses that may also demonstrate vast di fferences

The customer as the dominant force to be considered in designing the service systems represents the central guiding
principle in this view. This simple, yet powerful idea can be formulated as:

Potential E fficiency = f (1 - Customer Contact Time / Service Creation Time)

This equation indicates that “potential” efficiency of a service is limited by the amount of time the customer
is involved in the system. (E.g. quick service v/s extended waiting period for a service)

Important classification frameworks include:

1. The Customer Contact Model
2. The Service Process Matrix
 The Customer Contact
Model
In the Customer Contact Model - services are classified according to the amount of
customer contact

High Contact Low Contact

Pure services Mixed Services Quasi-Manufacturing Manufacturing

Medical Branch o ffi ces Home o ffi ces

Restaurants Distribution centers
Transportation
 The Service Process
Matrix
Model was proposed by Schmenner in 1986, it di ff erentiates service processes based on two important
factors: Degree of - Interaction and Customization, ratio of labor cost to capital cost
Degree of - Labor Intensity, ability of customer to a ffect personally the nature of the service being delivered
CHALLENGES IN SERVICE-PROCESS
MATRIX
Now Let’s look
at Service
Processes, shall
Four main types of Service
processes Decreasing unit costs
 Simplicity and
Compl
●Simplicity (low variety/low exity These include small operations such as
volume).
microbreweries, and small and specialist consultancies. Some larger organisations may
also develop ‘simple’ operations as start-up services, which then may grow in terms of
volume or variety or both.
● Complexity (high variety/high volume). At first sight, this position might
seem
to be the ideal, providing maximum flexibility for as many customers as possible. In
reality, however, providing flexibility for large numbers of customers is invariably
expensive, achieved by employing large numbers of highly skilled people and/or
high-tech equipment
Capability versus commodity
processes
 How can you tell if
your service operation
was successful or
not?
 Judging the success of a service
operation
Success is also about making a wider contribution to the success of the
organisation, in particular:

● Providing customer value

● Delivering brand values

● Making a financial contribution to the organisation

● Delivering an organisational contribution

 Hey! Let us watch a
video to understand the
concepts better!
Video - Service delivery time and customer
satisfaction
 Case - Study Sky
● Airways
What problems does Peter Greenwood face?
●If you were Peter Greenwood, what would you
say to the board?
● In the case David Goh, tells Peter Greenwood the operations
director that “I think we should stop providing meals altogether,
certainly on the short hauls.” - Analyse this action in the context of
the case and mention the pros and the cons of this decision.
Lets acquire a
new skill!
 Skill set demo - SEO content
Steps: creation
1. Research on the content to be created
2. Shortlist Key phrases and one main keyword
3. Structure the content with headers if applicable

The main technique/challenge - your keyword should be greater than 2% and

less than 3% of the total content of the word count.
Simulating a
management
scenario!
 Class
Activity
Role play Restaurant staff training for - better customer experience and safety

HOTEL SHIV SAGAR

Characters:

Judge - Owner
Staff
Consultant