1. Richard Weeks UNIVERSITY OF PRETORIA SYSTEMS ENGINEERING:
Graduate School of Technology Management
SYSTEMS ENGINEERING:
A DUAL SA ECONOMY PERSPECTIVE
Richard Weeks

2. ASPECTS TO BE ADDRESSED
South Africa: the reality of a dual economy within a global services driven economy
Service science: the new South African frontier in a dual services and manufacturing economy
A Systems Engineering perspective of the new frontier
Clarity as to the concept and nature of services
Service system life cycle
Service System Design
Facility Design
The service encounter (moment of truth)
Service implementation and management

3. Nature of the global economy- Employment trends

4. Nature of the global economy- GDP trends

5. Nature of the global economy- Rise of services economy
Source: 2004 IBM study, based on national labour data

6. Question?
In your day-to-day life-world how many of the purchases that you and your family make are services related?
Within the organisation you work for, how many of the day-to-day activities undertaken are services related?

7. Question?
In your day-to-day life-world how many of the purchases that you and your family make are services related?
Medical – insurance – servicing of car – electricity -banking/financial transactions – municipal services – education of children – security services –
domestic cleaning – transportation (taxies) ………….
Within the organisation you work for, how many of the day-to-day activities undertaken are services related?
May be external or internal to the organisation – information - travel/transportation – training of staff – salaries – taxation – IT support services ………….

8. Nature of the services sector What are some everyday services?
Transportation
Train, taxis, airlines, delivery, airports, shipping,
Hospitality
Hotels, restaurants, cafeterias,
Infrastructure
Communications, electricity, water, waste removal, roads, energy
Government
Police, fire, water, waste removal, health, education,
Financial
Banking, investments, insurance,
Entertainment
Television, movies, concerts,
Professional Services
Doctors, dentists, lawyers, skilled craftspeople, teachers,
Health
Hospitals, dentists, clinics, doctors, medical aid, ambulance

9. Role of Services in a Network Economy
FINANCIAL SERVICES
· Financing
· Leasing
· Insurance
INFRASTRUCTURE SERVICE
· Communications
· Transportation
· Utilities
· Banking
PERSONAL SERVICES
· Healthcare
· Restaurants
· Hotels
MANUFACTURING
Services inside company:
· Finance
· Accounting
· Legal
· R&D and design
DISTRIBUTION SERVICES
· Wholesaling
· Retailing
· Repairing
CONSUMER
(Self-service)
BUSINESS SERVICES
· Consulting
· Auditing
· Advertising
· Waste disposal
GOVERNMENT SERVICES
· Military
· Education
· Judicial
· Police and fire protection

10. Economic Evolution Economy Agrarian Industrial Service Experience
Offering
Food
Packaged
goods
Commodity
service
Consumer services
Business
services
Function
Extract
Make
Deliver
Stage
Co-create
Nature
Fungible
Tangible
Intangible
Memorable
Effectual
Attribute
Natural
Standardized
Customized
Personal
Growth
Method of Supply
Stored in bulk
Inventoried
Delivered on demand
Revealed over time
Sustained over time
Seller
Trader
Producer
Provider
Stager
Collaborator
Buyer
Market
Customer
Client
Guest
Expectation
Quantity
Features
Benefits
Sensations
Capability

11. Distribution of GDP in the US Economy
Product
Services
Physical
Information 6%
10%
31%
53%
37%
63%
84%
16% D B A C

12. Nature of Service Sector
Percent Distribution of Wage and Salary Employment in USA by Industry Sector, 2006

13. We believe that the global economy has passed a tipping point in the transition from an industrial, good-centred to an innovation, service-centred logic. Dominant logic and innovative technologies, methods and concepts evolve in a particular way to form something new.”
Davenport, Leibold & Voelpel

14. The realities of the South African Economy
ESSENTIALLY SOUTH AFRICA HAS A DUAL SERVICES & MANUFACTURING ECONOMY
AGRICULTURE 9%
MANUFACTURING
26%
SERVICES
65%
Fastest growing sector of the economy

15. The nature of the South African Services Economy In relation to the Global Services Economy Relative annual % growth in exports of services Growth over the period
South Africa
Source: OECD

16. The nature of the South African Services Economy In relation to the Global Services Economy Relative annual % growth in imports of services Growth over the period
South Africa
Source: OECD

17. The nature of the South African Services Economy
Services trade balance: exports of services minus imports of services
Billion US dollars, average
Negative Trade Balance!!
South Africa
NOTE: SOUTH AFRICA IMPORTS MORE SERVICES
THAN IT EXPORTS

18. The nature of the South African Economy Trade balance: exports of goods minus imports of goods Billion US dollars, average Negative Trade Balance!!
South Africa

19. This is not a sustainable situation
SARS TRADE STATISTICS REPUBLIC OF SOUTH AFRICA PRELIMINARY REPORT FOR JULY 2008
This is not a sustainable situation

20. SERVICE SCIENCE: THE NEW SOUTH AFRICAN FRONTIER IN A DUAL SERVICES AND MANUFACTURING ECONOMY

21. How is South Africa positioned to address the challenge of the new frontier? World Economic Forum: The 12 pillars of competitiveness
Service innovation critical for South Africa to gain a competitive advantage

22. SA – Global Competitive Index 2007-2008
Global Competitiveness Index
SOUTH AFRICA’S RANKINGS
Rank
Score
(Out of 131 countries/economies)
(Out of 7)
Global Competitiveness Index 44
4.42
Sub index A: Basic requirements 61
4.45
1st pillar: Institutions 39
4.55
2nd pillar: Infrastructure 43
4.22
3rd pillar: Macroeconomic stability 50
5.08
4th pillar: Health and primary education
117
3.96
Sub index B: Efficiency enhancers 36
4.44
5th pillar: Higher education and training 56
4.12
6th pillar: Goods market efficiency 32
4.73
7th pillar: Labor market efficiency 78
4.16
8th pillar: Financial market sophistication 25
5.19
9th pillar: Technological readiness 46
3.57
10th pillar: Market size 21
4.89
Sub index C: Innovation and sophistication 33
11th pillar: Business sophistication
4.61
12th pillar: Innovation
3.71
SA – Global Competitive Index
South Africa's GCI
for 44

23. “Africa needs to improve its competitive position in order to penetrate global markets, its own national markets being too small to constitute a solid basis for sustainable growth and poverty reduction ”
Peter Watson

24. The South African Skills Paradox
South Africa has large numbers of unemployed people (Estimate 25%) yet it also suffers from a skills shortage at the same time –
The services economy requires
multi-skilled people
who can integrate
technology & business in developing innovative product & service business solutions for clients, with due regard to the human socio-cultural operational factors involved

25. T-shaped people for the services economy

26. THE NEW SOUTH AFRICAN DUAL SERVICES & MANUFACTURING ECONOMIC FRONTIER
If the services sector is the largest and the fastest growing sector of the global economy South Africa will need to capture a larger share of the action within this highly competitive sector of the economy, if it is to turn the negative trade balance around
In a Dual Economy the focus is on an innovative product/services bundle or offering to gain a competitive advantage in the marketplace
This by implication, from a systems engineering perspective, entails the need to innovatively integrate the manufacturing and services value chains at an operational level – particularly as it relates to front and back stage operational and support systems

27. Trevor Manual – SA Minister of Finance (SA Reality):
“The knowledge base of the population, the technology that workers are able to use, the systems around which production is organised, the innovation potential of a workforce and the means of communication between agents in the economy are all key factors that drive long run economic growth”
“the world economy is far more skills intensive today”
YET
“South Africa faces an unprecedented shortage of skills. While we have about four million unemployed people we have about a million vacancies”

28. A Systems Engineering perspective of the new frontier

29. Systems engineering perspective
Systems engineering in a dual services & manufacturing economic context provides a framework for the integration of processes, tools, technology and human resources in the planning, development, implementation and management of innovative services and products that meet client’s needs.
It is defined by the International Council on Systems Engineering (INCOSA) as:
an engineering discipline whose responsibility is creating and executing an interdisciplinary process to ensure that the customer and stakeholder's needs are satisfied in a high quality, trustworthy, cost efficient and schedule compliant manner throughout a system's entire life cycle”

30. Service Systems Engineering Defined:
Service Systems Engineering applies engineering methods, ingenuity, and integrative techniques to design service processes and systems for improving the human condition and quality of life.
Michigan University of Technology . Definition, 6/07

31. Definition: Engineering Services Management (ESM)
A melding together of strategy, engineering, business processes & infrastructure, and human socio-cultural systems into an innovative and dynamic response that adds value in realising client needs and expectations in order to gain a competitive advantage within the global and local services and manufacturing marketplace
University of Pretoria: GSTM

32. Clarity as to the concept and nature of services

33. Clarity as to the concept and nature of services

34. Clarity as to the concept and nature of services
Provider
An entity (person or institution) that makes preparations to meet a need
An entity that serves
Client
An entity (person, business, or institution) that engages the service of another
An entity being served
Some general relationship characteristics are that the client
Participates in the service process (also known as the service engagement)
Co-produces the value
The quality of service delivered depends on customers preferences,
requirements, expectations and perception of the services encounter
(Moment of truth)

35. Value proposition Value Community Service Customer Value Provider
Employees &
Stockholders
Community
Customer
Service
Provider
Value
Value
Service
Experience
Partners
Service System
Competition
Source: Adapted from Stephen K. Kwan & Jae H. Min, 2008

36. Clarity as to the concept and nature of services
Simultaneity: services created & consumed simultaneously - cannot be stored, It eliminates opportunity for quality-control intervention before delivery. Capacity management critical to meet demand or queuing ensues.
Perishability: cannot establish a services inventory as backup, leads to a loss of opportunity of idle capacity and a need to match supply with demand – an airline seat no filled or a dentist appoint not kept results in a revenue loss.
Intangibility: services are concepts and ideas in contrast to products as things. Difficult for client to evaluate beforehand what is being offered and what they will get for their money. Creative advertising, no patent protection, importance of reputation assume relevance.
Heterogeneity: customer involvement and the human element in services delivery process results in variability. Interaction involved and perceptions of the interaction in relation to prier expectations in terms thereof is subjective in nature.
Customer Participation in the Service Process: attention to facility design and the services encounter. Issues of consideration: opportunities for co-production, concern for customer and employee behavior.
Non-Ownership: unlike goods there is not a transfer of ownership - what are clients buying? Gaining access to a resource for a period of time. Sharing resources between clients presents management challenges i.e. queuing.

37. Non-ownership Classification of Services
Type of Service
Customer value
Examples
Management Challenge
Goods rental
Obtain temporary right to exclusive use
Vehicles, tools, furniture, equipment
Site selection and maintenance
Place and space rental
Obtain exclusive use of defined portion of a larger space
Hotel room, seat on airplane, storage unit
Housekeeping and achieving economies of scale
Labor and expertise
Hire other people to do a job
Car repair, surgery, management consulting
Expertise is a renewable resource, but time is perishable
Physical facility usage
Gain admission to a facility for a period of time
Theme park, camp ground, physical fitness gym
Queuing and crowd control
Network usage
Gain access to participate
Electric utility, cell phone, internet
Availability and pricing decisions

38. Implications of Rental/Usage Paradigm
Creates the option of renting a good upon
demand rather than purchase.
Service often involves selling slices of larger
physical entities.
Labor and expertise are renewable resources.
Time plays a central role in most services.
Service pricing should vary with time and
availability.
Question: Can services in general be described as customers sharing resources?

39. The Service Process Matrix
Degree Degree of Interaction and Customization
of labor Intensity Low High
Service Factory Service Shop
* Airlines * Hospitals
Low * Trucking * Auto repair
* Hotels * Other repair services
* Resorts and recreation
Mass Service Professional Service
* Retailing * Doctors
High * Wholesaling * Lawyers
* Schools * Accountants
* Retail banking * Architects

40. Service Classification (Nature of Demand and Capacity)
Extent of Demand Fluctuation over Time
Extent to Which Demand
Exceeds Capacity Wide Narrow
Electricity Insurance
Peak demand can Telephone Legal services
met without a major delay Police emergency Banking
Hospital maternity unit Laundry and dry cleaning
Tax preparation Fast food restaurant
Peak demand regularly Passenger transportation Movie theater
exceeds capacity Hotels and motels Gas station

41. The ESM Ecosystem

42. Product / Service transformation analogy
James Teboul,

43. The Services Product bundle or offering
Process of value enhancement in services and manufacturing systems integration – client & provider customisation of product and associated services, design, testing manufacturing, delivery, after sales service, training in use of product, maintenance, phasing out of product taking environmental considerations into account.
Products and services in nature are fundamentally very different and this in itself presents inherent challenges in defining the bundle offered and purchased.
Innovation and creativity assumes specific relevance in product and services design and delivery, as well as their integration to gain a competitive advantage in the marketplace.
The inherent human interaction aspects involved in services introduces emotions, feelings, perceptions, values, beliefs and similar difficult considerations that need to be taken into consideration.
Introduction of front stage client facing and backstage institutional & support systems and activities that need to be integrate
Services in support of goods has become a means of differentiating a firm’s products.

44. The Increasing Role of Service in Manufacturing
Examples of Services
Product / service customization
Information
Warranties
Leasing, licensing, and rentals
After sales services
Staff training
Customer support
Maintenance
Service adds value (and profitability)
Service margins can be greater than associated product margins
Additional services providing a competitive advantage I marketplace
Bundle providing innovative packaged offering exceeding value of
individual elements added together
Outsourcing resulting is lowering of cost to client and enhanced services
Client access to: ongoing research; technology; staff expertise & experience

45. SERVICE SYSTEM LIFE CYCLE
Conceptualisation
Service
Design
Service
Testing
Systems engineering in
a dual services & manufacturing economic context provides
a framework for the integration of processes, tools, technology and human resources in the planning, development, implementation and management of innovative services and products that meet client’s needs.
Service
Implementation
Service
Management
Service
Phase-out

46. SERVICE SYSTEM DESIGN

47. Service Design Elements
Structural - Service vision
- Delivery system - Location - Facility design
- Capacity planning
Managerial - Service encounter - Quality - Managing capacity and demand - Information

48. New Service System Design
People
Technology
Systems
Product
Full Launch
Development
Design
Analysis
Organizational
Context
Teams
Tools
Enablers
Formulation
of new services
objective / strategy
Idea generation
and screening
Concept
development and
testing
Business analysis
Project
authorization
Full-scale launch
Post-launch
review
Service design
and testing
Facility design and
Process and system
design and testing
Marketing program
Personnel training
Service testing and
pilot run
Test marketing

49. Service Vision Service Delivery System
What are important features of the service delivery system including: role of people, technology, equipment, layout, procedures?
What capacity does it provide, normally, at peak levels?
To what extent does it, help insure quality standards, differentiate the service from competition, provide barriers to entry by competitors?

50. Services Design considerations
Element
Considerations
Delivery system
What does the customer see, where does production occur? In B2B can we seamlessly move information from one processing point to the next?
Facilities design
Size, layout, how does it feel? Important in B2C – if people are uncomfortable they probably won’t come back.
Capacity planning
Queues and demand. Typically we don’t plan for full capacity which would result in waste. What do we do with excess capacity? What do we do with customers when we have to make them wait?
Service encounter
Employee training and empowerment. The culture & climate people experience influences their behaviour which in turn affects customer relationships.
Quality
Service quality is subjective client assessment that relates client’s service expectation to perceived services rendered by the provider
Managing capacity and demand
Adjusting your plans to accommodate customer requirements, or is there a way to drive demand to map to your ability to deliver (think of happy hour).
Information
What to collect, keep, for competitive advantage. At issue here is privacy and who really ‘owns’ the data? Can you think of any service that doesn’t depend on information?

51. Typical Customer Criteria used in selecting a service provider
Availability (24 hour ATM)
Convenience (Site location)
Dependability (On-time performance)
Personalization (Know customer’s name)
Price (Quality surrogate)
Quality (Perceptions important)
Reputation (Word-of-mouth)
Safety (Customer well-being)
Speed (Avoid excessive waiting)
The services economy is a highly competitive business environment and how the institution hopes to gain an advantage needs to be taken into consideration in the service design i.e. availability, quality etc

52. Technology-Driven Service Innovations
Source of Technology
Service Example
Service Industry Impact
Power/energy
Jet aircraft
Nuclear energy
International flight is feasible
Less dependence on fossil fuel
Facility design
Hotel atrium
Enclosed sports stadium
Feeling of grandeur/spaciousness
Year-around use
Materials
Photochromic glass
Synthetic engine oil
Energy conservation
Fewer oil changes
Methods
Just-in-time (JIT)
Six Sigma
Reduce supply-chain inventories
Institutionalize quality effort
Information
E-commerce
Satellite TV
Increase market to world-wide
Alternative to cable TV

53. Taxonomy of Service Processes
Low divergence (Standard service) High divergence (Customized service)
Processing Processing Processing Processing Processing Processing
of goods Information of people of goods Information of people
Dry Check Auto repair Computer
No Cleaning processing Tailoring a programming
Customer Restocking Billing for a suit Designing a
Contact a vending credit card building
machine
Ordering Supervision
Indirect groceries of a landing
customer from a home by an air
contact computer controller
No Operating Withdrawing Operating Sampling Documenting Driving a
customer a vending cash from an elevator food at a medical rental car
service machine an ATM Riding an buffet dinner history Using a
worker Assembling escalator Bagging of health club
interaction premade groceries Searching for facility
(self furniture information
Direct service) in a library
Customer Customer Food Giving a Providing Home Portrait Haircutting
Contact service service in a lecture public carpet painting Performing
worker restaurant Handling transit cleaning Counseling a surgical
interaction Hand car routine bank Mass Landscaping operation
washing transactions vaccination service

54. Framework for Services Blueprint
Facilities, Aesthetics, Documentation etc.
Physical evidence
Customer actions
Front stage
Employee actions
Backstage
Support Systems
Line of
Client/Employee
Interaction
Service Encounter
Line of
visibility
Support staff activities
Line of
Internal interaction
Information Systems, Technology, CRM, ERP, Employee Training, etc.

55. Services Blueprint: Three Star South African Hotel

56. The Service Quality: Design versus Client Perception
Causes of Gaps
Sales Generated
Expectation
Inflated Expectation
Communication
Real Expectation
Management’s
Perceived Client
Expectation
Marketing
Design
Service Quality
= Service Quality Gap
Service Design
Specification
Conformance
Service
Delivered
Service Received
Service Provider’s
Perspective
Client’s
Perception

57. The Supporting Facility Design
(servicescapes)
Creating the Right Environment

58. Facility Design Considerations
Nature and Objectives of Service Organization
Land Availability and Space Requirements with future development considerations in mind
Location of facilities with respect to client access
Technology service support systems
Flexibility
Security
Aesthetic Factors
Symbols & artifacts
The Community and Environment impact

59. SERVICESCAPE FRAMEWORK

60. Location Considerations
Front Office
Back Office
External
Customer
(consumer)
Is travel out to customer or customer travel to site?
Can electronic media substitute for physical travel?
Is location a barrier to entry?
Is service performed on person or property?
Is co-location necessary?
How is communication accomplished?
Internal
(employee)
Availability of labor?
Are self-service kiosks an alternative?
Are economies of scale possible?
Can employees work from home?
Is offshoring an option?

61. Site Selection Considerations
1. Access: Parking:
Convenient to freeway exit and Adequate off-street parking
entrance ramps Expansion:
Served by public transportation Room for expansion
Communication facilities & networks
2. Visibility: Environment:
Set back from street Immediate surroundings Surrounding clutter should complement the
Sign placement service
3. Traffic: Competition:
Traffic volume on street that may Location of competitors
Indicate potential impulse buying Government:
Traffic congestion that could be a Zoning restrictions
hindrance (e.g.., fire stations) Taxes
Services (telephone, water, electricity, waste removal)

62. Matching Capacity and Demand for Services
MANAGING
DEMAND
MANAGING
CAPACITY
Partitioning
demand
Increasing
customer
participation
Developing
complementary
services
Sharing
capacity
Establishing
price
incentives
Scheduling
work shifts
Cross-
training
employees
Developing
reservation
systems
Creating
adjustable
capacity
Promoting
off-peak
demand
Using
part-time
employees
Yield
management

63. Managing Waiting Lines
“Americans hate to wait. So business is trying a trick or two to make lines seem shorter…” The New York Times, September 25, 1988
“An Englishman, even when he is by himself, will form an orderly queue of one…” George Mikes, “How to be an Alien”
“In the Soviet Union, waiting lines were used as a rationing device…” Hedrick Smith, “The Russians”
“In South Africa it is a way of life” Richard Weeks

64. Where the Time Goes In a life time, the average person will spend:
SIX MONTHS Waiting at stoplights
EIGHT MONTHS Opening junk mail
ONE YEAR Looking for misplaced 0bjects
TWO YEARS Reading
FOUR YEARS Doing housework
FIVE YEARS Waiting in line
SIX YEARS Eating

65. Laws of Service
Maister’s First Law: Customers compare expectations with perceptions.
Maister’s Second Law: Is hard to play catch-up ball.
Skinner’s Law: The other line always moves faster.
Jenkin’s Corollary: However, when you switch to another other line, the line you left moves faster.

66. Remember Me
I am the person who goes into a restaurant, sits down, and patiently waits while the wait-staff does everything but take my order.
I am the person that waits in line for the clerk to finish chatting with his buddy.
I am the one who never comes back and it amuses me to see money spent to get me back.
I was there in the first place, all you had to do was show me some courtesy and service The Customer

67. Psychology of Waiting
That Old Empty Feeling: Unoccupied time goes slowly
A Foot in the Door: Pre-service waits seem longer that in-service waits
The Light at the End of the Tunnel: Reduce anxiety with attention
Excuse Me, But I Was First: Social justice with FCFS queue discipline
They Also Serve, Who Sit and Wait: Avoids idle service capacity

68. Approaches to Controlling Customer Waiting
Animate: Disneyland distractions, elevator mirror, recorded music
Discriminate: Avis frequent renter treatment (out of sight)
Automate: Use computer scripts to address 75% of questions
Obfuscate: Disneyland staged waits (e.g. House of Horrors)

69. Arrival Process Arrival process Static Dynamic Random arrivals with
constant rate
Random arrival
rate varying
with time
Facility-
controlled
Customer-
exercised
control
Accept/Reject
Price
Appointments
Reneging
Balking

70. Queue Configurations Multiple Queue Single queue Take a Number Enter 34 2 8 6 10 12 7 11 9 5

71. SERVICES ENCOUNTER
(Moment of Truth)

72. The Service Triangle Service Organization Control versus autonomy
Efficiency
versus
satisfaction
Contact
Personnel
Customer
Perceived
control
Note: Perceived control determines if a relationship or encounter
is established between contact personnel and customer.

73. The Customer Expectations and Attitudes Customer as Coproducer
Economizing customer – wants value for money, time & effort
Ethical customer - social & environmental conscious
Personalizing customer – wants personal customized friendly attention
Convenience customer – hassle free service without red tape
Customer as Coproducer
Scripts defined by context determine service encounter behaviour e.g. Self-service in a cafeteria, check-out encounters at a store etc.
Use of technology e.g. automation of services such as ATMs
View of service quality subjective

74. Difficult Interactions with Customers
Unrealistic customer expectations Unexpected service failure
1. Unreasonable demands Unavailable service
2. Demands against policies Slow performance
3. Unacceptable treatment of Unacceptable service
employees
4. Drunkenness
5. Breaking of societal norms
6. Special-needs customers
(Use scripts to train for proper response)

75. The Service Organisation (Aspects influencing services encounter)
The service organisation establishes the environment for the service encounter – the organisational culture serves as a behavioural determinant – physical surroundings (Servicescape) inherently influence the atmosphere in which encounter takes place.
Case in point: McDonalds – people know what is expected and what they will get – consistency in services rendered – Staff trained to comply.

76. Contact Personnel
Selection (getting staff with correct personality attributes – e.g. flexibility, tolerance for ambiguity, empathy for clients etc.)
Abstract Questioning – open ended interviews allows them to reveal their views and feelings
Situational Vignette – questions relating to specific situations that may be encountered in dealing with clients – “can they think on their feet”
Role Playing – simulated situations.
Training – skills to perform the service tasks
Unrealistic customer expectations - client expectations that cannot be delivered by the system e.g. passengers wanting to take oversized luggage onto an aircraft – demands that go against company policies, unexcitable treatment of employees, breaking social norms
Unexpected service failure – places burden on contact staff who need to show innovation in dealing with situations that may arise so they do not get worse
Ethics – standards cannot be compromised in service encounters by contact staff even if it means losing a client in the process as it can have longer term and far reaching implications on future serve encounters with clients.

77. Examples of Unethical Behaviour
Misrepresenting the Nature of the Service
Customer Manipulation
General Honesty and Integrity
• Promising a nonsmoking room when none is available
• Using bait-and-switch tactics
• Creating a false need for service
• Misrepresenting the credentials of the service provider
• Exaggerating the benefits of a specific service offering
• Giving away a guaranteed reservation
• Performing unnecessary services
• Padding a bill with hidden charges
• Hiding damage to customer possessions
• Making it difficult to invoke a service guarantee
• Treating customers unfairly or rudely
• Being unresponsive to customer requests
• Failing to follow stated company policies
• Stealing customer credit card information
• Sharing customer information with third parties

78. Satisfaction Mirror – (When a strong sound relationship develops between client and staff)
More Familiarity with Customer Needs and Ways of Meeting Them
Greater Opportunity for Recovery
from Errors
Higher Employee
Satisfaction
Higher Productivity
Improved Quality
of Service
More
Repeat
Purchases
Stronger Tendency to Complain about Service Errors
Lower Costs
Better Results
Higher Customer Satisfaction

79. Operating strategy and service delivery system
Service Profit Chain
Internal
External
Operating strategy and
service delivery system
Service concept
Target market
Loyalty
Customers
Revenue
growth
Satisfaction
Productivity
&
Output
quality
Service
value
Employees
Satisfaction
Loyalty
Capability
Profitability
Service
quality
Customer orientation/quality emphasis
Allow decision-making latitude
Selection and development
Rewards and recognition
Information and communication
Provide support systems
Foster teamwork
Quality & productivity improvements yield higher service quality and lower cost
Attractive Value 
Service designed
& delivered to
meet targeted
customers’ needs
Solicit customer
feedback
Lifetime value
Retention
Repeat Business
Referrals

80. SERVICE IMPLEMENTATION
It is all about managing change and people do not feel comfortable with change that impacts on their well established comfort zones
and
ways of doing things around here – organisational culture
It is a human thing
and that makes service implementation and management complex to deal with in practice

81. THANK YOU FOR YOUR ATTENTION
Guess our time is up
Any questions or comments?