SERVICE

MANAGEMENT

OPERATIONS MANAGEMENT 2
Contents

01 SERVICE
ECONOMY
03 SERVICE DESIGN

02 SERVICE 04 SERVICE
STRATEGY MANAGEMENT
SERVICE ECONOMY
SERVICE DEFINITIONS

• Services are deeds, processes, and performances. (Valarie A. Zeithaml,

Mary Jo Bitner, and Dwayne D. Gremler, Services Marketing, 7th ed., New York: McGraw-Hill, 2017, p. 4.)

• A service system is a value-coproduction configuration of

people, technology, other internal and external service systems,
and shared information (such as language, processes, metrics,
prices, policies, and laws). (Jim Spohrer, Paul Maglio, John Bailey, and Daniel Gruhl,
Computer, January 2007, p. 72)
SERVICE DEFINITIONS

• Services are economic activities offered by one party to another, most

commonly employing time-based performances to bring about desired
results in recipients themselves or in objects or other assets for which
purchasers have responsibility. In exchange for their money, time, and
effort, service customers expect to obtain value from access to goods,
labor, professional skills, facilities, networks, and systems; but they do not
normally take ownership of any of the physical elements involved. (Jochen Wirtz
and Christopher Lovelock, Services Marketing: People, Technology, Strategy, 8th ed., Upper Saddle River, NJ:
Prentice-Hall, 2007, p. 6)
DISTINCTIVE CHARACTERISTICS OF
SERVICE OPERATIONS
• Customer Participation
• Simultaneity
• Perishability
• Intangibility
• Heterogeneity
• Nontransferrable Ownership
NONTRANSFERRABLE OWNERSHIP
STAGES OF ECONOMIC ACTIVITY
COMPARISON OF SOCIETIES
LANGUAGE OF ECONOMIC EVOLUTION
ROLE OF SERVICES IN AN ECONOMY
TYPOLOGY OF SERVICES IN
THE 21ST CENTURY
A service classification derived from
ecommerce
Internal services
The challenges posed by internal service provision include:
• Getting people within an organisation to recognise the
service and the importance of the service they provide to
each other, and treat it, assess it, measure it and improve it
in just the same way as they deal with external service.
• Demonstrating that the internal services, such as IT and
finance, provide at least as good ‘value for money’ as an
external alternative.
• Gaining acceptance from their internal customers.
Types of service and their key challenges
Is the distinction between different
types of service reducing?
Comparing airline operations
SERVICE STRATEGY
Service strategy should ..
THE SIX ELEMENTS OF SERVICE
STRATEGY
ELEMENTS OF THE STRATEGIC
SERVICE VISION
UNDERSTANDING THE
COMPETITIVE ENVIRONMENT OF
SERVICES
• Relatively low overall entry barriers.
• Minimal opportunities for economies of scale
• Erratic sales fluctuations.
• No advantage of size in dealing with buyers or
suppliers.
• Product substitution
• Customer loyalty.
• Exit barriers.
COMPETITIVE SERVICE
STRATEGIES
• Overall Cost Leadership
• Seeking Out Low-Cost Customers
• Standardizing a Custom Service
• Reducing the Personal Element in Service Delivery
• Reducing Network Costs
• Taking Service Operations Offline
• Differentiation
• Making the Intangible Tangible
• Customizing the Standard Product
• Reducing Perceived Risk
• Giving Attention to Personnel Training
• Controlling Quality
• Focus
STRATEGIC ROLES OF INFORMATION
REVENUE GENERATION

• Yield Management

• Point of Sale

• Expert Systems
DATABASE ASSET

• Selling Information

• Developing Services
Using Information to
• Micromarketing Categorize Customers
• Coding
• Routing
• Targeting
• Sharing
BIG DATA
Chase and Hayes’ four-stage scheme
of service operations’ contribution to
strategic competitiveness
SCALABILITY AND E-COMMERCE
SERVICE DESIGN
Open-Systems View of Service Operations
The service concept
The structure of a typical service concept
What the service concept is not…
• The service promise
• The business proposition.
• The 4Ps of service marketing
• Business model.
• A vision
• A mission statement
• An idea
• Brand
SERVICE PACKAGE
SERVICE PACKAGE
Supporting facility. The physical resources that must be in place
before a service can be offered. Examples are a golf course, a ski
lift, a hospital, and an airplane.
Facilitating goods. The material purchased or consumed by the
buyer, or the items provided by the customer.
Information. Data that are available from the customer or
provider to enable efficient and customized service.
Explicit services. The benefits that are readily observable by the
senses and that consist of the essential or intrinsic features of the
service.
Implicit services. Psychological benefits that the customer may
sense only vaguely, or the extrinsic features of the service.
WEAK TO STRONG EMOTIONS
THE NSD PROCESS CYCLE
Blueprint for Luxury Hotel
Taxonomy of Service Processes
 Generic Approaches to Service
System Design
• Production-Line Approach • Customer Contact Approach
• Limited Discretionary Action of • Degree of Customer Contact
Personnel • Separation of High- and Low-Contact
• Division of Labor Operations
• Substitution of Technology for People • Sales Opportunity and Service
• Service Standardization Delivery Options
• Customer as Coproducer • Information Empowerment
• Self-Service • Employee Empowerment
• Smoothing Service Demand • Customer Empowerment
• Customer-Generated Content
Major Design Considerations for
High- and Low-Contact
Operations
Sales Opportunity and Service
Design
Service Process Types with
Management Challenges
THE SERVICE PROCESS MATRIX
CHALLENGES FOR SERVICE MANAGERS
THE SERVICE ENCOUNTER TRIAD
The Service
Profit Chain
Challenges Facing Customer Contact
Personnel
FACILITY LAYOUT

 Refers to the specific arrangement of physical facilities.

 Location or arrangement of everything within & around buildings

[Link] layout
[Link] layout
Office Layout Post COVID-19
RETAIL/SERVICE LAYOUT
¨ Decision variables
¨ Store flow pattern
¨ Allocation of (shelf) space to products
¨ Types
¨ Grid design
¨ Free-flow design Video
STORE LAYOUT
GRID LAYOUT
FREE FLOW LAYOUT
DIAGONAL LAYOUT
ANGULAR LAYOUT
GEOMETRIC LAYOUT
STRAIGHT LAYOUT
MIXED LAYOUT
LOOP LAYOUT
A Step-By-Step Guide to Planning
Store Layouts

• Step One: Target The First Floor

• Step Two: Identify Customer Flow

• Step Three: Avoid The Transition Zone

• Step Four: Design for Clockwork Navigation

• Step Five: Remove Narrow Aisles

ENVIRONMENTAL DIMENSIONS OF SERVICESCAPES
SERVICE RECOVERY
SERVICE MANAGEMENT
Strategies for
Matching
Capacity of and
Demand for
Services
Strategies for Managing Customer-
Induced Variability
Perceived Service Quality
Service Quality Gap Model
Classification of Service Failures
Customers and services in booking a
holiday
Classification of Queue Discipline
Classification of Service Processes
Classification of Queuing Models
Scheduling Services
Service systems differ from manufacturing

MANUFACTURING SERVICES
Schedules machines Schedule staff
and materials
Inventories used to Seldom maintain
smooth demand inventories
Machine-intensive and Labor-intensive and
demand may be smooth demand may be
variable
Few social or behavioral Social and behavioral
issues issues may be quite
important
Scheduling Services
• Scheduling in service systems may involve:

• Customers
• The workforce
• Equipment.
 Scheduling Customers
Scheduling Services

 Appointment Systems
 Reservation Systems
 Yield management
 Scheduling Customers
Scheduling Services

Appointment Systems are intended to control

the timing of customer arrivals in order to minimize
customer waiting while achieving a high degree of
capacity utilization..

Four decisions:
1. Determine the appointment time interval.
2. Determine the length of each workday and
time off-duty.
3. Decide how to handle overbooking.
4. Develop customer appointment rules that
maximize customer satisfaction.
 Scheduling Customers
Scheduling Services

Reservation Systems are designed to enable

service systems to formulate a fairly accurate
estimate of the demand on the system for a given
time period and to minimize customer
disappointment generated by excessive waiting or
inability to obtain service.

Late arrivals and no-shows can disrupt

the system
 Scheduling Customers
Scheduling Services

Yield management - The application of

pricing strategies to allocate capacity among
various categories of demand

The ability to predict demand is critical

to the success of yield management
Scheduling Workforce
▶Objective is to meet staffing requirements with
the minimum number of workers
▶Schedules need to be smooth and keep
personnel happy
▶Many techniques exist from simple algorithms
to complex linear programming solutions
 Scheduling Workforce

To match available personnel with the needs of

the organization:

1. Accurately forecasting demand and

translating it into the quantity and timing of
work to be done.
2. Determining the staffing required to
perform the work by time period.
3. Determining the personnel available and
the full- and part-time mix.
4. Matching capacity to demand
requirements and developing a work
schedule that maximizes service and
 Scheduling Workforce

▶Considerations:
▶Predicted demand

▶Variations in customer demands can be met with workforce flexibility

▶Constraints:
▶ Legal constraints

▶ Behavioral constraints

▶ Technical constraints

▶ Budget constraints
Example: T.R. Accounting Service is developing a workforce schedule for three
weeks from now, and has forecast demand and translated it into the following
minimum personnel requirements for the week.

Day Mon Tue Wed Thur Fri Sat Sun

Min Personnel 8 6 6 6 9 5 3

Employee 1:

New
requirements:

Employee 2:

New
requirements:
 Employee 3:

New
requirements:

Remaining assignments:
Final Accountant Schedule
 Vietnam
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