1. Lecture 3. Service Environment
Introduction
Lecture 3. Service Environment

2. Service Environment
Nature and importance of services
Designing service organization
Service blue printing
Service guarantees

3. Difference between manufacture and service
Manufacturing Organization
Service Organization
Physical, durable product
Output can be inventoried
Low customer contact
Long response time
Regional, national or international markets
large facilities
Capital Intensive
Quality easily Measured
Intangible, perishable product
Output that cannot be inventoried
Short response time
Local markets
Small facilities
Labor intensive
Quality not easily measured

4. Nature and Importance of Service
Service creation process
Idiosyncratic: What works well in providing one kind of service may prove disastrous in another
Quality of work is not quality of service
Service package Consist of a mix of tangible and intangible attributes
High contact
Effective management of services requires an understanding of marketing and personnel
Face to face, telephone and other interactions

5. Service Strategy
Treatment of the customers by selecting the operating focus, friendliness and helpfulness
Speed and convenience of service delivery
Price of the service
Variety of services
Quality of the tangible goods that are central to or accompany the service.
Unique skills that constitute the service offerings

6. Designing Service Organizations
Designing a service organization involves four major elements
1. Identification of target market (Who is our customer?)
2. Service concept: How do we differentiate our service in the market?
3. Service strategy: What is our service package and the operating focus of our service?
4. Service delivery system: What are the actual processes, staff and facilities by which the service is created?

7. Service Process Design

8. Service Blueprinting
Service blueprint is a flowchart for service process design
Service Blueprint is a process analysis technique that focuses on the customer and the provider’s interaction with the customer.
Service blueprint distinguish between high customer contact aspects of the service and those activities that the customer does not see.
This distinction is term as “ line of visibility”

9. Poka-Yokes
(Roughly translated from the Japanese as “Avoid Mistakes”
Service blueprinting describe features of the service design but doesn’t provide any direct guidelines for how to make the process confirm to that design.
Poka-Yokes blocks inevitable mistakes from becoming service defects

10. Service Blueprint for Service at Ten Minute Lube, Inc.

11. Customer Interaction and Process Strategy
Mass Service
Professional Service
Service Factory
Service Shop
Commercial
Banking
General purpose law firms
Fine dining restaurants
Hospitals
Airlines
Full-service stockbroker
Retailing
Personal banking
Boutiques
Law clinics
Fast food restaurants
Warehouse and catalog stores
No frills airlines
Limited service stockbroker
For-profit hospitals
Degree of Interaction and Customization
Degree of Labor Intensity
Low High
High Low

12. Service Process Technology
Depending on the nature and types of service to be rendered to the customer, the process technology is divided to two major types
Customer contact
Labor versus capital intensive
Customer Contact
The main feature of service is that customer’s contact is essential in two ways
Designing service or creating service or customizing service
e.g. while designing new house, customer interact closely with architect
During creating and consuming the service
e.g Hair styling
The high contact process technology is more flexible to accommodate the diverse need of customer and more customization. But the conversion process is difficult to standardized.
If the degree of contact is low, the process technology can be standardized to some extent with higher efficiency.

13. Service Process Technology
Labor versus Capital Intensive
Some service organizations are labor intensive and some are capital intensive.
The service industry is classified into labor intensive organization and capital intensive organization.
In labor intensive organization, training and development of labor plays a vital role for rendering service to customer whereas technology and capital investment plays a dominant role in capital intensive organization.
On the basis of the customer’s contact and labor intensiveness, service process technology can be classified into four distinct categories as follow;
Quasi-Manufacturing process technology
b. Mass-service process technology
C, Custom shop service process technology
d. Professional service process technology

14. The Service Process Matrix
Degree of Interaction and Customization
Low
High
Quasi Manufacturing
low customer contact, low labor intensity, rigid standardized process, concerned with developing reliable delivery schedules e.g. airlines, federal express
Custom-shop Services/ Service Shop
high customer contact, capable to provide customized services with professional staff in relatively capital intensive conversion technology e.g. hospital
Mass Service
Labor intensive conversion process, offers a standardized product, training & development and scheduling if human resources is critical for successful service delivery e.g. live entertainment, cafeterias
Professional Service
Customized service delivered through intensive interaction between customer and professional, professional skills relating to customer is essential e.g. medical diagnosis
Capital Intensive
Labour Intensive

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

16. Components of Service-system design matrix
Degree of customer/server contact
It describe the contact of the customer with the service design and delivery. It is of three types
Buffered core: Very less contact with customer, or physically separated from the customer
Permeable system: It is penetrable to customer’s requirements
The reactive system: It is both penetrable and reactive to the customer’s requirements.
Logical marketing proposition
The greater the amount of contact with customer, the greater the sales opportunity.
Impact of production efficiency
The right hand side shows the impact on production efficiency as the customer exerts more influence on the operation.

17. Use of Service-system design matrix
Operational Uses
Service-system matrix helps to visualize the understanding of service Process.
It helps to visualize the service process.
Helps to understand the components of service delivery as human factor and technical components
Helps to make focus on operation and its improvements
b. Strategic Use
Enables systematic integration of operations and marketing strategy
Provides clear picture of what combination of service delivery the firm is providing
Comparison with the other firms delivery on specific services
Indicates evolutionary or life cycle changes that might be in order as the firm grows

18. Use of Service- System Design Matrix
Operational Use
Low
High
Degree of Customer/ Server Contact
Worker Requirements
Clerical Skills
Helping Skills
Verbal Skills
Procedural Skills
Trade Skills
Diagnostic Skills
Focus of Operations
Paper Handling
Demand Manage-ment
Scripting Calls
Flow Control
Capacity Management
Client Mix
Technological Innovations
Office Automation
Routing
Methods
Computer Databases
Electronic Aids
Self Service
Client/ Worker teams
B. Strategic Use
Enables systematic integration of operations and marketing strategy
Provides clear picture of what combination of service delivery the firm is providing
Comparison with the other firms delivery on specific services
Indicates evolutionary or life cycle changes that might be in order as the firm grows

19. Techniques for Improving Service Productivity
Strategy
Technique
Separation
Self-service
Postponement
Focus
Structure service so customers must go where service is offered
Self-service so customers examine, compare and evaluate at their own pace
Customizing at delivery
Restricting the offerings

20. Techniques for Improving Service Productivity
Strategy
Technique
Modules
Automation
Scheduling
Training
Modular selection of service. Modular production
Separating services that lend themselves to automation
Precise personnel scheduling
Clarifying the service options
Explaining problems
Improving employee flexibility

21. Processes at Service Organizations
High
Project process
Real estate process for
For constructing facilities
for insurance company
Student’s project work
Job process
Customer service process
at financial services firm
General medical practice
Batch process
Order fulfillment process for
distributor
Placing purchase order at
Public relations agency
Customization
Line process
Cafeteria line
Teller line at bank
Continuous process
Power generation plant
Providing telephone line access
Low
Low
Volume
High

22. Processes Reengineering
The fundamental rethinking and radical redesign of process to improve performance dramatically – far more radical than regular process improvement.
Elements of Process Reengineering
Critical processes in
core business
Cross-functional
team
Strong leadership
Clean-slate customer
focused philosophy
Information
technology
Thorough
process analysis

23. Service Business and Internal services
(Business require interaction with the customers to produce service. E.g banks, airlines, hospitals etc
Facilities based services
Customer must go to service facility
Field based services
Production and consumption of service takes place in customer premise (e.g home repair)

24. Service Business and Internal services
Services required to support the activities of the larger organization
E.g. data processing, accounting, engineering etc

25. New Service development process
Full Launch
Development
Analysis
Design

26. New Service development process
Formulation of new services objective/strategy
Idea Generation and screening
Concept development
Analysis
Business analysis
Project authorization

27. New Service development process
Design
Service design and testing
Process and system design and testing
Marketing program design and testing
Personnel training
Service testing and pilot run
Test marketing

28. Characteristics of a Well-Designed Service System
1. Each element of the service system is consistent with the operating focus of the firm
2. It is user-friendly
3. It is robust
4. It is structured so that consistent performance by its people and systems is easily maintained
5. It provides effective links between the back office and the front office so that nothing falls between the cracks
6. It manages the evidence of service quality in such a way that customers see the value of the service provided
7. It is cost-effective

29. Service Guarantees
Service guarantee can be a marketing tool designed to provide a peace of mind for customers unsure about trying their services
A service guarantee offer has to be:
Unconditional
Meaningful to the customer
Easy to understand and communicate
Painless to exercise

30. Service Guarantees
A service guarantee can be used not only as an improvement tool but also at the design stage to focus the firm’s delivery system squarely on the things it must do well to satisfy the customer.
Issues in Service Guarantees
Any guarantee is better than no guarantee. The most effective guarantees are big deals. They put the company at risk in the eyes of customer.
Involve the customer as well as employees in the design
Avoid complexity or legalistic language.
Do not quibble when a customer invokes the guarantee
Make it clear that you are happy for customers to invoke the guarantee

31. End of Lecture

32. Important Question
How do you design service? Discuss the steps of service designing process.
Describe the service design and service process technology.
Explain the techniques for improving service productivity.
Explain Service Blue Printing (5) PU 2009 BBA
Explain Service Guarantee (5) PU 2008
“A house of quality integrates customer’s voice into the product development process.” Explain. (7) PU BBA 2004
Differentiate between job shop, batch assembly and continuous process. (8) PU 2004
Discuss about different types of process strategy. (7) PU 2008
What are the types of processes? How do they differ ? Give example of each. (7) PU 2008
How do you define services? Write down its characteristics. (7)