Service Delivery Process
Efficiency in Service
Stages of Operational Competitiveness
Strategically, the service firm can choose to view its operations as a necessary evil to complete day-to-day tasks, or use its operations as the key component of its competitive strategy
The manner in which “operational competitiveness” is embraced can be described by 4 stages:
Stage 1: Available for Service
Operations are viewed as a necessary evil
Operations are at best reactive to the needs of the rest of the organisation & deliver the service as specified
Primary mission is to avoid mistakes
Technological investment, investment in training, and personnel costs are minimised
Stage 2: Journeyman
Characterised by the introduction of technologically based systems for the primary purpose of cost savings
Employees are given procedures to follow
Operations become more outward-looking
Management focuses on ensuring that standardised procedures are followed
Prompted by the arrival of competition
Stage 3: Distinctive Competencies Achieved
View of technology changes from "cost savings" to "enhancing the effectiveness of service to customers"
Involves a philosophical change of balancing efficiency with effectiveness
The firm has mastered the core service & understands the complexity of changing current operations
Front-line workers may select from alternative procedures
Stage 4: World-Class Service Delivery
The company's name is synonymous with service excellence
Operations become adaptive & innovative
Technology provides a means to accomplish tasks that the competition cannot easily duplicate
Marketing vs. Operations
establishing a balance between marketing & ops
Critical: The "marriage" of consumers' needs with the technology & manufacturing capabilities of the firm
Problem Area
capacity planning & long-range sales forecasting
marketing: why don't we have enough capacity?
manufacturing: why didn't we have accurate sales forecasts?
production scheduling & short-range sales forecasting
marketing: we need faster response. our lead times are ridiculous
manufacturing: we need realistic customer commitments & sales forecasts that don't change like wind direction
delivery & physical distribution
marketing: why don't we ever have the right merchandise in inventory?
quality assurance
marketing: why can't we have reasonable quality at reasonable costs?
breadth of product line
cost control
new product introduction
marketing: our customers demand variety
manufacturing: the product line is too broad -- all we get are short, uneconomical runs
marketing: our costs are so high that we are not competitive in the marketplace
manufacturing: we can't provide fast delivery, broad variety, rapid response to change, and high quality at low cost
manufacturing: why myst we always offer options that are too hard to manufacture and that offer little customer utility?
manufacturing: we can't keep everything in inventory
marketing: new products are our life-blood
manufacturing: unneccesary design changes are prohibitively expensive
adjunct services such as spare parts, inventory support, installation, and repair
marketing: field service costs are too high
manufacturing: products are being used in ways for which they weren't designed
Service Efficiency Models
The Focused Factory Concept
The Plant-Within-a-Plant Concept (PWP)
Thompson's Perfect-World Model
constant rate, no uncertainty
smoothing, anticipating, rationing
in a perfect world, service firms will be efficient
To operate efficiently, a firm must be able to operate “as if the market will absorb the single kind of product at a continuous rate and as if the inputs flowed continuously at a steady rate and with specified quality”
Uncertainty creates inefficiencies
An operation that concentrates on performing
one particular task in one particular location
Used for promoting experience and effectiveness through repetition and concentration on one task necessary for success
The strategy of breaking up large, unfocused plants into smaller units buffered from one another so that each can each be focused separately
Organizations seek to buffer environmental influences by surrounding their technical core with input and output components
Operations Solutions for Service Firms
- Creating flexible capacity
- Creating flexible capacity
- Production-lining the whole system
- Moving the time of demand (demand smoothing)
- Isolate the technical core
Service Blueprinting
planning/ designing the service process
Blueprints provide a means of communication between operations and marketing and can highlight potential problems on paper before they occur
Service Blueprinting as a Flowchart
Show points of customer contact
Types of Blueprint
I. Use to visualise the process flow of the service delivery system
(Service Blueprinting)
II. Use as a flow chart to capture the efficiency of the process (time)
helps give a visual picture of the servuction model
Helps to visualise the process flow of a service delivery system
Identify failure points, areas of improvement and innovation opportunities in a service operation
A process control technique which focuses on the human-to-human (human-to-technology) interfaces
Components of Service Blueprints
Applying Service Blueprinting in practice
Backstage contact person (invisible)
contact employees who play a support role
Support Processes
Non-contact employees who play a support role
Onstage contact person (visible)
involves in customer interaction
Physical Evidence
Tangibles exposed to customers
Customer actions
represents the sequential steps of the customer
in cases where technology is involved (e.g., online shopping), the onstage contact employee can be replaced with onstage technology
going through the process of building a service blueprint is enough to gain important insights & a better understanding of the firm's service delivery system
separate blueprints can be developed for different segments of the customers
Servuction Model
illustrates 4 Factors
that influence the service experience
Servicescape (recall service package)
Contact personnel
Other customers
Invisible organisation & systems
rules, regulations and the processes in the organisation
Servuction Process
Servuction (Service Blueprint)
Identify directions 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 bottlenecks in the system
diagram
types
1 counter for one station
merge stations
as some capacity is untapped
simple - one station for each
Blueprinting for New Service Development
plannign/ designing the service process
New Service Development
The Roles of Complexity & Divergence
Degree of Complexity
measured by the number & intricacy of the steps in the service blueprint
Degree of Divergence
Amount of discretion or freedom the server is allowed to customise the service
e.g., clinic is less complex than a general hospital
e.g., activities of an attorney contrasted with those of a paralegal
how many decisions to make
Changing the Complexity
Specialisation positioning strategy
Changing the Divergence
Volume-oriented positioning strategy
reduces complexity
by unbundling the different services offered
Penetration positioning strategy
increases complexity
by adding more services and/or enhancing current services to capture more of a market
Niche positioning strategy
increases divergence
reduces divergence
produces standardised output and reduces costs but does so at the expense of increasing conformity & inflexibility
tailors the service experience to each customer