Production and Operations Management: Manufacturing and Services

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CHASE AQUILANO JACOBS
Operations Management
For Competitive Advantage
Chapter 6
Product Design Process Selection - Services
ninth edition
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Chapter 6Product Design and process Selection
Services

• Service Generalizations
• Service Strategy Focus Advantage
• Service-System Design Matrix
• Service Blueprinting
• Service Fail-safing
• Characteristics of a Well-Designed Service
  Delivery System

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Service Generalizations

• 1. Everyone is an expert on services.
• 2. Services are idiosyncratic.
• 3. Quality of work is not quality of service.
• 4. Most services contain a mix of tangible and
  intangible attributes.

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Service Generalizations (Continued)

• 5. High-contact services are experienced, whereas
  goods are consumed.
• 6. Effective management of services requires an
  understanding of marketing and personnel, as well
  as operations.
• 7. Services often take the form of cycles of
  encounters involving face-to-face, phone,
  internet, electromechanical, and/or mail
  interactions.

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Service Businesses

• Management of organizations whose primary
  business requires interaction with the customer
  to produce the service
• Includes service providers like banks, airlines,
  law offices, etc.
• Has two major types
• Facilities-based services
• Customer must go to the service facility
• Field-based services
• Production/consumption of service take place in
  customers environment

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Internal Services

• Management of services required to support
  activities of the larger organization
• Includes data processing, accounting,
  engineering, maintenance

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The Service Triangle
Exhibit 6.1
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Classification of Service Level of Contact

• High Degree of Customer Contact
• Customer is involved in the process
• Usually more difficult to control
• More difficult to rationalize
• Customer affects time of demand, nature of
  service
• Low Degree of Customer Contact
• Customer has less involvement in the process

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Designing Service Organizations

• Services cannot be inventoried
• Demand must be met as it arises
• Capacity is dominant issue
• If too much, excess costs (Discount fares,
  specials)
• If not enough, lost sales (Specials, rain checks)
• How do you know how much to provide for?
• Some form of analysis

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Elements of Service Organization Design

• Identification of target market
• Who is your customer?
• Service concept
• How do you differentiate your service in the
  market?
• Service strategy
• What is your service package and operating focus?
• Service delivery system
• What are the actual processes, staff, and
  facilities by which the services are created?

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Service Strategy Focus and AdvantagePerformance
Priorities

• Treatment of the customer
• Speed and convenience of service delivery
• Price
• Variety
• Quality of the tangible goods
• Unique skills that constitute the service offering

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Service-System Design Matrix
Exhibit 6.6
Degree of customer/server contact
Buffered
Permeable
Reactive
core (none)
system (some)
system (much)
High
Low
Face-to-face total customization
Face-to-face loose specs
Sales Opportunity
Production Efficiency
Face-to-face tight specs
Phone Contact
Internet on-site technology
Mail contact
High
Low
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Service Blueprinting Steps
1. Identify processes 2. Isolate fail points 3.
Establish a time frame 4. Analyze profitability ?
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Example of Service Blueprinting
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Service Recovery (Just in case)

• A real-time response to a service failure.
• Blueprinting can guide recovery planning (fail
  points).
• Recovery planning involves training front-line
  workers to respond to such situations as
  overbooking, lost luggage, or a bad meal.

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Service Fail-safingPoka-Yokes (A Proactive
Approach)

• Keeping a mistake from becoming a service defect.
• How can we fail-safe the three Ts?

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Have we compromised one of the 3 Ts?
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Three Contrasting Service Designs

• The production line approach
• Treat service delivery as a manufacturing process
• Example McDonalds restaurants
• The self-service approach
• Involve the customer in production of the service
• Examples are ATMs and self-service gas stations
• The personal attention approach
• Anything to satisfy the customer

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What is a Good Service Guarantee?

• Unconditional (No hidden clauses)
• Meaningful to the customer
• The payoff fully covers customer dissatisfaction
• Easy to understand and communicate
• For customers and
• For employees
• Painless to invoke
• Given proactively ?

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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.
• - The customer can interact with it easily
• 3. It is robust.
• - Cope with variations in demand and resources
• 4. It is structured so that consistent
  performance by its people and systems is easily
  maintained.

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Characteristics of a Well-Designed Service System
(Continued)

• 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.
• - There is minimum waste of time and resources in
  delivering the service