1. The Service Delivery Process
Chapter 5
The Service Delivery Process

2. Chapter Objectives
Compare and contrast the four 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 operational 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 operations.
Discuss the role of complexity and divergence as they relate to new service product development.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

3. Opening Vignette: Chipotle Mexican Grill
Chipotle sells only fresh foods and prepares everything by hand
Speed is critical
Chipotle’s delivery system is much like an assembly line
Employees manage throughput by preparing food and setting up the line before customers arrive
An expeditor and manager back up the line employees to move customers through the line quickly, minimize bottlenecks, and fill unmet service needs
More than 1,600 stores reap more than $4 billion in sales per year
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

4. Stages of Operational Competitiveness
Strategically, the service firm can choose to view its operations as a necessary evil to complete day-to-day tasks, or use its operations as the key component of its competitive strategy
The manner in which “operational competitiveness” is embraced can be described by four stages:
Available for Service
Journeyman
Distinctive Competencies Achieved
World-Class Service Delivery
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

5. Stage 1: Available for Service
Operations are viewed as a necessary evil
Operations are at best reactive to the needs of the rest of the organization and deliver the service as specified
Primary mission is to avoid mistakes
Technological investment, investment in training, and personnel costs are minimized
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

6. Stage 2: Journeyman Prompted by the arrival of competition
Operations become more outward-looking
Characterized by the introduction of technologically based systems for the primary purpose of cost savings
Employees are given procedures to follow
Management focuses on ensuring that standardized procedures are followed
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

7. Stage 3: Distinctive Competencies Achieved
The firm has mastered the core service and understands the complexity of changing current operations
View of technology changes from “cost savings” to “enhancing the effectiveness of service to customers”
Involves a philosophical change of balancing efficiency with effectiveness
Front-line workers may select from alternative procedures
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

8. Stage 4: World-Class Service Delivery
The company’s name is synonymous with service excellence
Operations become adaptive and innovative
Technology provides a means to accomplish tasks that the competition cannot easily duplicate
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9. Figure 5.1: Major Design Trade-Offs in High- and Low-Contact Systems
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10. Marketing and Operations: Balance Is Critical
The marriage of consumers’ needs with the technology and manufacturing capabilities of the firm
The marriage involves compromise
Customer needs can seldom be met completely and economically
Success in services marketing demands a much greater understanding of the constraints and opportunities posed by the firm’s operations
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

11. Figure 5.2: Sources of Cooperation/Conflict Between Marketing and Operations
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12. Thompson’s 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”
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

13. The Focused-Factory Concept
An operation that concentrates on performing one particular task in one particular location
Used for promoting experience and effectiveness through repetition and concentration on one task necessary for success
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14. The Plant-Within-a-Plant Concept
The strategy of breaking up large, unfocused plants into smaller units buffered from one another so that each can each be focused separately
Organizations seek to buffer environmental influences by surrounding their technical core with input and output components
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15. Applying Efficiency Models to Services
The servuction system itself is an operations nightmare
It is impossible to use inventories
It is impossible to decouple production from the customer
The system is linked directly to the market
Demand varies from day to day, hour to hour, minute to minute
Massive problems in capacity planning and utilization
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16. Operations Solutions for Service Firms
Isolate the technical core
Different management philosophies should be adopted for each separate unit of production
The technical core should be subjected to production-lining approaches
High-contact systems should sacrifice efficiency in the interest of the consumer
Production-lining the whole system
Creating flexible capacity
Increasing customer participation
Moving the time of demand
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

17. Flowcharts Identify directions 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 buildup at each step
Identify bottlenecks in the system
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

18. The Art of Blueprinting
Blueprints provide a means of communication between operations and marketing and can highlight potential problems on paper before they occur
Show points of customer contact
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19. Figure 5.3: Blueprint for Cafeteria-Style Restaurant
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20. Figure 5.4: Modified Blueprint for Cafeteria-Style Restaurant
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21. Figure 5.5: Alternate Blueprint for Cafeteria-Style Restaurant
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

22. Figure 5.6: Flowchart of a Discount Brokerage Service
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

23. Blueprinting and New-Product Development: The Roles of Complexity and Divergence
Complexity—a measure of the number and intricacy of the steps and sequences that constitute a process
Specialization positioning strategy
Reduces complexity
By unbundling the different services offered
Penetration positioning strategy
Increases complexity
By adding more services and/or enhancing current services to capture more of a market
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

24. Blueprinting and New-Product Development: The Roles of Complexity and Divergence (cont’d)
Divergence—a measure of the degrees of freedom service personnel are allowed when providing a service
Volume-oriented positioning strategy
Reduces divergence
Produces standardized output and reduces costs but does so at the expense of increasing conformity and inflexibility
Niche positioning strategy
Increases divergence
Tailors the service experience to each customer
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

25. Figure 5.7: Park Avenue Florist
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

26. Figure 5.8: Florist Services: Alternative Design
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.