EXTENDING THE PRODUCT PROCESS DIAGONAL
TO SERVICE ORGANIZATIONS
Tony Polito, Terry College of Business, 260F PE Building,
University of Georgia, Athens, GA, 30602, 706.542.3751
ABSTRACT
The explanatory power of the product process matrix does
not include current industry trends to increase the service
content of goods. When the matrix is coupled with the works
of Schmenner and Sasser, an expanded framework emerges
that fits well with many existing service classification
schemes.
TREND TO SERVICE VIA CUSTOMIZATION
A number of Original Levi's retail outlets now offer made-toorder women's bluejeans on a mass customization basis.
Customer measurements are entered at the POS terminal and
directed to a numerically controlled cutting device at the
company's Tennessee plant. Levi's customization strategy
effected a 300% increase in sales and a simultaneous
reduction in inventory at introduction.
Currently, the
company is codeveloping a POS "body scanner" expected to
decrease response time and improve the quality of the process
[14]. The application is not unique; Tom Peters notes a
similar process for the tailoring of suits at Saks Fifth Avenue
[15]. Anderson windows, Motorola pagers, and Hallmark
Create-A-Card vending machines provide examples of mass
customization from other industries. Even McDonald's, the
bellwether of Levitt's industrialized service, now carries
hundreds of menu items targeted by region, rotates specialty
items seasonally or monthly, and offers its once standardized
burgers on an assemble-to-order basis.
In some ways, mass customization implies a shift towards
craft shop production, including higher product heterogeneity
and increased levels of customer involvement, specification,
and delivery convenience. However, it also expects increased
volumes, economies of scale, capitalization, and commoditylike behaviors, as found in flow production of goods. These
contradictions in the trend to mass customization represent
directly opposing shifts along the main diagonal of the
product process matrix developed by Hayes and Wheelwright
to depict the relationship between a product's growth and
volume and its process technology. The matrix, now
accepted as a standard framework, is robust with implications
for strategy, operations, and marketing. Here, however, it
falters under the higher service content of the mass
customized product. Increased volumes, economies of scale,
capitalization, and commodity-like behaviors do, however,
represent an outward shift along the diagonal within the
service process matrix, developed by Schmenner for
equivalent analysis of service products and processes.
REVIEW OF RECENT SERVICE PERSPECTIVES
Hill's economic analysis of goods and services provides a
foundation for synthesis. Both goods and services are
transaction-based; the transfer of ownership identifies a good,
and the change in the condition of an object identifies a
service. Hill's perspective allows for the bundling of goods
and services within a single product transaction; a position
supported by numerous researchers [2] [4] [5] [8] [9] [16]
[17] [19]. Advocacy for bundling from a practitioner
perspective is exemplified by Lexus management, recently
defining its product, not as a good, but as a luxury service
package. Hill also recognizes the potential utility of a good
or service, and delineates it from the underlying transaction;
the interpretation of service as consumers transacting for
utility finds modern support as well [7] [13]. If both goods
and services are viewed by consumers as creating utility, then
a single product variously bundled with proportions of goods
and services allows for the efficient and rational consumer to
effect equivalent utility substitutions, eg, grocery stores
versus restaurants in the case of food products. Therefore, a
specific product should be viewed on a continuum
representing its relative proportion of goods and services, a
conclusion reached by others [16] [17] [19].
Bell [2] jointly classifies goods and services within a 2 x 2
continuum based on levels of tangibility and customer
involvement. The main diagonal moves from highly tangible,
low involvement products, referred to as commodity-like
"pure" goods, eg, rolled steel, to highly intangible, high
involvement products, titled customized service. The central
point is described as a bundle of goods and services bearing a
median level of product differentiation. Later work by Bell
[1] explores the strategic implications of repositioning a
product along the diagonal via bundling. Bell's classification
offers a "goods" diagonal that bears resemblance to the
product process diagonal, coupled to a equivalent diagonal
for services, resulting in a continuum of bundled goods and
services.
Schmenner [18] expands the perspective within a 'service
process' matrix that dichotomizes the degree of such
interaction and customization by the degree of labor intensity.
Professional service firms are characterized by high degrees
of interaction, customization, and labor intensity; service
factories, by low degrees. Service shops have low labor
content, but a high level of customization; mass services, the
reverse. Schmenner characterizes this work as a clear
services parallel to the Hayes and Wheelwright matrix for
manufacturing [6], eg, that increasing interaction and
customization causes the service factory to give way to the
service shop in similar manner as continuous flow gives way
to job shop manufacturing. Schmenner also notes the
attraction of services toward, and movement along, the main
diagonal from 'professional service' to 'service factory,' and
the related strategic implications of such positioning. Chase
[3] proposes a service diagonal similar to that of Schmenner
within a 'service system design matrix' to integrate marketing
and operational strategy, which he credits as strongly
influenced by the product process matrix.
Though
abbreviated herein, the review of service typologies
consistently identifies two perspectives with broad and
continuous support, ie, a product continuum containing
bundled goods and services and a service classification
scheme which mirrors the Hayes and Wheelwright diagonal.
elusive, the attributes are also significant for empirical
research. The content continuum still contains the strategic
implications of previous research. Positioning towards the
continuum is effected within the framework of the product or
service process matrix; repositioning along the continuum
reflects an altering of the proportional content of goods and
services as well as changes in volume and process. Pure
goods contain the lowest levels of total customer affinity,
product customization, needs determination by consumer,
product durability, product heterogeneity, customer
participation, customer as object of utility creation, economy
of scope, and hierarchical needs levels fulfilled; pure
services, the highest levels. Both pure goods and pure
services contain the lowest levels of labor intensity, employee
/ customer physical contact; good/service bundles, the highest
levels. Both pure goods and pure services contain the highest
levels of capital intensity, product volume, proximity of
delivery, process stability, operational standardization and
efficiency, and commodity attributes; good/service bundles,
the lowest levels
A CONTENT CONTINUUM
HARMONY WITH OTHER TYPOLOGIES
These two perspectives suggest a single "content continuum"
embracing both the Hayes & Wheelwright and the Schmenner
diagonals, in the manner concisely illustrated below as Figure
1.
There appears to be a high degree of concordance between
the content continuum and the existing body of knowledge in
service classification; Figure 2 equates, in an abbreviated
manner, the continuum with a few of the more visible
schemes (though some typologies are mirrored or extended
by degree in order to encapsulate both goods in addition to
services.).
CONCLUSION
FIGURE 1
Content Continuum
Product Process Diagonal
(Hayes & Wheelwright)
Continuous
Flow
Job
Shop
Service Process Diagonal
(Schmenner)
Professional
Service
Service
Factory
Pure Goods
Pure Service
Product as %age of Goods and Services (Sasser)
To exemplify, consider a continuous flow commodity good at
left that contains relatively little service, while a resort, eg,
Disney World, positioned at right, produces relatively little
goods, rather a highly customized service. At left of center,
the traditional print shop product is primarily a good bundled
with facilitating services; At right of center, professional
firms provide services bundled with facilitating goods, eg,
accountants and prepared tax returns.
This content
continuum moves from uniform commodity goods to unique
commodity services across the two previous frameworks.
A number of attributes to facilitate a deeper intuitive
understanding of the continuum are offered below. Since
measurement of proportional service content may prove
Though this framework does not provide a single
multidiscipinary model required under service, a return to the
motivational example of custom-cut bluejeans illustrates
useful inference.
The continuum suggests proximate
distribution for higher customer convenience; the location of
a POS body scanner, if fully automated, within a traditional
retail outlet becomes arbitrary. Such a device could be
situated anywhere target markets flow; the notion is barely
more extravagant than the decisive strategy that placed
hosiery displays within supermarkets. Incremental emphasis
on service flow strategy might include a more capable device
to allow for complimentary goods, eg, blouses and slacks, and
greater consumer needs determination, eg, styles and fabrics,
furthering an economy of scope. Direct effects of such a
strategy include lower labor intensity and physical contact,
[3]
FIGURE 2
Continuous
Flow
Job
Shop
Professional
Service
Service
Factory
Pure Goods
Pure Service
Product as %age of Goods and Services (Sasser)
[4]
[5]
Distribution, Lovelock [10] [11]
at producer
at mutual
at customer
convenience
convenience
convenience
[6]
[7]
Workflow Interface, Mills and Marguiles [12]
MaintTask
Personal
Task
Maintenance
interactive interactive interactive
enance
interactive
goods
goods and
services
interactive
goods
/ or
services
services
Customer Contact vs. Economic Concentration,
Stiff and Pollack [20]
Low contact,
High contact, low
Low contact,
high
concentration
high
concentration
goods and / or
concentration
goods
services
services
Object of Service, Lovelock [10] [11]
Goods and
Intangible
People's
People's
physical
assets
bodies charminds (perpossessions
acteristics)
ceptions)
with higher customer participation, capitalization, and degree
of flow.
As competitors duplicate such technology,
consumers could be expected to treat the product much like a
commodity, requiring marketing efforts to enhance the depth
of the customer relationship sufficiently to ensure the next
purchase. Even this brief example effectively suggests that
the content continuum is generally robust enough to provide
management with insight into the manufacturing, marketing,
and strategic implications of its decisions regarding the
service content of its products.
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
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