Design of Services

To Accompany Russell and Taylor, Operations Management, 4th Edition, 2003 Prentice-Hall, Inc. All rights reserved.
Service 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 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 Services
(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 Services
(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 Services
(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 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
customers environment
A service business is the management of
organizations whose primary business requires
interaction with the customer to produce the
service
Internal 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 Variability
Demand variability creates waiting lines and idle
service resources
Service design perspectives:
Cost and efficiency perspective
Customer perspective
Attempts to achieve high efficiency may
depersonalize service and change customers
perception of quality
Customer participation makes quality and demand
variability hard to manage

Differences Between Product and
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
Service Design (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 System
Components of service delivery system:
Facilities
Processes
Skills
Service Design
Service design involves
The physical resources needed
The goods that are purchased or
consumed by the customer
Explicit services
Implicit services
Performance Priorities in Service
Design
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 Design
Conceptualize
Identify service package components
Determine performance specifications
Translate performance specifications into
design specifications
Translate design specifications into delivery
specifications
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)
The Service Design Process
Performance Specifications
Service
Delivery Specifications
Physical
items
Sensual
benefits
Psychological
benefits
Design Specifications
Service
Provider
Customer
Customer
requirements
Customer
expectations
Activities Facility
Provider
skills
Cost and time
estimates
Schedule Deliverables Location
Service Concept Service Package
Desired service
experience
Targeted
customer
Service 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 Matrix
Mail contact
Face-to-face
loose specs
Face-to-face
tight specs
Phone
Contact
Face-to-face
total
customization
Buffered
core (none)
Permeable
system (some)
Reactive
system (much)
High
Low
High
Low
Degree of customer/server contact
Internet &
on-site
technology
Sales
Opportunity
Production
Efficiency
Design for High-and-Low Contact
Services (1 of 2)
DESIGN DECISION HIGH-CONTACT SERVICE LOW-CONTACT SERVICE
Facility location Convenient to customer Near labor or
transportation
Facility layout Must look presentable,
accommodate customer
needs, and facilitate
interaction with customer
Designed for efficiency
Quality control More variable since customer
is involved in process;
customer expectations and
perceptions of quality may
differ; customer present when
defects occur
Measured against
established standards;
testing and rework
possible to correct defects
Capacity Excess capacity required to
handle peaks in demand
Planned for average
demand
Design for High-and-Low Contact
Services (2 of 2)
DESIGN DECISION HIGH-CONTACT SERVICE LOW-CONTACT SERVICE
Worker skills Must be able to interact well
with customers and use
judgment in decision making
Technical skills
Scheduling Must accommodate customer
schedule
Customer concerned only
with completion date
Service process Mostly front-room activities;
service may change during
delivery in response to
customer
Mostly back-room
activities; planned and
executed with minimal
interference
Service package Varies with customer; includes
environment as well as actual
service
Fixed, less extensive
Service Blueprinting
Service blueprinting
A 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
Blueprinting
1. Establish boundaries
2. Identify sequence of customer interaction
3. Prepare a flowchart
4. Develop time estimates
5. Identify potential failure points
6. Determine which factors can influence
profitability


Example of Service Blueprinting
Brush
shoes
Apply
polish
Fail
point
Buff
Collect
payment
Clean
shoes
Materials
(e.g., polish, cloth)
Select and
purchase
supplies
Standard
execution time
2 minutes
Total acceptable
execution time
5 minutes
30
secs
30
secs
45
secs
15
secs
Wrong
color wax
Seen by
customer 45
secs
Line of
visibility
Not seen by
customer but
necessary to
performance
Blueprint for an Installment Lending Operation
Loan
application
Branch Officer
Pay book
Line of visibility
Deny
1 day 2 days 3 days
C
o
n
f
i
r
m

Fail point Customer wait Employee decision
F
F
F
F
F
F
W
30 min. 1 hr.
Decline
Receive
payment
Final
payment
Notify
customer
Close
account
Confirm
Delinquent
Issue
check
Print
payment
book
Accept
Verify
income
data
Initial
screening
Employer
Bank
accounts
Credit
check
Credit
bureau
Data base
records
Branch
records
Accounting
Verify
payor
W W
Service Blueprint
Service Fail-safing
Poka-Yokes (A Proactive Approach)
Keeping a mistake
from becoming a
service defect
How can we fail-
safe the three Ts?
Task
Tangibles Treatment
Have we
compromised
one of the
3 Ts?
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
Service Encounters
Characteristics of a Well-Designed
Service System (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
Service System (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 Design
1. Variable requirements
2. Difficult to describe
3. High customer contact
4. Service customer encounter
Guidelines for Successful Service
Design
1. Define the service package
2. Focus on customers perspective
3. Consider image of the service package
4. Recognize that designers perspective is different
from the customers 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