Service Delivery Process Chapter 5 Service Delivery Process

Chapter Objectives Discuss the stages of operational competitiveness. Appreciate the relationship between operations and marketing as it pertains to developing service delivery systems. Describe the types of operational models that facilitate operational efficiency. Consider the challenges associated with applying peak efficiency models to service organizations and recommend strategies that overcome some of these difficulties. Explain the art of service blueprinting as it relates to the design of service delivery systems ©2011 Cengage Learning. All rights reserved.

Opening Vignette: Netflix Netflix has done its job well, and its major competitive advantage is all in its process. Netflix process is the Internet-based ordering, shipping, and return system. Netflix typically ships 2.2 million discs a day to its over 10 million customers. ©2011 Cengage Learning. All rights reserved.

Stages of Operational Competitiveness Philosophical viewpoint where operations move from “necessary evil” to the key source of competitive advantage. ©2011 Cengage Learning. All rights reserved.

Four Stages of Operational Competitiveness Stage 1: Available for Service operations are a “necessary evil” operations are “reactive” the primary mission is to avoid mistakes technological investment, training, and personnel costs are minimize management designs skill out of the work ©2011 Cengage Learning. All rights reserved.

Four Stages of Operational Competitiveness Stage 2: Journeyman prompted by the arrival of competition operations become outward-looking investment in technology is linked to long-term costs savings processes are developed, implemented, and monitored operations still viewed as a secondary function ©2011 Cengage Learning. All rights reserved.

Four Stages of Operational Competitiveness Stage 3: Distinctive Competencies Achieved the firm has mastered the core service understands complexity of making changes operations are now viewed equal with other departments view of technology changes from “cost savings” to “enhancing the customers experience” ©2011 Cengage Learning. All rights reserved.

Four Stages of Operational Competitiveness Stage 4: World Class Service Delivery company’s name is synonymous with service excellence become a fast learner and innovator technology provides a means to accomplish tasks that the competition cannot duplicate ©2011 Cengage Learning. All rights reserved.

Marketing and Operations: Balance is Critical The marriage of customer needs with the manufacturing and technological capabilities of the firm The marriage involves compromise customer needs can seldom be met completely and economically Success in service marketing demands a much greater understanding of the constraints and opportunities posed by operations ©2011 Cengage Learning. All rights reserved.

Thompson’s Perfect-World Model To operate efficiently, a firm must be able to operate “as if the market will absorb the single kind of product at a continuous rate and as if the inputs flowed continuously at a steady rate and with specified quality” ©2011 Cengage Learning. All rights reserved.

The Focused-Factory Concept An operation that concentrates on performing one particular task in one particular part of the plant Used for promoting experience and effectiveness through repetition and concentration on one task necessary for success ©2011 Cengage Learning. All rights reserved.

The Plant within a Plant Concept PWP Concept An operation that that breaks up large, unfocused plants into smaller units buffered from one another so that they can each be focused separately Organizations buffer environmental influences by surrounding their technical core with input and output components ©2011 Cengage Learning. All rights reserved.

Applying Efficiency Models to Services Servuction system is an operations nightmare impossible to use inventories problems with decoupling production from the customer system is directly linked to the market demand varies day to day, hour to hour, minute to minute massive problems in capacity planning and utilization ©2011 Cengage Learning. All rights reserved.

Possible Solutions to Service Operation Problems Isolate the technical core Different management philosophies should be adopted for each unit of operation technical core should be subjected to production-ling approaches high contact areas should sacrifice efficiency in the interest of the consumer ©2011 Cengage Learning. All rights reserved.

Possible Solutions to Service Operation Problems Production-lining the whole system Creating flexible capacity Increasing customer participation Moving the time of demand ©2011 Cengage Learning. All rights reserved.

Service Blueprints Blueprints provide a means of communication between operations and marketing and can highlight potential problems on paper before they occur. essentially a flowchart that shows lines visibility ©2011 Cengage Learning. All rights reserved.

Figure 5.3 Blueprint for Cafeteria-Style Restaurant ©2011 Cengage Learning. All rights reserved.

Components of a Service Blueprint Identify direction in which processes flow Identify the time it takes to move from one process to the next Identify the costs involved with each process step Identify the amount of inventory build-up at each step Identify the bottlenecks in the system ©2011 Cengage Learning. All rights reserved.

Blueprinting and New- Product Development Complexity--the number and intricacy of steps Specialization strategy decreases complexity by reducing the number of steps in the process it unbundles the service offering Penetration strategy increases complexity by increasing the number of steps ©2011 Cengage Learning. All rights reserved.

Blueprinting and New- Product Development Divergence--degrees of freedom in decision making Volume-oriented strategy (production-line) decreases divergence produces standardized output and reduces costs but does so at the expense of increasing conformity and inflexibility Niche positioning strategy increases divergence Tailor the service experience to each customer ©2011 Cengage Learning. All rights reserved.

Copyright © 2011 Cengage Learning. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Cengage Learning.   ©2011 Cengage Learning. All rights reserved.