Topic 4

The Service Delivery Process

1

The main objective in this chapter is to familiarize students of services marketing with operations concepts, and explain the strategic importance of balancing operations and marketing functions in service operations.

2

Objectives1. Compare and contrast the four stages of operational

competitiveness.2. Appreciate the relationship between operations and

marketing as it pertains to developing service delivery systems.

3. Describe the types of operational models that facilitate operational efficiency.

4. Consider the challenges associated with applying operational efficiency models to service organizations and recommend strategies that overcome some of these difficulties.

5. Explain the art of service blueprinting as it relates to the design of service delivery operations.

6. Discuss the role of complexity and divergence as it relates to new service product development.

3

Stages of Operational Competitiveness

Without a successful service delivery process, the service firm will meet its final demise as customers become frustrated over the level of poor service delivered.

1. Available for Service

2. Journeyman

3. Distinctive Competencies Achieved

4. World-Class Service Delivery

4

Four stages of operational competitiveness

Stage 1: Available for Service operations are a necessary evil operations are reactive the primary mission is to avoid mistakes technological investment, training, and personnel

costs are minimize

may actually work if no competition however, it may attract competition

5

Four stages of operational competitiveness

Stage 2: Journeyman prompted by the arrival of competition operations become outward-looking investment in technology is linked to long-term

costs savings

processes are developed, implemented, and monitored

operations still viewed as a secondary function

6

Four stages of operational competitiveness

Stage 3: Distinctive Competencies Achieved the firm has mastered the core service understands complexity of making changes operations are now viewed equal with other

departments

view of technology changes from cost savings to enhancing the customers experience

7

Four stages of operational competitiveness

Stage 4: World Class Service Delivery companys name is synonymous with service

excellence

mission goes beyond satisfaction to delightment technology provides a means to accomplish tasks

that the competition cannot duplicate

8

Major Design Trade-offs in High- and Low-Contact Systems

9

Marketing and Operations: Balance is Critical

In a service firm, establishing a balance between marketing and operations is critical.

Significant aspects of the service operation are the product that creates the experience that delivers the bundle of benefits to the consumer.

E.g. A restaurant experience is not based solely on the quality of the food. The physical environment and interactions with contact personnel throughout the experience also greatly influence consumer perceptions of the quality of service delivered.

Success in services marketing demands a much greater understanding of the constraints and opportunities posed by the firms operations.

10

Sources of Cooperation/Conflict Between Marketing and Operations

11

The customers involvement in the production process

If the consumer is in the service factory, it is clear that if the factory is changed, consumer

behavior will have to be changed

Changing the factory, will mean changes in the consumers script, as well as changes in the scripts of contact

personnel

12

Service Delivery Process

The marriage of customer needs with the manufacturing and technological capabilities of the firm

The marriage involves compromise customer needs can seldom be met completely

and economically operational efficiency has to be balanced against

the effectiveness of the system from the consumers point of view

13

Service Delivery Process

Peak efficiency models inputs flow at a steady rate into the technical core the market absorbs a single kind of product at a

continuous rate

14

Service Delivery Process

Peak efficiency models decisions within the technical core can be

programmed and individual discretion can be replaced by rules

jobs are deskilled lower quality of labor can be used which lowers the

labor cost

rules can be programmed into machines

15

The Focused-Factory Concept

Accepts the notion that the ideal world is virtually impossible to create

Concentrates on performing one particular task in one particular part of the plant

buffering--surrounds the tech core on the input and output sides

smoothing--attempts to manage fluctuations in supply and demand

anticipating--predicts fluctuations rationing--triage strategies

Focus generates efficiency as well as effectiveness

16

Applying Efficiency Models to Services

Servuction system is an operations nightmare impossible to use inventories problems with decoupling production from the

customer

system is directly linked to the market demand varies day to day, hour to hour, minute to

minute

massive problems in capacity planning and utilization

17

Possible Solutions to Service Operation Problems

Isolate the technical core technical core should be subjected to production-

link approaches hard technologies--hardware soft technologies--rules and regulations

high contact areas should sacrifice efficiency in the interest of the consumer

18

The Art of Blueprinting

One of the most common techniques used to analyze and manage complex production processes in pursuit of operational efficiency is flowcharting. Flowcharts identify:

1. the directions in which processes flow;2. the time it takes to move from one process to the

next;3. the costs involved with each process step;4. the amount of inventory buildup at each step; and5. the bottlenecks in the system.

19

Service Blueprints

Blueprints provide a means of communication between operations and marketing and can highlight potential problems on paper before they occur. essentially a flowchart that shows lines visibility

20

Components of Service Blueprint

Identify direction 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 the amount of inventory build-up at each

step

Identify the bottlenecks in the system

21

An Example of a Simple Blueprint: Blueprint for Cafeteria-Style Restaurant

22

The Service Operations Managers Perspective: Modified Blueprint for Cafeteria-Style Restaurant

23

Alternate Blueprint for Cafeteria-Style Restaurant

24

Using Service Blueprints to Identify the Servuction Process

25

Flowchart of a Discount Brokerage Service

26

Constructing the Service Blueprint

Elicit scripts from employees and customers order events in sequence of occurrence

Identify potential fail points in the system Specify the time frame for service execution Given the costs of inputs needed for the

system to operate, analyze the profitability of the system

27

Blueprinting and New Product Development

Complexity--the number and intricacy of steps Specialization strategy

reduces complexity by reducing the number of steps in the process it unbundles the service offering

niche strategy

28

Blueprinting and New Product Development

Complexity--the number and intricacy of steps Penetration strategy

increases complexity by increasing the number of steps

attempts to appeal to a broader market

29

Blueprinting and New Product Development

Divergence--degrees of freedom in decision making Volume-oriented strategy (production-line)

decreases divergence produces standardized output and reduces costs but does so at the expense of increasing conformity and

inflexibility

30

Blueprinting and New Product Development

Divergence--degrees of freedom in decision making Customization strategy

increases divergence produces a heterogeneous output creates flexibility in tailor-made solutions but it does so at increased expense

31

Park Avenue Florist

32

Florist Services: Alternative Design

33

Thank you

34

Topic 4The Service Delivery ProcessSlide Number 2ObjectivesStages of Operational CompetitivenessFour stages of operational competitivenessFour stages of operational competitivenessFour stages of operational competitivenessFour stages of operational competitivenessMajor Design Trade-offs in High- and Low-Contact SystemsMarketing and Operations: Balance is CriticalSources of Cooperation/Conflict Between Marketing and OperationsThe customers involvement in the production processService Delivery ProcessService Delivery ProcessService Delivery ProcessThe Focused-Factory ConceptApplying Efficiency Models to ServicesPossible Solutions to Service Operation ProblemsThe Art of BlueprintingService BlueprintsComponents of Service BlueprintAn Example of a Simple Blueprint: Blueprint for Cafeteria-Style RestaurantThe Service Operations Managers Perspective: Modified Blueprint for Cafeteria-Style RestaurantAlternate Blueprint for Cafeteria-Style RestaurantUsing Service Blueprints to Identify the Servuction ProcessFlowchart of a Discount Brokerage ServiceConstructing the Service BlueprintBlueprinting and New Product DevelopmentBlueprinting and New Product DevelopmentBlueprinting and New Product DevelopmentBlueprinting and New Product DevelopmentPark Avenue FloristFlorist Services: Alternative DesignThank you