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OPSM 405 Service Operations Management
Class 5:
Service Design
Service Process Blueprinting
Chapters 5 & 7
Koç University
Zeynep [email protected]
New Service Development Cycle
Full Launch
Design
AnalysisDevelop-ment
Execution Stage Planning Stage
People
Products
Tech-nology Systems
New Services
Execution Incremental
Innovations– Service line extensionDivan vitamin bufe– Service improvementTHY self-check-in– Style changesPigastro
Planning Radical innovations
– Major innovationsOnline auctions– Start-up businessPersonal coaches for
diet, pregnancy etc.– New services for a
market being servedCan load Hazir kart
credits in markets
Service design factors
Location Layout Product-process design
– Features– Customer contact– Standardization– Industrialization
Resources: workers, technology, etc. Management: Quality, capacity, standards, etc.
Service Design Tools
Service process blueprinting Conjoint analysis
Automotive Service Operation
Service shuttle is inconvenient
Parts are not in stock
Vehicles not cleaned correctly
it takes too long to arrive
F
F
F
F
Understanding the link between positioning and service structure
Complexity Divergence Customer contact
Low complexity, high divergence
High complexity, low divergence
High complexity, high divergence
Defining terminology
complexity vs. divergence
what is done? how is it done?
Structural change: reduce divergence
positioning: economies of scale
+ : perceived increase in reliability
- : conformity, inflexibility
Structural change: increase divergence
positioning: niche
+ : prestige, customization, personalization
- : difficult to manage and control
Structural change: reduce complexity
positioning: specialization
+ : expert image, easy control
- : stripped down image
Structural change: increase complexity
positioning: wallet share
+ : maximize revenue generation / customer
- : customer confusion, decline in service quality
Example: Structural Alternatives
Lower Complexity/Divergence Current Process Higher Complexity/ Divergence
No reservations Take reservation Specific table selection
Self seat, menu on blackboard Seat guests, give menu Recite menu: describe choices
Eliminate Serve water and bread Assortment of meze & bread
Customer fills out form Take orders, prepare orders At table
Pre prepared-no choice Salad (4 choices) Individual prep at table
Limit to 4 choices Main dish (15 choices) Expand choices, bone fish at table etc.
Ice cream bar-self service Dessert (6 choices) Expand choices
Serve salad and main dish;
Dessert and bill together
Serve orders Separate service or orders; change plates
Cash only, pay when leaving Collect payment Choice of payment, serve karanfil & kolonyali mendil
Basic Principles of De-coupling
Customer contact model Services categorized by level of customer
contactHigh Contact Low Contact
Pure Services Mixed Services Quasi-Manufacturing
(medical) (branch banks) (distribution centers)
Efficiency: f(1 – contact time/service creation time) Potential for efficiency increases as customer contact time/service creation time decreases
Decoupling and process attributes
Decoupling and cost– Idle time due to removal of non-contact work– Duty overlap between front and back– Duty reduction without personnel reduction
Decoupling and quality– Conformance quality increases– Handoffs may affect dependability or
accuracy negatively
Decoupling and process attributes
Decoupling and time– Task specialization and automation helps speed– Handoffs and insufficient data collection in front office
might hurt– Also centralized back-office processes imply batch
processing which hurts delivery speed
Decoupling and flexibility– Homogenized services due to standardization– Front-end over-promising
Managerial DifferencesHigh Contact: Low Contact:
Branch Support CenterFacility Location near the customer near supply,
transportation, labor
Facility Layout customer-oriented production efficiency
Production orders cannot be smooth production planningstored with backorders
Worker Skills public interaction technical
Quality Control variable standards numerical measurement
Capacity set to peak set to averagework loadwork load
Management Practice
Cost Leader Cheap Convenience Focused Professionals
High Service
Level of De-coupling
High Low High Low
Competitive Advantage
Low costs Locational convenience/low cost
Personalized service at moderate cost
Premium level of personalized service
Reason to De-couple
Scale economies Maintain cost competitiveness
Quality control; disaggregation of high-and low-contact
Centralize only when it is cost prohibitive not to
Activities to De-couple
All back-office work Centralize back-office work in excess of front-office idle time
Back-office activities “regionalized,” not centralized
Activities requiring expensive capital goods
Operational Strategic Focus
Cost minimization; Conformance quality
Cost minimization; conformance quality
Maintain sufficient flexibility, response time, or service quality at lower cost than High Service
Maximize flexibility, response time, or service quality
Cost focus Quality, flexibility, time focus
Shared Services
Brings together functions that are duplicated across companies and offers those services more efficiently, at a lower cost and higher profitability through a Shared Services function
The Rationale
Improved customer satisfaction• getting products/services at the level,
quality, cost that clients are willing to pay for
Operating /business divisions can focus on what they do best• running their business
Who is doing it?
Why?
Allied Signal combined 75 functions into a Shared Services Centre• Saving $300 million over five years
Shell has set-up a separate Shared Services company• With 5000 employees and $1 billion in sales it
has reduced costs by 30-40 per cent On average a company can save 25 to 30 per
cent of its related costs
Citigroup Business Services - Why?
Business Units (Front Office and Operations & Technology) can better focus on customer activities and the competitive marketplace
Reduce corporate expense base by consolidating all activities into one centrally managed organisation that can• leverage economies of scale• integrate processes• eliminate redundant systems
Simplify and improve management control, analysis and reporting through standardised corporate MIS
Leverage Citigroup’s buying power into a global purchasing unit
