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UNIVERSITY OF PRETORIA
Graduate School of Technology Management
SYSTEMS ENGINEERING:
A DUAL SA ECONOMY PERSPECTIVE
Richard Weeks
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ASPECTS TO BE ADDRESSED
• South Africa: the reality of a dual economy within a global services driven economy
• Service science: the new South African frontier in a dual services and manufacturing economy
• A Systems Engineering perspective of the new frontier
• Clarity as to the concept and nature of services• Service system life cycle• Service System Design• Facility Design• The service encounter (moment of truth)• Service implementation and management
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Nature of the global economy- Employment trends
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Nature of the global economy- GDP trends
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Nature of the global economy-Rise of services economy
Source: 2004 IBM study, based on national labour data
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Question?
• In your day-to-day life-world how many of the purchases that you and your family make are services related?
• Within the organisation you work for, how many of the day-to-day activities undertaken are services related?
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Question?• In your day-to-day life-world how many of the purchases
that you and your family make are services related? Medical – insurance – servicing of car – electricity -banking/financial transactions –
municipal services – education of children – security services –
domestic cleaning – transportation (taxies) ………….
• Within the organisation you work for, how many of the day-to-day activities undertaken are services related?
May be external or internal to the organisation – information - travel/transportation – training of staff – salaries – taxation – IT support services ………….
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Nature of the services sector What are some everyday services?
TransportationTrain, taxis, airlines, delivery, airports, shipping,
HospitalityHotels, restaurants, cafeterias,
InfrastructureCommunications, electricity, water, waste removal,
roads, energy Government
Police, fire, water, waste removal, health, education, Financial
Banking, investments, insurance, Entertainment
Television, movies, concerts, Professional Services
Doctors, dentists, lawyers, skilled craftspeople, teachers,
Health Hospitals, dentists, clinics, doctors, medical aid,
ambulance
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Role of Services in a Network EconomyINFRASTRUCTURE SERVICE
· Communications· Transportation· Utilities· Banking
PERSONAL SERVICES· Healthcare· Restaurants· Hotels
CONSUMER(Self-service)
GOVERNMENT SERVICES· Military· Education· Judicial· Police and fire protection
DISTRIBUTION SERVICES
· Wholesaling · Retailing · Repairing
FINANCIAL SERVICES
· Financing · Leasing · Insurance
MANUFACTURINGServices inside company:· Finance· Accounting· Legal· R&D and design
BUSINESS SERVICES· Consulting· Auditing· Advertising· Waste disposal
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Economic EvolutionEconomy Agrarian Industrial Service Experience
EconomicOffering
Food Packagedgoods
Commodityservice
Consumer services
Businessservices
Function Extract Make Deliver Stage Co-create
Nature Fungible Tangible Intangible Memorable Effectual
Attribute Natural Standardized Customized Personal Growth
Method of Supply
Stored in bulk
Inventoried Delivered on demand
Revealed over time
Sustained over time
Seller Trader Producer Provider Stager Collaborator
Buyer Market Customer Client Guest Collaborator
Expectation Quantity Features Benefits Sensations Capability
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Distribution of GDP in the US Economy
Product Services
Physical
Information
6%
10%
31%
53%
37%
63%
84%16%
D
BA
C
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Nature of Service Sector
Percent Distribution of
Wage and Salary Employment in USA by Industry
Sector, 2006
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We believe that the global economy has passed a tipping point in the transition from an industrial, good-centred to an innovation, service-centred logic. Dominant logic and innovative technologies, methods and concepts evolve in a particular way to form something new.”
Davenport, Leibold & Voelpel - 2006
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The realities of the South African Economy
SERVICES65%
MANUFACTURING 26%
AGRICULTURE9%
ESSENTIALLY SOUTH AFRICA HAS A DUAL SERVICES & MANUFACTURING ECONOMY
Fastest growing sector of the economy
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The nature of the South African Services Economy In relation to the Global Services Economy Relative annual % growth in exports of services Growth over the period 1997-2006
South Africa
Source: OECD
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The nature of the South African Services Economy In relation to the Global Services Economy Relative annual % growth in imports of services Growth over the period 1997-2006
South Africa
Source: OECD
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The nature of the South African Services Economy
Services trade balance: exports of services minus imports of services
Billion US dollars, average 2004-2006Negative Trade Balance!!
South Africa
NOTE: SOUTH AFRICA IMPORTS MORE SERVICES THAN IT EXPORTS
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The nature of the South African Economy Trade balance: exports of goods minus imports of goods Billion US dollars, average 2004-2006 Negative Trade Balance!!
South Africa
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SARS TRADE STATISTICSREPUBLIC OF SOUTH AFRICAPRELIMINARY REPORT FOR JULY 2008
This is not a sustainable situation
SERVICE SCIENCE: THE NEW SOUTH AFRICAN FRONTIER IN A DUAL
SERVICES AND MANUFACTURING ECONOMY
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How is South Africa positioned to address the challenge of the new frontier? World Economic Forum: The 12 pillars of competitiveness
Service innovation critical for South Africa to gain a competitive advantage
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SA – Global CompetitiveIndex2007-2008
Global Competitiveness Index 2007 - 2008
SOUTH AFRICA’S RANKINGS
Rank Score
(Out of 131 countries/economies) (Out of 7)
Global Competitiveness Index 2007-2008 44 4.42
Sub index A: Basic requirements 61 4.45
1st pillar: Institutions 39 4.55
2nd pillar: Infrastructure 43 4.22
3rd pillar: Macroeconomic stability 50 5.08
4th pillar: Health and primary education 117 3.96
Sub index B: Efficiency enhancers 36 4.44
5th pillar: Higher education and training 56 4.12
6th pillar: Goods market efficiency 32 4.73
7th pillar: Labor market efficiency 78 4.16
8th pillar: Financial market sophistication 25 5.19
9th pillar: Technological readiness 46 3.57
10th pillar: Market size 21 4.89
Sub index C: Innovation and sophistication 33 4.16
11th pillar: Business sophistication 36 4.61
12th pillar: Innovation 32 3.71
South Africa's GCIfor 2007-2008
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“Africa needs to improve its competitive position in order to penetrate global markets, its own national markets being too small to constitute a solid basis for sustainable growth and poverty reduction ”
Peter Watson
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The South African Skills Paradox
South Africa has large numbers of unemployed people (Estimate 25%) yet it also suffers from a skills shortage at the same time –
The services economy requires multi-skilled people who can integrate technology & business in developing innovative
product & service business solutions for clients, with due regard to the human socio-cultural operational factors involved
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T-shaped people for the services economy
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THE NEW SOUTH AFRICAN DUAL SERVICES & MANUFACTURING ECONOMIC FRONTIER
If the services sector is the largest and the fastest growing sector of
the global economy South Africa will need to capture a larger share
of the action within this highly competitive sector of the economy,
if it is to turn the negative trade balance around
In a Dual Economy the focus is on an innovative product/services
bundle or offering to gain a competitive advantage in the
marketplace
This by implication, from a systems engineering perspective, entails
the need to innovatively integrate the manufacturing and services
value chains at an operational level – particularly as it relates to
front and back stage operational and support systems
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Trevor Manual – SA Minister of Finance (SA Reality):
“The knowledge base of the population, the technology that workers are able to use, the systems around which
production is organised, the innovation potential of a workforce and the means of communication between agents
in the economy are all key factors that drive long run economic growth”
“the world economy is far more skills intensive today”
YET
“South Africa faces an unprecedented shortage of skills. While we have about four million unemployed people we have
about a million vacancies”
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A Systems Engineering perspective of the new frontier
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Systems engineering perspective
Systems engineering in a dual services & manufacturing economic context provides a framework for the integration of processes, tools, technology and human resources in the planning, development, implementation and management of innovative services and products that meet client’s needs.
It is defined by the International Council on Systems Engineering (INCOSA) as:
an engineering discipline whose responsibility is creating and executing an interdisciplinary process to ensure that the customer and stakeholder's needs are satisfied in a high quality, trustworthy, cost efficient and schedule compliant manner throughout a system's entire life cycle”
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Service Systems Engineering Defined:
Service Systems Engineering applies engineering methods,
ingenuity, and integrative techniques to design service processes and systems for
improving the human condition and quality of life.
Michigan University of Technology . Definition, 6/07
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Definition:Engineering Services Management (ESM)
A melding together of strategy, engineering,
business processes & infrastructure, and
human socio-cultural systems into an
innovative and dynamic response that adds
value in realising client needs and
expectations in order to gain a competitive
advantage within the global and local
services and manufacturing marketplace
University of Pretoria: GSTM
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Clarity as to the concept and nature of services
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Clarity as to the concept and nature of services
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Clarity as to the concept and nature of services
Provider An entity (person or institution) that makes preparations to meet a need An entity that serves
Client An entity (person, business, or institution) that engages the service of another An entity being served
Some general relationship characteristics are that the client
Participates in the service process (also known as the service engagement) Co-produces the value The quality of service delivered depends on customers preferences, requirements, expectations and perception of the services encounter (Moment of truth)
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Value proposition
ServiceServiceExperienceExperience
ServiceServiceProviderProviderCustomerCustomer
Community
Competition
Partners
Service System
Value
Value
ValueEmployees &Stockholders
Source: Adapted from Stephen K. Kwan & Jae H. Min, 2008
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Clarity as to the concept and nature of services Simultaneity: services created & consumed simultaneously - cannot be stored,
It eliminates opportunity for quality-control intervention before delivery. Capacity management critical to meet demand or queuing ensues.
Perishability: cannot establish a services inventory as backup, leads to a loss of opportunity of idle capacity and a need to match supply with demand – an airline seat no filled or a dentist appoint not kept results in a revenue loss.
Intangibility: services are concepts and ideas in contrast to products as things. Difficult for client to evaluate beforehand what is being offered and what they will get for their money. Creative advertising, no patent protection, importance of reputation assume relevance.
Heterogeneity: customer involvement and the human element in services delivery process results in variability. Interaction involved and perceptions of the interaction in relation to prier expectations in terms thereof is subjective in nature.
Customer Participation in the Service Process: attention to facility design and the services encounter. Issues of consideration: opportunities for co-production, concern for customer and employee behavior.
Non-Ownership: unlike goods there is not a transfer of ownership - what are clients buying? Gaining access to a resource for a period of time. Sharing resources between clients presents management challenges i.e. queuing.
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Non-ownership Classification of Services
Type of Service
Customer value Examples Management Challenge
Goods rental Obtain temporary right to exclusive use
Vehicles, tools, furniture, equipment
Site selection and maintenance
Place and space rental
Obtain exclusive use of defined portion of a larger space
Hotel room, seat on airplane, storage unit
Housekeeping and achieving economies of scale
Labor and expertise
Hire other people to do a job
Car repair, surgery, management consulting
Expertise is a renewable resource, but time is perishable
Physical facility usage
Gain admission to a facility for a period of time
Theme park, camp ground, physical fitness gym
Queuing and crowd control
Network usage Gain access to participate
Electric utility, cell phone, internet
Availability and pricing decisions
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Implications of Rental/Usage Paradigm
Creates the option of renting a good upon demand rather than purchase. Service often involves selling slices of larger physical entities. Labor and expertise are renewable resources. Time plays a central role in most services. Service pricing should vary with time and availability.
Question: Can services in general be described as customers sharing resources?
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The Service Process Matrix
Degree Degree of Interaction and Customization
of labor Intensity Low High
Service Factory Service Shop
* Airlines * Hospitals
Low * Trucking * Auto repair
* Hotels * Other repair services
* Resorts and recreation
Mass Service Professional Service
* Retailing * Doctors
High * Wholesaling * Lawyers
* Schools * Accountants
* Retail banking * Architects
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Service Classification (Nature of Demand and Capacity)
Extent of Demand Fluctuation over Time
Extent to Which Demand
Exceeds Capacity Wide Narrow
Electricity Insurance
Peak demand can Telephone Legal services
met without a major delay Police emergency Banking
Hospital maternity unit Laundry and dry cleaning
Tax preparation Fast food restaurant
Peak demand regularly Passenger transportation Movie theater
exceeds capacity Hotels and motels Gas station
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The ESM Ecosystem
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Product / Service transformation analogy
James Teboul, 2006.
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The Services Product bundle or offering Process of value enhancement in services and manufacturing systems
integration – client & provider customisation of product and associated services, design, testing manufacturing, delivery, after sales service, training in use of product, maintenance, phasing out of product taking environmental considerations into account.
Products and services in nature are fundamentally very different and this in itself presents inherent challenges in defining the bundle offered and purchased.
Innovation and creativity assumes specific relevance in product and services design and delivery, as well as their integration to gain a competitive advantage in the marketplace.
The inherent human interaction aspects involved in services introduces emotions, feelings, perceptions, values, beliefs and similar difficult considerations that need to be taken into consideration.
Introduction of front stage client facing and backstage institutional & support systems and activities that need to be integrate
Services in support of goods has become a means of differentiating a firm’s products.
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The Increasing Role of Service in ManufacturingExamples of Services
Product / service customization Information Warranties Leasing, licensing, and rentals After sales services Staff training Customer support Maintenance
Service adds value (and profitability) Service margins can be greater than associated product margins Additional services providing a competitive advantage I marketplace Bundle providing innovative packaged offering exceeding value of individual elements added together Outsourcing resulting is lowering of cost to client and enhanced services Client access to: ongoing research; technology; staff expertise & experience
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SERVICE SYSTEM LIFE CYCLE
Service Conceptualisation
ServiceDesign
ServiceTesting
ServiceImplementation
Service Management
Service Phase-out
Systems engineering in a dual services & manufacturing economic context provides a framework for the integration of processes, tools, technology and human resources in the planning, development, implementation and management of innovative services and products that meet client’s needs.
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SERVICE SYSTEM DESIGN
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Service Design Elements
Structural- Service vision
- Delivery system- Location - Facility design
- Capacity planning Managerial
- Service encounter- Quality- Managing capacity and demand- Information
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New Service System Design
People
Technology Systems
Product
Full Launch Development
Design Analysis
Org
aniz
atio
nal
Con
text Team
s
Tools
Enablers
• Formulation of new services objective / strategy• Idea generation and screening• Concept development and testing
• Business analysis• Project authorization
• Full-scale launch• Post-launch review
• Service design and testing• Facility design and testing• Process and system design and testing• Marketing program design and testing• Personnel training• Service testing and pilot run• Test marketing
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Service VisionService Delivery System
What are important features of the service delivery system including: role of people, technology, equipment, layout, procedures?
What capacity does it provide, normally, at peak levels?
To what extent does it, help insure quality standards, differentiate the service from competition, provide barriers to entry by competitors?
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Services Design considerations
Element Considerations
Delivery system What does the customer see, where does production occur? In B2B can we seamlessly move information from one processing point to the next?
Facilities design Size, layout, how does it feel? Important in B2C – if people are uncomfortable they probably won’t come back.
Capacity planning Queues and demand. Typically we don’t plan for full capacity which would result in waste. What do we do with excess capacity? What do we do with customers when we have to make them wait?
Service encounter Employee training and empowerment. The culture & climate people experience influences their behaviour which in turn affects customer relationships.
Quality Service quality is subjective client assessment that relates client’s service expectation to perceived services rendered by the provider
Managing capacity and demand
Adjusting your plans to accommodate customer requirements, or is there a way to drive demand to map to your ability to deliver (think of happy hour).
Information What to collect, keep, for competitive advantage. At issue here is privacy and who really ‘owns’ the data? Can you think of any service that doesn’t depend on information?
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Typical Customer Criteria used in selecting a service provider
• Availability (24 hour ATM)• Convenience (Site location)• Dependability (On-time performance)• Personalization (Know customer’s name)• Price (Quality surrogate) • Quality (Perceptions important)• Reputation (Word-of-mouth)• Safety (Customer well-being)• Speed (Avoid excessive waiting)
The services economy is a highly competitive business environment and how the institution hopes to gain an advantage needs to be taken into consideration in the service design i.e. availability, quality etc
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Technology-Driven Service Innovations
Source of Technology
Service Example Service Industry Impact
Power/energy Jet aircraft Nuclear energy
International flight is feasibleLess dependence on fossil fuel
Facility design Hotel atriumEnclosed sports stadium
Feeling of grandeur/spaciousnessYear-around use
Materials Photochromic glassSynthetic engine oil
Energy conservationFewer oil changes
Methods Just-in-time (JIT)Six Sigma
Reduce supply-chain inventoriesInstitutionalize quality effort
Information E-commerceSatellite TV
Increase market to world-wideAlternative to cable TV
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Taxonomy of Service Processes Low divergence (Standard service) High divergence (Customized service)
Processing Processing Processing Processing Processing Processing of goods Information of people of goods Information of people Dry Check Auto repair Computer
No Cleaning processing Tailoring a programming
Customer Restocking Billing for a suit Designing a
Contact a vending credit card building machine Ordering Supervision
Indirect groceries of a landing customer from a home by an air contact computer controller No Operating Withdrawing Operating Sampling Documenting Driving a customer- a vending cash from an elevator food at a medical rental car service machine an ATM Riding an buffet dinner history Using a worker Assembling escalator Bagging of health club interaction premade groceries Searching for facility (self- furniture information
Direct service) in a libraryCustomer Customer Food Giving a Providing Home Portrait HaircuttingContact service service in a lecture public carpet painting Performing worker restaurant Handling transit cleaning Counseling a surgical interaction Hand car routine bank Mass Landscaping operation washing transactions vaccination service
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Framework for Services Blueprint
Physical evidence
Customer actions
Front stage
Employee actions
Backstage
Employee actions
Support Systems Information Systems, Technology, CRM, ERP, Employee Training, etc.
Line of visibility
Line of Client/Employee Interaction
Line of Internal interaction
Service Encounter
Facilities, Aesthetics, Documentation etc.
Support staff activities
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Services Blueprint: Three Star South African Hotel
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Client’sClient’sPerceptionPerception
Real Expectation
Inflated ExpectationSales Generated
Expectation
Service Provider’s Service Provider’s PerspectivePerspective
Management’sPerceived Client
Expectation
Service Design Specification
ServiceDelivered
Service Received
= Service Quality Gap
Conformance
Design
Marketing
Communication
Causes of Gaps
The Service Quality: Design versus Client PerceptionS
ervi
ce Q
ual
ity
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The Supporting Facility Design
(servicescapes)Creating the Right Environment
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Facility Design Considerations
Nature and Objectives of Service Organization Land Availability and Space Requirements with
future development considerations in mind Location of facilities with respect to client access Technology service support systems Flexibility Security Aesthetic Factors Symbols & artifacts The Community and Environment impact
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SERVICESCAPE FRAMEWORK
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Location ConsiderationsFront Office Back Office
External
Customer
(consumer)
Is travel out to customer or customer travel to site?
Can electronic media substitute for physical travel?
Is location a barrier to entry?
Is service performed on person or property?
Is co-location necessary?
How is communication accomplished?
Internal
Customer
(employee)
Availability of labor?
Are self-service kiosks an alternative?
Are economies of scale possible?
Can employees work from home?
Is offshoring an option?
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Site Selection Considerations1. Access: 4. Parking: Convenient to freeway exit and Adequate off-street parking entrance ramps 5. Expansion: Served by public transportation Room for expansion Communication facilities & networks 2. Visibility: 6. Environment: Set back from street Immediate surroundings Surrounding
clutter should complement the Sign placement service3. Traffic: 7. Competition: Traffic volume on street that may Location of competitors Indicate potential impulse buying 8. Government: Traffic congestion that could be a Zoning restrictions hindrance (e.g.., fire stations) Taxes Services (telephone, water,
electricity, waste removal)
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Matching Capacity and Demand for Services
MANAGINGDEMAND
PartitioningdemandDeveloping
complementaryservices
Establishingprice
incentivesDevelopingreservationsystems
Promoting off-peakdemand
Yieldmanagement
MANAGINGCAPACITY
Cross-training
employees
Increasingcustomer
participationSharingcapacity
Schedulingwork shifts
Creatingadjustablecapacity
Usingpart-time
employees
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Managing Waiting Lines
• “Americans hate to wait. So business is trying a trick or two to make lines seem shorter…” The New York Times, September 25, 1988
• “An Englishman, even when he is by himself, will form an orderly queue of one…” George Mikes, “How to be an Alien”
• “In the Soviet Union, waiting lines were used as a rationing device…” Hedrick Smith, “The Russians”
• “In South Africa it is a way of life” Richard Weeks
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Where the Time Goes
In a life time, the average person will spend:
SIX MONTHS Waiting at stoplights
EIGHT MONTHS Opening junk mail
ONE YEAR Looking for misplaced 0bjects TWO YEARS Reading E-mail FOUR YEARS Doing housework FIVE YEARS Waiting in line SIX YEARS Eating
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Laws of Service
• Maister’s First Law:Customers compare expectations with perceptions.
• Maister’s Second Law:Is hard to play catch-up ball.
• Skinner’s Law:The other line always moves faster.
• Jenkin’s Corollary:However, when you switch to another other line, the line you left moves faster.
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Remember Me
I am the person who goes into a restaurant, sits down, and patiently waits while the wait-staff does everything but take my order.
I am the person that waits in line for the clerk to finish chatting with his buddy.
I am the one who never comes back and it amuses me to see money spent to get me back.
I was there in the first place, all you had to do was show me some courtesy and service.
The Customer
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Psychology of Waiting
• That Old Empty Feeling: Unoccupied time goes slowly
• A Foot in the Door: Pre-service waits seem longer that in-service waits
• The Light at the End of the Tunnel: Reduce anxiety with attention
• Excuse Me, But I Was First: Social justice with FCFS queue discipline
• They Also Serve, Who Sit and Wait: Avoids idle service capacity
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Approaches to Controlling Customer Waiting
• Animate: Disneyland distractions, elevator mirror, recorded music
• Discriminate: Avis frequent renter treatment (out of sight)
• Automate: Use computer scripts to address 75% of questions
• Obfuscate: Disneyland staged waits (e.g. House of Horrors)
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Arrival Process
Static Dynamic
AppointmentsPriceAccept/Reject BalkingReneging
Randomarrivals withconstant rate
Random arrivalrate varying
with time
Facility-controlled
Customer-exercised
control
Arrival process
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Queue Configurations
Multiple Queue Single queue
Take a Number Enter
3 4
8
2
6 10
1211
5
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SERVICES ENCOUNTER
(Moment of Truth)
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The Service Triangle
ServiceOrganization
Efficiencyversus
satisfaction
Controlversus
autonomy
CustomerContact
Personnel Perceived control
Note: Perceived control determines if a relationship or encounter is established between contact personnel and customer.
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The Customer
Expectations and Attitudes Economizing customer – wants value for money, time & effort Ethical customer - social & environmental conscious Personalizing customer – wants personal customized friendly attention Convenience customer – hassle free service without red tape
Customer as Coproducer Scripts defined by context determine service encounter behaviour e.g.
Self-service in a cafeteria, check-out encounters at a store etc. Use of technology e.g. automation of services such as ATMs
View of service quality subjective
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Difficult Interactions with Customers
Unrealistic customer expectations Unexpected service failure
1. Unreasonable demands 1. Unavailable service
2. Demands against policies 2. Slow performance
3. Unacceptable treatment of 3. Unacceptable service
employees
4. Drunkenness
5. Breaking of societal norms
6. Special-needs customers
(Use scripts to train for proper response)
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The Service Organisation (Aspects influencing services encounter)
The service organisation establishes the environment for the service encounter – the organisational culture serves as a behavioural determinant – physical surroundings (Servicescape) inherently influence the atmosphere in which encounter takes place.
Case in point: McDonalds – people know what is expected and what they will get – consistency in services rendered – Staff trained to comply.
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Contact Personnel
Selection (getting staff with correct personality attributes – e.g. flexibility, tolerance for ambiguity, empathy for clients etc.) Abstract Questioning – open ended interviews allows them to reveal their
views and feelings Situational Vignette – questions relating to specific situations that may be
encountered in dealing with clients – “can they think on their feet” Role Playing – simulated situations.
Training – skills to perform the service tasks Unrealistic customer expectations - client expectations that cannot be
delivered by the system e.g. passengers wanting to take oversized luggage onto an aircraft – demands that go against company policies, unexcitable treatment of employees, breaking social norms
Unexpected service failure – places burden on contact staff who need to show innovation in dealing with situations that may arise so they do not get worse
Ethics – standards cannot be compromised in service encounters by contact staff even if it means losing a client in the process as it can have longer term and far reaching implications on future serve encounters with clients.
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Examples of Unethical Behaviour
Misrepresenting the Nature of the
Service
Customer Manipulation
General Honesty and Integrity
• Promising a nonsmoking room when none is available
• Using bait-and-switch tactics
• Creating a false need for service
• Misrepresenting the credentials of the service provider
• Exaggerating the benefits of a specific service offering
• Giving away a guaranteed reservation
• Performing unnecessary services
• Padding a bill with hidden charges
• Hiding damage to customer possessions
• Making it difficult to invoke a service guarantee
• Treating customers unfairly or rudely
• Being unresponsive to customer requests
• Failing to follow stated company policies
• Stealing customer credit card information
• Sharing customer information with third parties
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Satisfaction Mirror – (When a strong sound relationship develops between client and staff)
Higher Customer Satisfaction
More Familiarity with Customer Needs and Ways of Meeting Them
Greater Opportunity for Recoveryfrom Errors
Higher EmployeeSatisfaction
Higher Productivity
Improved Quality of Service
MoreRepeatPurchases
Stronger Tendency to Complain about Service Errors
Lower Costs
Better Results
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Service Profit Chain
Internal
Operating strategy andservice delivery system
Service concept Target market
Servicevalue
Customers
Loyalty
Productivity&
Outputquality
Servicequality
Capability
Satisfaction
Employees Satisfaction Loyalty
Revenuegrowth
External
Profitability
Customer orientation/quality emphasisAllow decision-making latitudeSelection and developmentRewards and recognitionInformation and communicationProvide support systemsFoster teamwork
Quality & productivity improvements yield higher service quality and lower cost
Attractive Value Service designed& delivered tomeet targetedcustomers’ needsSolicit customerfeedback
Lifetime valueRetentionRepeat BusinessReferrals
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SERVICE IMPLEMENTATION
It is all about managing change and people do not feel comfortable with change that impacts on their well
established comfort zonesand
ways of doing things around here – organisational cultureIt is a human thing
and that makes service implementation and management complex to deal with in practice
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THANK YOU FOR YOUR ATTENTION
Guess our time is up
Any questions or comments?
