CHAPTER 5

SERVICE PROCESS DESIGN

Teaching Notes

A chapter on service process design has been included in the text because of the increasing emphasis on the service economy. The service sector presently employs many more people than the manufacturing economy in the U.S., while productivity in the service sector is growing at a much slower pace than that of the manufacturing sector.

Several important service industries are under intense pressure to improve productivity for a variety of reasons. Budgetary cutbacks are placing pressure on governmental services, technology and demographics are causing health care services to grow more expensive every year, and deregulation has created increased competition in such service industries as telecom­munica­tions, financial services, and transportation.

Traditionally management in service industries has resisted the tendency to rationalize, standardize, and control or manage the design and delivery of services, based on the belief that services cannot be so managed. I stress that services can be managed just as manufacturing can be managed. Addition­ally, the role of technology in the design and delivery of services is key.

The chapter describes several interesting concepts. Designing the service-product bundle is a useful idea and many interesting examples of it can be given in class. The concept of service guarantees is emphasized in the chapter since it provides a way for operations to know exactly what is required of the service. Schmenner's service matrix and the customer contact model help students understand differences in types of services. Finally, the service-profit chain can be used as a way to emphasize ideas described earlier in the text by viewing operations as an integrated system involving both employees and customers. The books by Heskett (1997), Carlzon (1987) and Fitzsimmons and Fitzsimmons (2001) give good background material for those teaching this chapter. Articles of special note are by Silverstro and Cross (2000) on the service profit chain, Wirtz, Kum and Lee (2000) on the service guarantee and Swank (2003) on the “Lean Service Machine”.

Answers to Questions

1. a. Check clearing in a bank: Low customer contact, Low uncertainty. b. Bank teller: High customer contact, Medium uncertainty. c. Bank loan officer: Medium customer contact, High uncertainty.

2. School: The primary customer is the student. (Customers such as parents, community members, and future employers can also be considered­.) Moments of truth include student-teacher interactions, whether inside or outside of class, and the contact of teachers, staff, and administrators with students, parents, or community members. Jail: The primary customer is the inmate, although again we can also consider society at large to be a customer. Moments of truth include moments of contact between inmates and prison staff, inmates and visitors, and inmates and society once the inmate leaves prison.

Personnel office of a firm: The primary customer is the firm itself; including managers and staff in various departments who require the services of the personnel office. Moments of truth include telephone conversations with employees, personal interviews with job applicants, and written correspondence with job applicants, employees, or other organiza­tions.

3. a. Vending machine business: Service Factory. b. Housecleaning service: Mass Service. c. Appliance repair: Service Shop.

4. Process management differs because the vending machine business and the housecleaning service require a dispersed work force while appliance repair can be done (in most cases from a centralized location.) The house­cleaning service will most often have a known task and a predic­table demand, the vending machine business will have some uncertainty of demand, and the appliance repair business will be highly variable.

Work force management differs in the