Chapter 9 Supply Chain

Who is the center of all decisions and actions of the service organization?

The customer

What 3 things surround the customer?

• The service strategy

• Employees

• Support systems

Service package

A bundle of goods and services that is provided in some environment

Service packages consist of what?

• Supporting facility (ski lift, airline)

• Facilitating goods (golf clubs, skis)

• Information (tee-off times, weather report)

• Explicit services (AC in hotel room, response time by ambulance)

• Implicit services (Status of degree from Ivy League, worry-free auto repair)

Customer contact

Physical presence of the customer in the system

Creation of the service

The work processes involved in providing the service itself

Extent of contact

Percentage of time the customer must be in the system relative to the total time needed to perform the customer service

The greater the percentage of contact time between the service system and customer, the _____ the degree of interaction between the 2 during the production process

Greater

In services, what becomes a dominant issue?

Capacity

Factors that distinguish service design and development from typical manufactured product development:

• The process and the product must be developed simultaneously

• A service operation lacks the legal protection commonly available to goods production

• The service package constitutes the major output of the development process

• Many parts of the service package are often defined by the training individuals receive before they become part of the service organization

• Many service organizations can change their service offerings virtually overnight

Buffered core

Physically separated from the customer

Permeable system

Penetrable by the customer via phone or face to face contact

Reactive system

Both penetrable and reactive to the customer’s requirements

Strategic uses of the matrix:

• Enabling systematic integration of operations and marketing strategy

• Clarifying exactly which combination of service delivery the firm is in fact providing

• Permitting comparison with how other firms deliver specific services

• Indicating evolutionary or life cycle changes that might be in order as the firm grows

Web platform business

A firm that creates value by enabling the exchange of info and processing of transactions between consumers and providers of a service or product

5 basic types of variability:

• Arrival variability

• Request variability

• Capability variability

• Effort variability

• Subjective variability

Arrival variability example

Customers arriving at times when there are not enough service providers

Capability variability example

A patient being unable to explain symptoms to a doctor

Request variability example

Travelers requesting a room with a special view at a crowded hotel

Effort variability example

Shoppers not putting up carts

Subjective preference variability example

A waiter addressing a customer with informality

4 basic accommodation strategies:

• Classic accommodation

• Low-cost accommodation

• Classic reduction

• Ucompromised reduction

Classic accommodation

Entails extra employees or additional employee skills to compensate for variations among customers

Low-Cost accomodation

Entails low-cost labor, outsourcing, and self-service to cut the cost of accommodation

Classic reduction

Requires customers to engage in more self-service, use reservation systems, or adjust their expectations

Uncompromised reduction

Uses knowledge of the customer to develop procedures that enable good service, while minimizing the variation impact on the service delivery system

6 behaviorally based principles for service encounter design and management:

• The front end and the back end of the encounter are not created equal

• Segment the pleasure; combine the pain

• Let the customer control the process

• Pay attention to norms and rituals

• People are easier to blame than systems

• Let the punishment fit the crime in service recovery

Service gurantees

A promise of service satisfaction backed up by a set of actions that must be taken to fulfill the promise

Guidelines for using service gurantees:

• Any guarantee is better than no guarantee

• Involve the customer as well as employees in the design

• Avoid complexity or legalistic language

• Do not quibble or wriggle when a customer invokes the guarantee

• Make it clear that you are happy for customers to invoke the guarantee

Service blueprint

The flowchart of a service process, emphasizing what is visible and what is not visible to the customer

Poka-yokes

Procedures that prevent mistakes from becoming defects

7 characteristics of a well-designed service system:

• Each element of the service system is consistent with the operating focus of the firm

• It is user-friendly

• It is robust

• It is structured so that consistent performance by its people and systems is easily maintained

• It provides effective links between the back office and the front office so that nothing falls between the cracks

• It manages the evidence of service quality in such a way that customers see the value of the service provided

• It is cost effective

Motto to improve customer experience

Segment the pleasure; combine the pain