Service System Design

These course notes are for use in conjuction with Learning Module 5 of
MG 476 - Services Management.

Menu for Learning Module 5

• Generic approaches to service system design
• Service Facility Design Considerations
• Service Guarantees as Design Drivers
• Seven Characteristics of a Well-Designed Service System
• Service process design
• Error-Proofing Services
• Service Delivery System Design
• Assignment 5-1
• Assignment 5-2
• Assignment 5-3

Reminder: This week, you should also be working on your Electronic Journal Article, if you have not done so already.

Three contasting generic approaches to service design:

• The Production Line Approach (made famous by McDonald's Corporation)
• The Self-Service Approach (made famous by ATMs and gas stations)
• The Personal Attention Approach (made famous by Nordstrom department stores and the Ritz-Carlton Hotel Company)

The Production Line Approach

The production line approach pioneered by McDonald's refers to more than just the steps required to assemble a Big Mac. Rather, as Theodore Levitt [2] notes, it is treating the delivery of fast food as a manufacturing process rather than a service process. The value of this philosophy is that it overcomes many problems inherent in the concept of service itself. That is, service implies subordination or subjugation of the server to the served; manufacturing, on the other hand, avoids this connotation because it focuses on things rather than people. Thus in manufacturing and at McDonald's, "the orientation is toward the efficient production of results not on the attendance on others."

Levitt notes that besides McDonald's marketing and financial skills, the company carefully controls "the execution of each outlet's central function - the rapid delivery of a uniform, high-quality mix of prepared foods in an environment of obvious cleanliness, order, and cheerful courtesy. The systematic substitution of equipment for people, combined with the carefully planned use and positioning of technology, enables McDonald's to attract and hold patronage in proportions no predecessor or imitator has managed to duplicate." [1][2]

• Limited discretionary action of personnel
• Division of labor
• Substitution of technology for people
• Service standardization
• Customer participation
• Substitution of consumer labor for provider labor
• Smoothing of service demand
• Customer contact
• Degree of customer contact
• Separation of high- and low-contact operations
• Sales opportunity and service delivery options [20]

The Self-Service Approach

In contrast to the production line approach, C.H. Lovelock and R.F. Young [3] propose that the service process can be enhanced by having the customer take a greater role in the production of the service. Automatic teller machines, self-service gas stations, salad bars, and in-room coffee-making equipment in motels are approaches that shift the service burden to the consumer.

Many customers like self-service because it puts them in control. For others, this philosophy requires some selling on the part of the service organization to convince customers that it helps them. To this end, Lovelock and Young propose a number of steps, including developing customer trust, promoting the benefits of cost, speed and convenience, and following up to make sure that the procedures are being effectively used.

In essence, this turns customers into "partial employees" who must be trained in what to do and, be "fail-safed" in case of mistake. [1]

The Personal Attention Approach

An interesting contrast in the way personal attention is provided can be seen in Nordstrom Department Stores and the Ritz-Carlton Hotel Company. At Nordstrom, a rather loose, unstructured process relies on developing a relationship between the individual salesperson and the customer. At the Ritz-Carlton, the process is virtually scripted, and the information system rather than the employee keeps track of the guest's (customer's) personal preferences. [1]

Service Facility Design Considerations:

• Nature and objectives of service organizations
• Land availability and space requirements
• Flexibility
• Aesthetic Factors
• The community and environment [20]

More on this in the Learning Module 6 on Facility Design. 

Service Guarantees as Design Drivers

The phrase "Positively, absolutely, overnight" is an example of a service guarantee most of us know by heart. Hiding behind such marketing promises of service satisfaction are a set of actions that must be taken by the operations organization to fulfill these promises. Thousands of companies have launched service guarantees as a marketing tool designed to provide peace of mind for customers unsure about trying their service. From an operations persepective, a service guarantee can be used not only as an improvement tool but also at the design stage to focus the firm's delivery system squarely on the things it must do so well to satisfy the customer. [1] {consider links to companies with service guarantees}

Seven Characteristics of a Well-Designed Service System.

1. Each element of the service system is consistent with the operating focus of the firm. For example, when the focus is on speed of delivery, each step in the process should help to foster speed.

2. It is user-friendly. This means that the customer can interact with it easily - that is, it has good signage, understandable forms, logical steps in the process, and service workers available to answer questions.

3. It is robust. That is, it can cope effectively with variations in demand and resource availability. For example, if the computer goes down, effective backup systems are in place to permit service to continue.

4. It is structured so that consistent performance by its people and systems is easily maintained. This means the tasks required of the workers are doable, and the supporting technologies are truly supportive and reliable.

5. It provides effective links between the back office and the front office so that nothing falls between the cracks. In football parlance, there should be "no fumbled handoffs."

6. It manages the evidence of service quality in such a way that customers see the value of the service provided. Many services do a great job behind the scenes but fail to make this visible to the customer. This is particularly true where a service improvement is made. Unless customers are made aware of the improvement through explicit communication about it, the improved performance is unlikely to gain maximum impact.

7. It is cost-efffective. There is minimum waste of time and resources in delivering the service. Even if the service outcome is satisfactory, customers are often put off by a service company that appears inefficient. [1]

Service process design

A core service product is a process - that is, a method of doing things. Preparing an invoice, taking a telephone order, processing a credit card, preparing food, checking out of a hotel, and teaching a class are all examples of service processes. A good way to start designing a service is to answer the following questions:

• What is the purpose of the process?
• How does the process create customer satisfaction?
• What are the essential inputs and outputs of the process?

The service design specifies in detail the sequence of steps - value-adding activities and specific tasks - involved in delivering the service and is usually depicted as a flowchart. Such a graphical representation provides an excellent communication device for visualizing and understanding the service operation. Flowcharts can become the basis for job descriptions, employee-training programs, and performance measurements. (example)

Once a process is designed, we may ask several fundamental questions about it:

1. Are the steps in the process arranged in logical sequences?

2. Do all steps add value? Can some steps be eliminated and should others be added to improve quality or operational performance? Can some be combined? Should some be reordered?

3. Are capacities of each step in balance; that is, are there bottlenecks that increase customer waiting time?

4. What skills, equipment, and tools are required at each step of the process? Should some steps be automated?

5. At which points in the system might errors occur that would result in customer dissatisfaction, and how might those errors be corrected?

6. At which point or points should quality be measured?

7. Where interaction with the customer occurs, what procedures and guidelines should employees follow that will present a positive image? [32]

Error-Proofing Services

Error-proofing services [36] simply means designing procedures to prevent errors from occurring. Service error-proofing must account for the customers' activities as well as those of the producer, and fail-safe methods must be set up for interactions conducted directly by phone, mail, or other technologies such as ATM.

Error-proofing procedures can be classified by the type of error they are designed to prevent:

• server errors or
• customer errors.

Server errors result from the

• task,
• treatment, or
• tangibles of the service.

Treatment errors occur in the contact between the server and the customer. Lack of courteous behavior and failure to acknowledge, listen, or react appropriately to the customer are examples. (examples)

Tangible errors are those in the physical elements of the service, such as unclean facilities, dirty uniforms, poor temperature control, and document errors.

Customer errors occur during

• preparation,
• the service encounter, or
• resolution.

Customer errors during the encounter can be due to inattention, misunderstanding, or simply a memory lapse. They include failure to remember steps in the process or follow instructions. Examples: beepers that remind to remove card from ATM; locks on airplane lavatories.

Customer errors during resolution stage of a service encounter include failure to signal service failures, learn from experience, adjust expectations, and execute appropriate post-encounter actions. Examples: strategically placed tray-return stands; hotel gift certificate to solicit customer feedback. [32]

Service Delivery System Design

Designing Services Researchers have suggested that services have three basic components:

• physical facilities, processes, and procedures
• employees' behavior, and
• employees' professional judgement [35]

More on this in Learning Module 7 and 8.

Reminder: This week, you should also be working on your Electronic Journal Article, if you have not done so already.

Assignment 5-1

Consider the three contrasting generic approaches to service design. Under the personal attention approach, only two examples are given. Locate a web site of a company that believes it is providing the level of personal attention service. Provide the company name and URL (the complete, accurate, address) and a few sentences of explanation why you think they do, or do not, provide this level of service.

This should take one or two screens of explanation. These responses will be posted.

Send your comments to the instructor, subject: MG 476  5-1

Assignment 5-2

After carefully considering the several service system design charactistics noted in the readings, above, pick an Internet web site that is offering a service, that you haven't written about before, and discuss the good and the poor design characteristics of the service web site.

This should take about two screens of explanation.

Send your comments to the instructor, subject: MG 476  5-2

Assignment 5-3

Think about a service you have been involved with.

Discuss, briefly, an error-proofing process you used to provide better service.

This should take about one screen of explanation.

Send your comments to the instructor, subject: MG 476 5-3

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William L. Smith Teacher Home Page

Service Management Home Page
Emporia State University

If you have comments or suggestions, e-mail me at smithwil@emporia.edu .

This page last updated 21 Aug 2000.

Examples provided by students:

Mayo Children's Clinic
www.mayo.edu/patient-physician.html

  "The best interest of the patient is the only interest to be considered."
This is the philosophy used by the physicians and staff of the children's
clinic at Mayo hospital.  They use the best technological and scientific
instruments available in the medical field.  By putting the patients first,
they provide personal attention service.
   I feel that every employee that works at the Mayo clinic looks out for
the interest of the children.  This is the kind of service that makes the
clinic so popular.  Mayo offers a caring and compassionate environment not
only for the patients, but for the families and friends also.  They offer
counseling for the friends and families of patients.  This can help them
understand and deal with any frustrations in dealing during this difficult
time.
Angie Chilcott

  MD Anderson Cancer Center provides personal attention service to their
patients.  I know this by first hand experience.  Right now my mom is down
there receiving radiation for ten weeks.  On May 11th she had surgury there
to remove cancer in her face.  We spent a week in the hospital with her.
While we were there, we received the best personal service we ever had.
Everyone in that hospital is willing to help.  We were told that when they
interview people, they put as much emphasis on the person's personality as
they do their medical skills.  Everytime you walk down the halls, staff
members are always asking you if they can assist you.  The nurses and
doctors show sincere concern for both the patients and the family members.
They are always willing to answer questions and offer guidance.
   In the time we spent here, the nurses and doctors began to know my
sisters and I by name.  This means a lot to a person when they are dealing
with a situation like this.  MD Anderson is one of the top two cancer
centers in the world.  I believe, in addition to the top medical technology
here, the personal service they provide to each of their patients and the
families help to make them top in the world.
Melissa Sims

Century 21
http://www.century21.com
Century 21 Real Estate Corporation is franchisor of the world’s largest residential real estate sales organization, providing comprehensive training, management, administrative and marketing support for the Century 21 System.  This system is actively increasing its presence and market share in the U.S. and globally through the affiliation of new franchised offices and firms.  Century 21 has the power to help you buy or sell your home with more than 6,300 offices and 110,000 real estate professionals in more than 23 countries and territories.  That means they have the power to help you move across town, across the country, or around the world.  This site offers information about hundreds of communities across North America at the touch of a button.  Once you find that new community to live in Century 21 Connections offers you discounts on home-related products and services from top companies, including AT&T, and ADT Security Systems.  Century 21 professional takes the anxiety out of buying or selling a home.
Jaime Cales