The various elements of a service system will either work against each other or work smoothly together. Here are some potential trade-off situations to consider:
The Service Organization has many elements. Let's consider some of these before we look more specifically at some of them.
Culture - Each service organization has a specific culture that is defined by their unique approach to people and processes.
Empowerment - The degree of empowerment fostered by the culture of the organization is a key ingredient in the nature of the services provided.
Contact Personnel - The selection and training of contact personnel will be critical to the successful implementation of the chosen service strategy.
Customer Expectations and Attitudes - What the customer expects and what the customer perceives is as important to a successful service encounter as anything management or the contact personnel do. Here is a sample of brief descriptions of some of these customers:
Unrealistic Customer Expectations
Unexpected Service Failures
Unavailable services
Slow performance
Unacceptable service
Creating a Customer Service Orientation
Benjamin Schneider study [21] of bank tellers:
Analysis showed that customers perceived better service in branches where employees reported the following:
The way we now view services parallels the way we view quality: The customer is (or should be) the focal point of all decisions and actions of the service orgainzation. This philosophy is captured nicely in the service triangle.
The customer is the center of things - the service strategy, the systems, and the people who serve him or her. From this view, the organization exists to serve the customer, and the systems and the people exist to facilitate the process of service. The role of operations in the triangle is a major one. Operations is responsible for service systems (procedures, equipment, and facilities) and is responsible for managing the work of the service workforce who typically comprise the majority of employees in large service organizations.
Some suggest that the service organization also exists to serve the workforce because they generally determine how the service is perceived by the customers. Relative to the latter point, the customer gets the kind of service that management deserves: in other words, how management treats the worker is how the worker will treat the public. If the workforce is well trained and well motivated by management, they will do good jobs for their customers. [1].
One way to operationally distinguish one service system from another, in its production function, is the extent of customer contact in the creation of the service.
Customer contact refers to the physical presence of the customer in the system, and creation of the service refers to the work process involved in providing the service itself.
Extent of contact here may be roughly defined as the percentage of time the customer must be in the system relative to the total time it takes to perform the customer service. Generally speaking, the greater the percentage of contact time between the service system and the customer, the greater the degree of interaction between the two during the production process. From this conceptualization, it follows that service systems with a high degree of customer contact are more difficult to control and more difficult to rationalize than those with a low degreee of customer contact.
In high-contact systems, the customer can affect the time of demand, the exact nature of the service, and the quality, or perceived quality, of service since the customer is involved in the process. The chart (below) describes the implications of this distinction. Here we see that each design decision is impacted by whether the customer is present during service delivery. We also see that when work is done behind the scenes (in this case, in a bank's processing center), it is performed on customer surrogates - reports, databases, and invoices. We can thus design it according to the same principles we would use in designing a factory - to maximize the amount of items processed during the production day.
There can be tremendous diversity of customer influence and, hence,
system variability within high-contact service systems. For example, a
bank branch offers both simple services such as cash withdrawals that take
just a minute or so, and complicated services such as loan application
preparation that can take in excess of an hour. Moreover, these activities
may range from being self-service through an ATM, to coproduction where
bank personnel and the customer work as a team to develop the loan application.
[1]
| Design Decision | High-Contact System
(A branch office) |
Low-Contact System
(A check processing center) |
| Facility location | Operations must be near the customer | Operations may be placed near supply, transport, or labor |
| Facility layout | Facility should accomodate the customer's physical and psychological needs and expectations | Facility should focus on production efficiency |
| Product design | Environment as well as the physical product define the nature of the service | Customer is not in the service environment so the product can be defined by fewer attributes |
| Process design | Stages of production process have a direct, immediate effect on the customer | Customer is not involved in majority of processing steps |
| Scheduling | Customer is in the production schedule and must be accommodated | Customer is concerned mainly with completion dates |
| Production planning | Orders cannot be stored, so smoothing production flow will result in loss of business | Both backlogging and production smoothing are possible |
| Worker skills | Direct workforce constitutes a major part of the service product and so must be able to interact well with the public | Direct workforce need only have technical skills |
| Quality control | Quality standards are often in the eye of the beholder and, thus, are variable | Quality standards are generally measureable and, thus, fixed |
| Time standards | Service time depends on customer needs so time standards are inherently loose | Work is performed on customer surrogates (e.g., forms) so time standards can be tight |
| Wage payment | Variable output requires time-based wage systems | Work is performed on customer surrogates (e.g., forms) so time standards can be tight |
| Capacity planning | To avoid lost sales, capacity must be set to match peak demand | Storable output permits capacity at some average demand level |
Three-dimensional Classification of Service Systems
Haywood-Farmer [32] extended the customer-contact concept along two additional dimensions, which results in a segmentation of service organizations with important strategic implications. This Three-dimensional Classification of Service Systems includes:
| Labor Intensity - High
2 Service Customization - Low |
Labor Intensity - High
4 Service Customization - High |
| Service Customization - Low
1 Labor Intensity - Low |
Service Customization - High
3 Labor Intensity - Low |
| Labor Intensity - High
6 Service Customization - Low |
Labor Intensity - High
8 Service Customization - High |
| Service Customization - Low
5 Labor Intensity - Low |
Service Customization - High
7 Labor Intensity - Low |
As customer contact increases, one must consider the impact of labor intensity. For services with low labor intensity, the customer's impression of physical facilities and process technology are important. For high levels of labor intensity, more attention must be paid to human resourses.
As customization increases, the service product and process must be designed to fit the customer. Thus, issues of product and process technology become the principal strategic focus relative to the levels of labor intensity and customer contact.
Service strategy begins by selecting the operating focus - those performance priorities - by which the service firm will compete. These include:
1. Treatment of the customer in terms friendliness and helpfulness.
2. Speed and convenience of service delivery.
3. Price of the service.
4. Variety of service (essentially a one-stop shopping philosophy).
5. Quality of the tangible goods that are central to or accompany the service. Examples include a "world-class" corned beef sandwich, eyeglasses made while you wait, or an understandable insurance policy.
6. Unique skills that constitute the service offering, such as hair styling, brain surgery, or piano lessons.[1]
Developing Performance Indicators
Key business factors - elements of a business that effect strategic planning, design and management of process quality, human resources development and management, and data collection and analysis.
A systematic process for generating useful performance measures follows. [34]
1. Identify all customers of the system and determine their requirements and expectations. Ask, who are my customers, and what do they expect? Tools such as customer surveys, focus groups, and user panels help to address those questions. Customer expectations change over time, so feedback must be obtained regularly.
2. Define the work process that provides the product or service. Ask, what do I do that affects customer needs, and what is my process?
3. Define the value-adding activities and outputs that comprise the process. Identify each step in the system where value is added and an intermediate output is produced. This step should identify internal customers and lead to weeding out activities that fail to add value to the process and that contributes to waste and inefficiency.
4. Develop performance measures or indicators. Each key process step identified in Step 3 represents a critical point where value is added to the output for the next (internal) customer until the final output is produced. Ask, what should I look at to determine how well the process is producing to customer requirements? Also, what deviations can occur, and what are the sources of variability?
5. Evaluate the usefulness of each performance measure. Ask the following questions about each measure: Is it at a critical point where value-added activities occur? Is it controllable? Is obtaining the data neede for the measure feasible? [32]
Using the Customer-Contact Model, or the Three-Dimensional Classification of Service Systems, compare and contrast two service organizations you deal with on a regular basis.
This should take one to two paragraphs of information.
Send your comments to the instructor, subject: MG 476 4-1
Choose three very different service organizations and create a web page to discuss them each briefly, using the Service Strategy dimensions to demonstrate their differences. Use a link to each of their home pages. Use one image (and one only, please) from each of their sites on your own web page. (Use right mouse to Save Image As to your own disk. Then, insert image on your page using that copy on your disk.)
This should take about two paragraphs of explanation for each organization.
Send your comments to the instructor,
subject: MG 476 4-2. Be sure to attach your three image
files used as well as the web page. This web page will be posted.
Using some service process you are now involved with (or, have been in the past) develop and evaluate a proposed Performance Measurement Indicator for that process. This will be a measurement tool. This need not be elaborate, it need not even be especially practical. It should, however, demonstrate that you understand how a performance measurement indicator should be developed for a service process. (May be a check list, or series of steps to perform and record, for example, to be sure the process is happening as it is supposed to.)
This should take a least one screen of information.
Send your comments to the instructor, subject: MG 476 4-3
William
L. Smith Teacher Home PageService
Management Home Page
Emporia State UniversityIf you have comments or suggestions, e-mail me at smithwil@emporia.edu
This page last updated 9 May 2000.
Using the Customer Contact model, I decided to evaluate and compare Southwest Airlines and Midwest Express, both of which are airlines based on service. Scheduling airline flights for my companies' employees, I have found that there are two "types" of service in this industry. For example, Southwest uses its fun, low-fare peanut flights to get its customers to their destinations in a timely manner. The same is true for Midwest Express, although their ticket prices are much higher. Each customer has generous amounts of space to relax and work. Each are provided with access to computers and phones if need be.
Facility location: Southwest Airlines, a larger, major player in its industry, can be located at multiple airports throughout the country and has destinations to many cities. Midwest, being a smaller airline, may only be located at selected airports, and provides flights to a smaller number of cities.
Facility layout: Midwest Express provides more room for its customers to stretch, relax and enjoy themselves. Adequate space is provided for work if necessary. Southwest provides a smaller, but comfortable atmosphere for its customers.
Scheduling: Both Midwest Express and Southwest Airlines base thier services on promptness ability to reach their destinations efficiently.
Worker skills: All employees, in both airlines, receive similar training in their areas as well as customer service.
Time Standards: Southwest Airlines, having a larger number of daily flights to many cities, tends to be somewhat more flexible with their time than Midwest Express. Although Southwest is very efficient, they are not as dependent on time as Midwest. Midwest, realizing that it caters its services to many in the business environment, bases its services on timeliness and punctualness.
Capacity: Southwest Airlines is more apt to fill its airplanes to capacity in order to become the low-cost leader in the industry.
Although both of these airlines provide a service to their customers
in the airline industry, each is geared somewhat differently. I have found
through experience at work that the salespeople are more apt to travel
with Southwest and similar airlines, while our executives tend to fly with
Midwest, when possible, in order to work during their flight.
Wal-mart and QuikTrip
According to the Customer Contact Model, the customer is the center
of all things. The two service companies I have chosen do believe in the
customer as the center to such a degree that they offer 100 percent satisfaction
guarantee on eve thing they sell. The two services that I have chosen are
Wal-mart and QuikTrip. I feel that both these companies deal with many
of the same things and situations but in a different kind of way. Under
the Customer Contact Model it states that how management treats their people
is how the worker will treat the public. I agree with this statement, especially
at QT. All employees are trained to deal with the customer in certain ways.
They are told that no matter what, the customer is always right. In some
instances the customer is obviously at fault, but for the good of the business,
they make him/her happy. This starts with the training o managers and such
and flows down through the workforce. When discussing customer contact
I feel that the two companies have different goals. At QT, they strive
to give the best service possible in the least amount of time. Because
people are usually in more of a hurry here, this is why a 1 minute standard
in set up. It is QT's goal to not let a customer wait more than one minute
before they are checked out. Of course this is not always possible, but
I feel it is a good goal to have in mind. At Wal-mart on the other hand,
people are not so rushed and more laid back. So here it is more important
to make sure the customer can find everything they want and if they need
help with something , to make sure help is available. I would say that
Wal-mart has a more personalized type of service because people are actually
shopping there and they aren't positively sure what they want or need;
whereas, at QT people go in to get a certain item(s) and want to do it
as quick a possible. To measure the extent of contact I again would have
to say that Wal-mart has the higher contact system and has more customer
Customer-Contact Model
I chose to evaluate Hardee's and Subway. These "fast food" restraurants offer fast turnaround meals at affordable prices. Hardee's offers menus through the day and into the night (sometimes all night) including breakfast, lunch, and supper. Subway is strictly a lunchtime through late evening menu. Both offer the customer the chance to order and have a sit down meal or to carryout. Hardee's offers the drive thru menu for convinence for the non-stop, fast past traveler.
Facility location: Hardees East is located near the I-35 exit and Burlingame Road and is accessible to both travelers leaving and entering Emporia or those who are traveling through. Hardee's West is located on the main throughfair of Emporia and within the industrial park region. Subway has one location on Merchant near 6th & 12th Avenue, one on the univeristy campus, and another located in the West Plaza Shopping mall also near the industrial park.
Facility layout: Hardees East and West offers large parking areas with accessible entrances on both sides of the buildings. Each offer drive thru order routes. The facilities offer places to sitdown and enjoy a quick meal. Special orders are somewhat cumbersome to handle. Ordering a meal requires waiting in lines. Subway is similar to buffetstyle meals except you order and the meal is prepared before you as you progress through the line, usually one order point and one cashiering point. Meals are prepared to your request.
Product design: Hardees now offers chicken dinners, kids menus, and breakfast fair in order to compete with like businesses in the area. Hardees offeres a few healthy menu choices. Subway has also began to offer salad bowls lunches, soups, and small subs. Subway has several meals which are heart healthy choices.
Worker skill: All employees are trained to serve the public and in safety courses for food handling.
Scheduling: Customers in both businesses expect quick service and good food at affordable prices.
Production Scheduling: Both deal with perishable food. Scheduling must meet customer demand.
Quality Control: There is a timer at Hardees drive through to time the order cycle. Both facilities being fast foods service, the expectation is to have food delivered within minutes of ordering. The food must meet the customer's expectation as to taste, flavor, and temperature. Hardees often stockpiles burgers in order to meet customer demand at peak times. Subway makes orders to specifications.as ordered. The quality standard is generally easy to measure. Time Standards: Both are fast food restraurants. The time standards are set to deliver foodstuff within minutes of an order. The standard is fairly tight.
Wage payments: Both restrauants hire semi-skilled labor. Wages are generally low.
Capacity planning: To avoid lost sales, production is as needed to meet peak demand in both businesses. Perishable items can only be stored for a short period of time. Hardees would have to be able to serve meals around the clock. Subway would only need to serve from lunchtime to late evening.