Chap005.ppt Service Process Design

7/30/2019 Chap005.ppt Service Process Design

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McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2007, All Rights Reserved 5-1

Service Process Design

Chapter 5


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Chapter 5: Outline

Defining ServiceService Guarantees/service recovery

The Service-Product BundleCycle of ServiceCustomer Contact

Service MatrixService/Profit Chain


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The Shiftto Services


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Services in Europe

The Service Sector accounts for

about 70 percent of the Europeaneconomy.

Source: Wall Street Journal, 4 March 2005, p. A13


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Definition of ServiceKey Concepts

No finished goods inventoryIntangibility of the product

Simultaneous production and consumptionDifficulty in defining and measuring qualityand productivityOther Differences between Manufacturing andService ( See Table 5.1 )


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Production of Services vs. GoodsTypical Differences

Services are process focused.

Customers served as first come, first served.Labor is scheduled, not the customer.

Location often near customers.

Result: service production tends to be less

efficient than production of goods.


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Related Concepts

Service guarantee

Analogous to a guarantee for a product

Requires specific criteria and responses

Service Recovery

What you do to compensate the customer for badservice.


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The Service/Product Continuum

Pure Service

No product with intrinsic value involved. e.g. lawyer

Service/Product bundle Combination of product with service (most common)

Pure Product

Very rare. Yard sale. Blacksmith.


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Service-Product Bundles

The Service-Product Bundles has three parts:

physical goods (facilitating goods) whatyou can carry away

tangible service (explicit service) what theseller does for you.

psychological service (implicit service) how you feel about it.


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Comparison of Goods and Services ( Figure 5.1 )

100% 75% 50% 25% 0% 100%75%50%25%

Self-service groceries Automobile

Installed carpetingFast-food restaurant

Gourmet restaurant

Auto maintenanceHaircut

Consulting services

Goods Services


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Moments of TruthMoment of Truth = customer contact with aservice system.Service is defined as the cumulative effectof all the moments of truth.One failed moment of truth can causefailure of the entire service.

Therefore, service systems must bedesigned as a whole, not in parts.


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Moments of Truth

Examples from book:

SAS airlines has 50,000 moments of truth per day.Marriott hotels has 6,000,000 momentsof truth per day.


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Cycle of Service for an Airline (Figure 5.2)

Leaves Airport

ReceiveBaggage Arrives at

airport

Customer requestsschedule information

Makesreservation

Checksbaggage andchecks in for flight

Proceeds to gateand security check

Receivesboarding pass

Boardsaircraft

Receivesin-flightservice

DepartsPlane


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Customer Contact (1)

Definition of contact interaction between service provider and the customer.Each moment of truth is a contact.


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Customer Contact (2)Potential inefficiency in services is a function of

the amount of customer contactWhy? Customer determines the time Customer determines the order of service Customer influences what happens during the

service


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Customer Contact (3)High contact ( front room ) services Direct customer contact Customer has control of process

Low-contact ( back room ) services Out of sight of customer Provider has control of process

Goal: move as much activity as possible tothe back room why?


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Service Matrix (Figure 5.3)

Low High

Low

High

Service factory Airlines TruckingHotelsResort andrecreation

Degree of Interaction and Customization

Mass servicesRetailingWholesalingSchoolsRetail aspects of commercial banking

Professional ServicesLawyersDoctors

Accountants Architects

Service shopHospitals Auto repair Repair services

D e g r e e o

f L a

b o r

i n t e n s i

t y


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Links in the service-profit chain

(See Figure 5.4)Internal service quality, leads to Employee satisfaction, leads to Employee retention & productivity, lead to External service value, leads to Customer satisfaction, leads to Customer loyalty, leads to Revenue growth & profitability (the goal)


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Summary

Defining ServiceService Guarantees/service recovery

The Service-Product BundleCycle of ServiceCustomer Contact

Service MatrixService/Profit Chain


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End of Chapter Five

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Chap005.ppt Service Process Design