Service Processes

Operations ManagementDr. Ron Lembke

How are Services Different? Everyone is an expert on services What works well for one service provider doesn’t

necessarily carry over to another Quality of work is not quality of service “Service package” consists of tangible and intangible

components Services are experienced, goods are consumed Mgmt of service involves mktg, personnel Service encounters mail, phone, F2F

Degree of Customer Contact More customer contact, harder to

standardize and control Customer influences:

Time of demand Exact nature of service Quality (or perceived quality) of service

3 Approaches Which is Best?

Production Line Self-Service Personal attention

What do People Want? Amount of friendliness and helpfulness Speed and convenience of delivery Price of the service Variety of services Quality of tangible goods involved Unique skills required to provide service Level of customization

Service-System Design Matrix

Mail contact

Face-to-faceloose specs

Face-to-facetight specs

PhoneContact

Face-to-facetotal

customization

Buffered core (none)

Permeable system (some)

Reactivesystem (much)

High

LowHigh

Low

Degree of customer/server contact

Internet & on-site

technology

SalesOpportunity

ProductionEfficiency

Applying Behavioral Science The end is more important to the lasting

impression (Colonoscopy) Segment pleasure, but combine pain Let the customer control the process Follow norms & rituals Compensation for failures: fix bad

product, apologize for bad service

Restaurant TippingNormal Experiment

Introduce self(Sun brunch) 15% 23%Smiling (alone in bar) 20% 48% Waitress 28% 33% Waiter (upscale lunch) 21% 18%“…staffing wait positions is among the most

important tasks restaurant managers perform.”

Fail-Safing “poka-yokes” – Japanese for “avoid

mistakes” Not possible to do things the wrong way

Indented trays for surgeons ATMs beep so you don’t forget your card Pagers at restaurants for when table ready Airplane bathroom locks turn on lights Height bars at amusement parks

How Much Capacity Do We Need?

BlueprintingFancy word for making a flow chart“line of visibility” separates what customers

can see from what they can’tFlow chart “back office” and “front office”

activities separately.

Demand rate varies by time

9 10 11 12 1 20

5

10

15

20

25

30

35Arrivals

Average#

customers arriving per hour

Time of Day

Demand varies by Customer

1 2 3 4 5 6 7 8 9 100

0.5

1

1.5

2

2.5

3 Time Average

Min to process customer

Customer #

What did we learn? Human considerations very important in

services Hard to please everyone, because we’re all

critics Degree of customer contact important

strategic decision Keeping things simple is good Fluctuations in demand making capacity

setting difficult