In this chapter we will discuss: Defining service, service-product bundle, service matrix, customer contact, service recovery and guarantees, globalization of services, employees and service.
INTRODUCTION to Operations Management Chapter 5, Service Process Design 5e, Schroeder McGrawHill/Irwin Copyright © 2011 by The McGrawHill Companies, Inc. All rights reserved Chapter Outline Defining Service ServiceProduct Bundle Service Matrix Customer Contact Service Recovery and Guarantees Globalization of Services Employees and Service 52 TheShift toServices 53 Services in Europe “The Service Sector accounts for about 70 percent of the European economy.” Source: Wall Street Journal, 4 March 2005, p. A13 54 Defining Service Key Concepts Intangibility of the offering Simultaneous production and consumption No finished goods inventory Front office vs. back office Difficulty in defining and measuring quality and productivity Other differences between manufacturing and service (See Table 5.1) 55 Service-Product Bundles Tangible service (explicit service)—what the seller does for you Psychological benefits (implicit service)— how you feel about it Physical goods (facilitating goods)—what you can carry away 56 Comparison of Goods and Services (Figure 5.1) Services Goods 100% 75% 50% 25% 0% 25% 50% 75% 100% Selfservice groceries Automobile Installed carpeting Fastfood restaurant Gourmet restaurant Auto maintenance Haircut Consulting services 57 SERVICE MATRIX (Figure 5.2) Customer Wants and Needs in the Service Package Highly customized with unique process sequence. Many process pathways, jumbled flows, complex work with many exceptions Moderatenumber of processpathways Flexibleflowswith somedominant paths, moderatework complexity noit ar e p O Limited number of processpathways Lineflows, low complexitywork Standard with options, using Moderately repeatable Sequence Standardizedwithhighly repeatableprocess sequence Customer Routed •Estateplanning Co-routed •Stock brokerage Provider Routed •ATM 58 Customer Contact Definition of “contact”—interaction between service provider and the customer. 59 Customer Contact Matrix (see Fig 5.3) Low customer contact – – – – – High production efficiency Low sales opportunity Workers with clerical skills Focus on paper handling Office automation High customer contact – Low production efficiency – High sales opportunity – Workers with diagnostic skills – Focus on client mix – Client/worker teams 510 Customer Contact Inefficiency Potential inefficiency in services is a function of the amount of customer contact Why? Customer must be managed – – – Customer determines the time in service system Customer determines the sequence of service Customer influences what happens during the service and may require support services such as food and bathrooms 511 Customer Contact Variability Types of Variability induced by customers in service delivery: arrival – when they arrive to consume a service request – what they ask for in the bundle capability – ability of customers to participate effort – willingness of customers to participate subjective preference – preferences of customers in how service is carried out 512 Customer Contact Directness High contact (front office) services – Direct customer contact – Customer has control of process Lowcontact (back office) services – Out of sight of customer – Provider has control of process Goal: move nonvalueadded activities to back office—why? 513 Related Concepts Service Recovery – What you do to compensate the customer for bad service – Fly in your soup: new bowl of soup plus free dessert Service Guarantee – Analogous to a guarantee for a product – Requires specific criteria and responses – Pizza delivery: 30 minutes or it is free! 514 Technology in Services Contrasting Views: Productionline approach to service – Standardization – Automation Employees are the center of service delivery – Technology to support frontline employees – Value investments in employees – Place importance on recruiting frontline employees 515 Outsourcing & Offshoring of Services Outsourcing: having an organization outside your own firm perform service activities such as workforce recruiting, payroll management, accounting services, and call center functions Offshoring: the export of these service activities to other countries 516 Employees and Service Links in the service-profit chain (See Figure 5.4) Internal service quality, leads to… Employee satisfaction, leads to… Employee retention & productivity, lead to… External service value, leads to… Customer satisfaction, leads to… Customer loyalty, leads to… Revenue growth & profitability (the goal) 517 Summary Defining Service ServiceProduct Bundle Service Matrix Customer Contact Service Recovery and Guarantees Globalization of Services Employees and Service 518 End of Chapter Five 519 .. .Chapter Outline Defining? ?Service ServiceProduct Bundle Service? ?Matrix Customer Contact Service? ?Recovery and Guarantees Globalization of Services Employees and? ?Service 52 TheShift toServices... Employee retention & productivity, lead? ?to? ?? External? ?service? ?value, leads? ?to? ?? Customer satisfaction, leads? ?to? ?? Customer loyalty, leads? ?to? ?? Revenue growth & profitability (the goal) 517 Summary Defining? ?Service ServiceProduct Bundle... Offshoring: the export of these? ?service? ?activities to? ?other countries 516 Employees and Service Links in the service- profit chain (See Figure 5.4) Internal? ?service? ?quality, leads? ?to? ?? Employee satisfaction, leads? ?to? ?? Employee retention & productivity, lead? ?to? ??