Service Processes
Operations Management
Dr. Ron Lembke

How are Services Different?
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Everyone is an expert on services
What works well for one service provider doesn’t necessarily carry over to another
Quality of work is not quality of service
“Service package” consists of tangible and intangible components
Services are experienced, goods are consumed
Mgmt of service involves mktg, personnel
Service encounters mail, phone, F2F

Degree of Customer Contact
 More customer contact, harder to standardize and control
 Customer influences:
 Time of demand
 Exact nature of service
 Quality (or perceived quality) of service

3 Approaches
 Which is Best?
 Production Line
 Self-Service
 Personal attention

What do People Want?
 Amount of friendliness and helpfulness
 Speed and convenience of delivery
 Price of the service
 Variety of services
 Quality of tangible goods involved
 Unique skills required to provide service
 Level of customization

Service-System Design Matrix
High
Sales
Opportunity
Degree of customer/server contact
Buffered core (none)
Permeable system (some)
Reactive system (much)
Face-to-face loose specs
Face-to-face total customization
Face-to-face tight specs
Phone
Contact
Mail contact
Internet & on-site technology
Low
Production
Efficiency
Low High

Applying Behavioral Science
 The end is more important to the lasting impression (Colonoscopy)
 Segment pleasure, but combine pain
 Let the customer control the process
 Follow norms & rituals
 Compensation for failures: fix bad product, apologize for bad service

Restaurant Tipping
Normal Experiment
Introduce self
(Sun brunch)
15% 23%
Smiling

(alone in bar)
Waitress
20%
28%
48%
33%
 Waiter
(upscale lunch)
21% 18%
“…staffing wait positions is among the most important tasks restaurant managers perform.”

Fail-Safing
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“poka-yokes” – Japanese for “avoid mistakes”
 Not possible to do things the wrong way
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Indented trays for surgeons
ATMs beep so you don’t forget your card
 Pagers at restaurants for when table ready
 Airplane bathroom locks turn on lights
 Height bars at amusement parks

How Much Capacity Do We
Need?

Blueprinting
Fancy word for making a flow chart
“line of visibility” separates what customers can see from what they can’t
Flow chart “back office” and “front office” activities separately.

Demand rate varies by time
# customers arriving per hour
35
30
25
20
15
10
5
0
Arrivals
Average
9 10 11 12 1 2
Time of Day

Demand varies by Customer
3
Min to process customer
2,5
2
1,5
1
0,5
0
Time
1 2 3 4 5 6
Average
7 8 9 10
Customer #

What did we learn?
 Human considerations very important in services
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Hard to please everyone, because we’re all critics
 Degree of customer contact important strategic decision
 Keeping things simple is good
 Fluctuations in demand making capacity setting difficult