1. McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 4 Service Design

2. 4-2 Learning Objectives  Explain the strategic importance of service design.  List some key reasons for design or redesign.  Identify the main objectives of service design.  Discuss the importance of standardization.  Discuss the importance of legal, ethical, and environmental issues in service design.

3. 4-3 Learning Objectives  Describe some of the main sources of design ideas.  Name several key issues in service design.  Name the phases in service design.  List the characteristics of well-designed service systems.  Name some of the challenges of service design.

4. 4-4  Major factors in design strategy  Cost  Quality  Time-to-market  Customer satisfaction  Competitive advantage Service Design Service design – or redesign – should be closely tied to an organization’s strategy

5. 4-5 1.Translate customer wants and needs into service requirements 2.Refine existing services 3.Develop new services 4.Formulate quality goals 5.Formulate cost targets 6.Construct and test prototypes 7.Document specifications Service Design Activities

6. 4-6 Reasons for Service Design  Economic  Social and demographic  Political, liability, or legal  Competitive  Cost or availability  Technological

7. 4-7 Objectives of Service Design  Main focus  Customer satisfaction  Understand what the customer wants  Secondary focus  Function of service  Cost/profit  Quality  Appearance  Ease of service operation

8. 4-8  Taking into account the capabilities of the organization in designing services.  Failure to take this into account can:  Reduce productivity  Reduce quality  Increase costs Designing For Operations

9. 4-9  Legal  FDA, OSHA, IRS  Product / service liability  Uniform commercial code  Ethical  Releasing products with defects  Environmental  EPA Legal, Ethical, and Environmental Issues

10. 4-10 Regulations & Legal Considerations  Product Liability - A manufacturer is liable for any injuries or damages caused by a faulty product.  Uniform Commercial Code - Products carry an implication of merchantability and fitness.

11. 4-11 Designers Adhere to Guidelines  Produce designs that are consistent with the goals of the company  Give customers the value they expect  Make health and safety a primary concern  Consider potential harm to the environment

12. 4-12 Other Issues in Service Design  Service life cycles  How much standardization  Mass customization  Service reliability  Robust design  Degree of newness  Cultural differences

13. 4-13 Life Cycles of Services Time Introduction Growth Maturity Saturation Decline Deman d Figure 4.1

14. 4-14 Standardization  Standardization  Extent to which there is an absence of variety in a product, service or process  Standardized services are immediately available to customers

15. 4-15 Advantages of Standardization  Design costs are generally lower  Reduced training costs and time  More routine purchasing, handling, and inspection procedures  Quality is more consistent

16. 4-16 Advantages of Standardization (Cont’d)  Opportunities for long production runs and automation  Need for fewer components justifies increased expenditures on perfecting designs and improving quality control procedures.

17. 4-17 Disadvantages of Standardization  Designs may be frozen with too many imperfections remaining.  High cost of design changes increases resistance to improvements.  Decreased variety results in less consumer appeal.

18. 4-18 Mass customization:  A strategy of producing standardized services, but incorporating some degree degree of customization  Delayed differentiation  Modular design Mass Customization

19. 4-19 Delayed differentiation is a postponement tactic  Producing but not quite completing a service until customer preferences or specifications are known Delayed Differentiation

20. 4-20 Modular Design Modular design is a form of standardization in which service component are subdivided into modules that are easily replaced or interchanged. It allows:  easier diagnosis and remedy of failures  easier repair and replacement  simplification of manufacturing and assembly  rapid customization

21. 4-21 Reliability  Reliability : The ability of a system to perform its intended function under a prescribed set of conditions  Failure : Situation in which a system does not perform as intended  Normal operating conditions : The set of conditions under which an item’s reliability is specified

22. 4-22 Improving Reliability Component design Production/assembly techniques Testing Redundancy/backup Preventive maintenance procedures User education System design

23. 4-23 Robust Design: Design that results in services that can function over a broad range of conditions Robust Design

24. 4-24 Degree of Newness 1.Modification of an existing service 2.Expansion of an existing service 3.Clone of a competitor’s service 4.New service

25. 4-25 Global Product Design  Virtual teams  Uses combined efforts of a team of designers working in different countries  Provides a range of comparative advantages over traditional teams such as:  Engaging the best human resources around the world  Possibly operating on a 24-hr basis  Global customer needs assessment  Global design can increase marketability

26. 4-26 Phases in Product Development Process 1.Idea generation 2.Feasibility analysis 3.Product specifications 4.Process specifications 5.Prototype development 6.Design review 7.Market test 8.Product introduction 9.Follow-up evaluation

27. 4-27 Reverse Engineering Reverse engineering is the dismantling and inspecting of a competitor’s product to discover product improvements.

28. 4-28 Research & Development (R&D)  Organized efforts to increase scientific knowledge or product innovation & may involve:  Basic Research advances knowledge about a subject without near-term expectations of commercial applications.  Applied Research achieves commercial applications.  Development converts results of applied research into commercial applications.

29. 4-29 Component Commonality  Multiple products or product families that have a high degree of similarity can share components  Automakers using internal parts  Engines and transmissions  Water pumps  Etc.  Other benefits  Reduced training for assemble and installation  Reduced repair time and costs

30. 4-30  Quality Function Deployment  Voice of the customer  House of quality Quality Function Deployment QFD: An approach that integrates the “voice of the customer” into the product and service development process.

31. 4-31 The House of Quality Correlation matrix Design requirements Customer require- ments Competitive assessment Relationship matrix Specifications or target values Figure 4.3

32. 4-32 House of Quality Example Figure 4.4

33. 4-33 Service Design  Service is an act  Service delivery system  Facilities  Processes  Skills  Many services are bundled with products

34. 4-34 Service Design  Service design involves  The physical resources needed  The goods that are purchased or consumed by the customer  Explicit services  Implicit services

35. 4-35 Service Design  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 package  The physical resources needed to perform the service

36. 4-36  Tangible – intangible  Services created and delivered at the same time  Services cannot be inventoried  Services highly visible to customers  Services have low barrier to entry  Location important to service  Range of service systems  Demand variability Differences Between Product and Service Design

37. 4-37 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)

38. 4-38 Service Demand Variability  Demand variability creates waiting lines and idle service resources  Service design perspectives:  Cost and efficiency perspective  Customer perspective  Customer participation makes quality and demand variability hard to manage  Attempts to achieve high efficiency may depersonalize service and change customer’s perception of quality

39. 4-39 Phases in Service Design 1.Conceptualize 2.Identify service package components 3.Determine performance specifications 4.Translate performance specifications into design specifications 5.Translate design specifications into delivery specifications

40. 4-40 Characteristics of Well Designed Service Systems 1.Consistent with the organization mission 2.User friendly 3.Robust 4.Easy to sustain 5.Cost effective 6.Value to customers 7.Effective linkages between back operations 8.Single unifying theme 9.Ensure reliability and high quality

41. 4-41 Challenges of Service Design 1.Variable requirements 2.Difficult to describe 3.High customer contact 4.Service – customer encounter

42. 4-42 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

43. 4-43 1.Increase emphasis on component commonality 2.Package products and services 3.Use multiple-use platforms 4.Consider tactics for mass customization 5.Look for continual improvement 6.Shorten time to market Operations Strategy

44. 4-44 Shorten Time to Market 1.Use standardized components 2.Use technology 3.Use concurrent engineering