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Design of Services To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved.

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Presentation on theme: "Design of Services To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved."— Presentation transcript:

1 Design of Services To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved.

2 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

3 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

4 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.

5 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

6 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

7 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 customer’s environment A service business is the management of organizations whose primary business requires interaction with the customer to produce the service

8 Internal Services 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

9 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 customer’s perception of quality   Customer participation makes quality and demand variability hard to manage

10 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

11 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

12 Service Delivery System Components of service delivery system:  Facilities  Processes  Skills

13 Service Design Service design involves –The physical resources needed –The goods that are purchased or consumed by the customer –Explicit services –Implicit services

14 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

15 Phases in Service Design  Conceptualize  Identify service package components  Determine performance specifications  Translate performance specifications into design specifications  Translate design specifications into delivery specifications

16 Three Contrasting Service Designs The production line approach (ex. McDonald’s) The self-service approach (ex. automatic teller machines) The personal attention approach (ex. Ritz- Carlton Hotel Company)

17 The Service Design Process Performance Specifications Service Delivery Specifications Physical items Sensual benefits Psychological benefits Design Specifications Service Provider Customer Customer requirements Customer expectations ActivitiesFacility Provider skills Cost and time estimates ScheduleDeliverablesLocation Service Concept Service Package Desired service experience Targeted customer

18 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)

19 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

20 Design for High-and-Low Contact Services (1 of 2) DESIGN DECISIONHIGH-CONTACT SERVICELOW-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

21 Design for High-and-Low Contact Services (2 of 2) DESIGN DECISIONHIGH-CONTACT SERVICELOW-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

22 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

23 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

24 Example of Service Blueprinting

25 Blueprint for an Installment Lending Operation Blueprint for an Installment Lending Operation Loan application BranchOfficer Pay book Line of visibility Deny 1 day 2 days 3 days Confirm Fail pointCustomer waitEmployee 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 WW

26 Service Blueprint

27 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 TangiblesTreatment

28 Have we compromised one of the 3 Ts? 1. 1.Task 2. 2.Treatment 3. 3.Tangible 1. 1.Task 2. 2.Treatment 3. 3.Tangible

29   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

30 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

31 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

32 Challenges of Service Design 1.Variable requirements 2.Difficult to describe 3.High customer contact 4.Service – customer encounter

33 Guidelines for Successful Service Design 1.Define the service package 2.Focus on customer’s perspective 3.Consider image of the service package 4.Recognize that designer’s perspective is different from the customer’s 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

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