COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. C hapter 6 S ervice D elivery P rocess

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. FOUR STAGES OF OPERATIONAL COMPETITIVENESS Philosophical viewpoint where operations move from “necessary evil” to the key source of competitive advantage.

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. 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  may actually work if no competition  however, it may attract competition

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. 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

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. 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”

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. FOUR STAGES OF OPERATIONAL COMPETITIVENESS  Stage 4: World Class Service Delivery  company’s name is synonymous with with service excellence  mission goes beyond satisfaction to “delightment”  technology provides a means to accomplish tasks that the competition cannot duplicate

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. THE CUSTOMER’S INVOLVEMENT IN THE PRODUCTION PROCESS  If the consumer is in the service factory,  it is clear that if the factory is changed, consumer behavior will have to be changed  Changing the factory,  will mean changes in the consumer’s script,  as well as changes in the scripts of contact personnel

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. SERVICE DELIVERY PROCESS  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  operational efficiency has to be balanced against the effectiveness of the system from the consumer’s point of view

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. SERVICE DELIVERY PROCESS  Peak efficiency models  inputs flow at a steady rate into the technical core  the market absorbs a single kind of product at a continuous rate

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. SERVICE DELIVERY PROCESS  Peak efficiency models  decisions within the technical core can be programmed and individual discretion can be replaced by rules  jobs are deskilled  lower quality of labor can be used which lowers the labor cost  rules can be programmed into machines

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. THE FOCUSED-FACTORY CONCEPT  Accepts the notion that the “ideal world” is virtually impossible to create  Concentrates on performing one particular task in one particular part of the plant  buffering--surrounds the tech core on the input and output sides  smoothing--attempts to manage fluctuations in supply and demand  anticipating--predicts fluctuations  rationing--triage’ strategies  Focus generates efficiency as well as effectiveness

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. 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

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. POSSIBLE SOLUTIONS TO SERVICE OPERATION PROBLEMS  Isolate the technical core  technical core should be subjected to production-ling approaches  hard technologies--hardware  soft technologies--rules and regulations  high contact areas should sacrifice efficiency in the interest of the consumer

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. 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

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. 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

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. CONSTRUCTING THE SERVICE BLUEPRINT  Elicit scripts from employees and customers  order events in sequence of occurrence  Identify potential fail points in the system  Specify the time frame for service execution  Given the costs of inputs needed for the system to operate, analyze the profitability of the system

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. BLUEPRINTING AND NEW PRODUCT DEVELOPMENT  Complexity--the number and intricacy of steps  Specialization strategy  reduces complexity  by reducing the number of steps in the process  it unbundles the service offering  niche strategy

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. BLUEPRINTING AND NEW PRODUCT DEVELOPMENT  Complexity--the number and intricacy of steps  Penetration strategy  increases complexity  by increasing the number of steps  attempts to appeal to a broader market

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. 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

COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning  is a trademark used herein under license. ALL RIGHTS RESERVED. BLUEPRINTING AND NEW PRODUCT DEVELOPMENT  Divergence--degrees of freedom in decision making  Customization strategy  increases divergence  produces a heterogeneous output  creates flexibility in tailor-made solutions  but it does so at increased expense