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Product Design and Process Selection Services

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Special Considerations in Service Design

Services are intangible Service output is variable Services have higher customer contact Services are perishable

Service inseparable from delivery Services tend to be decentralized and dispersed Services are consumed more often than products Services can be easily emulated
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Characteristics of a well-designed Service System

Consistent with firms strategic focus User friendly Robust Easy to sustain Effectively linked between front & back office Cost effective Visible to customer

FedEx

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Service Design
Specifies what the customer is to experience
Physical items Sensual benefits Psychological benefits

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5 Desired service experience

Service Concept
Targeted customer

Service Package
Physical items Sensual benefits Psychological benefits

Performance Specifications Customer requirements Customer Activities Customer expectations Service Provider Cost and time estimates

Design Specifications Facility Provider skills

Service Design Process

Delivery Specifications Schedule Deliverables Service Location

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Service Design Process (cont.)

Service concept
purpose of a service; it defines target market and customer experience

Service package
mixture of physical items, sensual benefits, and psychological benefits

Service specifications
performance specifications design specifications delivery specifications
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High v. Low Contact Services

Design Decision
Facility location Facility layout

High-Contact Service
Convenient to customer

Low-Contact Service
Near labor or transportation source

Must look presentable, Designed for efficiency accommodate customer needs, and facilitate interaction with customer

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High v. Low Contact Services (cont.)

Design Decision
Quality control

High-Contact Service
More variable since customer is involved in process; customer expectations and perceptions of quality may differ; customer present when defects occur

Low-Contact Service
Measured against established standards; testing and rework possible to correct defects

Capacity

Excess capacity required to handle peaks in demand

Planned for average demand

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High v. Low Contact Services (cont.)

Design Decision
Worker skills

High-Contact Service

Low-Contact Service

Must be able to interact Technical skills well with customers and use judgment in decision making Must accommodate customer schedule Customer concerned only with completion date

Scheduling

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High v. Low Contact Services (cont.)

Design Decision
Service process

High-Contact Service Mostly front-room activities; service may change during delivery in response to customer
Varies with customer; includes environment as well as actual service

Low-Contact Service
Mostly backroom activities; planned and executed with minimal interference Fixed, less extensive

Service package

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High

Project process Real estate process for leasing and constructing facilities for large insurance company

Processes at service providers

Customization

Job process Customer service process at financial services firm

Batch process Order fulfillment process of importer/distributor

Line process Cafeteria line Continuous process Power generation plant

Low Low High

Volume
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Low volume, customized-service process Less vertical

integration More resource flexibility More customer involvement Less capital intensity/ automation
Project process Real estate process for leasing and constructing facilities for large insurance company

Process design choices

Volume and Process Decisions for Services

Job process Customer service process at financial services firm

High volume, standardized-service process More vertical

integration Less resource flexibility Less customer involvement More capital intensity/ automation

Batch process Order fulfillment process of importer/distributor

Line process Cafeteria line

Continuous process Power generation plant

Low

High

Volume
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Flow Diagrams (Service blueprinting)

Service visible to customer Repair authorized
Customer drops off car Mechanic makes diagnosis* Discuss needed work with customer*

Service not visible to customer Parts available

Check parts availability

Perform work

Parts not available

Order parts

Repair not authorized

Inspect/ test and repair

Corrective work necessary

Customer departs with car Collect payment Notify customer

Repair complete

Perform corrected work

* = Points critical to the success of the service = Points at which failure is most often experienced

Figure 3.7
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Process Charts
Process: Subject: Beginning: Ending: Emergency room admission Ankle injury patient Enter emergency room Leave hospital
Insert Step Append Step Remove Step
Step no. Time (min) Distance (ft)

Summary

Activity
Operation Transport Inspect Delay Store

Number of steps 5 9 2 3

Time (min) 23 11 8 8

Distance (ft) 815

Step description

1 2 3 4 5
6 7 8 9 10 11 12 13 14 15 16 17 18 19

0.50 10.0 0.75 3.00 0.75

1.00 1.00 4.00 5.00 2.00 3.00 2.00 3.00 2.00 1.00 4.00 2.00 4.00 1.00

15 40 40
60 200 200 60 180 20

X
X X X X X X X X

Enter emergency room, approach patient window Sit down and fill out patient history Nurse escorts patient to ER triage room Nurse inspects injury Return to waiting room
Wait for available bed Go to ER bed Wait for doctor Doctor inspects injury and questions patient Nurse takes patient to radiology Technician x-rays patient Return to bed in ER Wait for doctor to return Doctor provides diagnosis and advice Return to emergency entrance area Check out Walk to pharmacy Pick up prescription Leave the building The McGraw-Hill Companies, Inc., 2004

X
X X X X X X X X X

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Service Generalizations
1. Everyone is an expert on services 2. Services are idiosyncratic 3. Quality of work is not quality of service 4. Most services contain a mix of tangible and intangible attributes

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Service Generalizations (Continued)

5. High-contact services are experienced, whereas goods are consumed 6. Effective management of services requires an understanding of marketing and personnel, as well as operations 7. Services often take the form of cycles of encounters involving face-to-face, phone, Internet, electromechanical, and/or mail interactions
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Service Businesses Defined

A service business is the management of organizations whose primary business requires interaction with the customer to produce the service 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 customers environment
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Internal Services Defined

Internal services is the management of services required to support the activities of the larger organization. Services including data processing, accounting, etc

Internal Supplier Internal Customer External Customer Internal Supplier

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The Service Triangle

A philosophical view that suggests the organization exists to serve the customer, and the systems and the employees exist to facilitate the process of service.
The Service Strategy

The Customer

The Systems

The People
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Applying Behavioral Science to Service Encounters

1. The front-end and back-end of the encounter are not created equal 2. Segment the pleasure, combine the pain 3. Let the customer control the process 4. Pay attention to norms and rituals 5. People are easier to blame than systems 6. Let the punishment fit the crime in service recovery
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Service Strategy: Focus and Advantage Performance Priorities

Treatment of the customer Speed and convenience of service delivery Price Variety Quality of the tangible goods Unique skills that constitute the service offering
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Service-System Design Matrix

Degree of customer/server contact High
Buffered core (none) Permeable system (some) Reactive system (much)
Face-to-face total customization

Low

Sales Opportunity
Internet & on-site Mail contact technology Phone Contact

Face-to-face loose specs Face-to-face tight specs

Production Efficiency

Low

High

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Service Fail-safing Poka-Yokes (A Proactive Approach)

Keeping a mistake from becoming a service defect
Treatment

Task

Tangibles

How can we failsafe the three Ts?

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Three Contrasting Service Designs

The production line approach (ex. McDonalds)

The self-service approach (ex. automatic teller machines)

The personal attention approach (ex. Ritz-Carlton Hotel Company)

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