What is Service?
Lecture 4A: Service Design

Nature of service

Critical issues in service design

Three contrasting service designs

Internal service

Readings: Chapter 7
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

Intangibility of the product
– A service can’t
can t be stored
stored, resold
resold, returned
returned, or transported
transported.
Simultaneous production and consumption
– Customers must be in process and may introduce uncertainty
uncertainty.
– Product and process are inseparable.
Diffi lt iin d
Difficulty
defining
fi i and
d measuring
i quality
lit and
d productivity
d ti it
Customer-supplied inputs
Service
provider
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The Service Triangle
g
inputs
Service
process
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outputs
Customers
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Critical Issues in Service System Design

The Service
Th
S i
Strategy
Strategy
gy and target
g market
– Operations focus
– Cost leadership, differentiation, focus

Design of the service package
– Support facility,
facility facilitating goods
goods, explicit and implicit services
The
Customer
Support
Systems
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Service delivery process
– Degree
D
off customization,
t i ti
ttype off customer
t
contact
t t
Employees
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Operations Focus
S i Strategy
Service
St t
Nordstrom Department Stores
SPEED /
TREATMENT CONVENIENCE PRICE
x

Treatment of the customer
Federal Express Corporation
C
x

Speed and convenience of service delivery
Wal M art Stores
Wal-M
x
y
Disneyland
x


M erill L ynch (Cash M gmt Acct)
Price Club
Price
American Express Company
Variety

Quality of the tangible goods

Unique skills that constitute the service offering
x
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x
x
Singapore Airlines
x
Service-Product Package
g or Bundle
x
x
x
x
x
x
100%
75%
50%
25%
0%
25%
50%
75%
x
x
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Degree of Customer Contact
Services
Goods
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x
x
S h
Southwest
Ai
Airlines
li
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x
x
M arriott Corporation
American Airlines
x
x
M cDonald's Corporation
Domino's Pizza
SKILLS /
VARIETY TANGIBLES
100%
Self-service groceries
Automobile
Installed carpeting
Fast food restaurant
Fast-food
Gourmet restaurant
Auto maintenance
Haircut
A service package consists of
Consulting services

Percentage of time the customer is in the system while
the service is being produced

Potential inefficiency as a function of customer contact

Separation of of high- and low-contact service
systems: front office and back room
pp
g facility
y
-- supporting
-- facilitating (physical) goods
-- explicit (sensual) service
-- implicit (psychological) service
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Service-System
y
Design
g Matrix
Service Blueprinting
p
g
Degree of customer/server contact
High
Buffered
core (none)
Sales
Opportunity
Internet &
on-site
h l
Mail contact technology
Permeable
system (some)
Phone
Contact
Face-to-face
tight specs
Reactive
system (much)
Face-to-face
loose specs
Standard
execution time
2 minutes
Low
Face to face
Face-to-face
total
customization
Seen by
customer
Line of
visibility
High
How is this matrix useful?
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Service Fail-safing:
g Poka-Yokes



Poka-Yokes:
J
Japanese
word
d
meaning “avoid
mistakes”
i t k ”
Keeping
K
i a mistake
i t k
from becoming a
service
i d
defect
f t
A pp
pplyy
polish
30
secs
30
secs
Total acceptable
execution time
5 m inutes
Production
Efficiency
Low
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Brush
shoes
F il
Fail
point
Clean
Cl
shoes
B ff
Buff
Collect
payment
45
secs
15
secs
W rong
color wax
45
secs
N ot seen by
customer
t
but
b t
necessary to
performance
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M aterials
(e.g., polish, cloth)
Select and
purchase
supplies
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Three Contrasting Service Designs

The production line approach
– McDonald’s, manufacturing rather than service process
Task

The self-service approach
– Amazon.com, ATM, in-room coffee making
g
T t
Treatment
t

T
Tangibles
ibl
The personal attention approach
– Nordstrom, Ritz-Carlton
How can we ffailH
il
safe the three Ts?
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Internal Services
Characteristics
of a Well-Designed Service System
1. Each element is consistent with the operating focus.
Internal Supplier
2. User-friendly.
Internal
Customer
3 Robust.
3.
Robust
External
Customer
4. Consistent performance easily maintained.
5. Effective links between the front and back office.
Internal Supplier
6 Evidence of service quality is seen by customers
6.
customers.
How management treats a worker is
how the worker treats the customer
7. Cost-effective.
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Links in the Service-Profit
Service Profit Chain
The master said, Govern the people by regulations, keep order among them
by chastisements, and they will flee from you, and lose all self-respect.
Govern them by moral force, keep order among them by ritual, and they will
keep their self-respect and come to you of their own accord.
Ritz-Carlton, “We are ladies and gentlemen serving ladies and gentlemen.”
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