Service Operations Management

Course Introduction

• A service is any act or performance that one party can offer to another that is
essentially intangible and does not result in ownership of anything. Its
production may or may not be linked to a physical product.

• Service operations management involves understanding the requirements of

customers, managing processes through which a service is delivered and ensuring
a smooth delivery of services. Thus, managing operations in service industry is
called service operations management. It is used to convert inputs to desired
outputs.

• In other words, service operations management can be defined as a process of

planning, executing, monitoring and controlling service operations.
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1 Chapter 1 Introduction to Service Operations Management

2 Chapter 2 Service Strategy Formulation and Execution

3 Chapter 3 Service Design

4 Chapter 4 Service Process Design

5 Chapter 5 Service Delivery

6 Chapter 6 Service Quality

7 Chapter 7 Service Productivity Measurement and Management

8 Chapter 8 Service Decoupling

9 Chapter 9 Role of IT in Service Operations

10 Chapter 10 Service Operations Management in Different Sectors

Service Operations Management Session 2

Chapter 3: Service Design

 Chapter Index
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1 Learning Objectives

2 Topic 1 Concept of Service Design

3 Topic 2 Generic Approaches to Service System Design

4 Topic 3 Service Development Process

5 Topic 4 Identifying and Meeting Customer Requirements

6 Topic 5 Resources Management and Planning Capacity Management

7 Topic 6 Layout of Facilities

8 Topic 7 Service Blueprinting

9 Topic 8 Process Design and Improvement

10 Let’s Sum Up
• Explain the concept of service design

• Describe generic approaches to service system design

• List steps in the service development process

• Explain how customer requirements are identified

• Describe how resources and capacity are managed

• State the importance of facility layout

• Explain the concept of service blueprinting

• Discuss process design and improvement

 1. Concept of Service Design

• In literal terms, design is a plan or drawing used to indicate or show how a

particular object such as building, garment, machine, product or service will look
and/or will function.

• In case of services, service design refers to a plan or drawing showing a detailed

layout of how a service will be delivered to customers.

• Service design is an on-going process that involves components, workshops and

projects to introduce new service practices into organisations and improve the
overall quality of services.

• Most organisations keep on innovating, developing and improving services by

continuously modifying its service design as per the requirements an
organisation’s stakeholders.
 2. Concept of Service Design

• The following are some principles of service design that organisations must adopt
while designing a service:

– Services are designed after taking into consideration various factors such as
purpose of service, expected demand for the service and the ability of the
service to satisfy customers.

– The needs and requirements of customers are analysed before designing a

service.

– Services are designed so as to deliver maximum value to the customer.

– Feedback of customers and inputs from the employees are taken into account
before services are designed.
 1. Generic Approaches to Service System Design

Production line approach:

• Under the production line approach, most work processes are automated;
however, there are certain areas that require human intervention. Workers are
trained and skilled for providing specific services or performing specific tasks.

• This approach is usually followed in the manufacturing sector. However, it can

also be applied to services.

• A service organisation that adopts this approach can have a competitive

advantage and cost leadership over its rivals as core processes of services are
integrated with technology and customers can avail services without visiting the
location of the service provider.

• This speeds up the overall service delivery process.

• Examples: Banking (Branch Operations / Support Services)

 2. Generic Approaches to Service System Design

Customer as a co-producer approach:

• Under this approach, customers can customise the required service(s) as per their
convenience. Usually, customers and the service provider both prefer self-service
activities as it leads to savings of money and time.
• Using this approach, the degree of customisation can be adjusted as per customers’
requirements.
• Example: McDonalds

Customer contact approach:

• A service delivery system is usually made up of various operations. Under the customer
contact approach, operations are categorised as high-contact and low-contact
operations.
• The operations that require low or no customer contact are performed at the back end.
• High-contact operations are performed at the front end with the involvement of
customers.
Example: High Contact – Healthcare/ Chemists
Low Contact – E-ticketing
 3. Generic Approaches to Service
System Design
Information empowerment approach:

• Technology touches our lives on a daily basis. Most services require the use of IT;
however, the degree of use may vary.

• Availability of technology empowers both employees and customers by providing

accurate information. Employees can maintain a record of customers and their
needs with the help of record keeping software and database and can render
services accordingly.

• Similarly, IT also helps customers. For example, courier companies provide the
status of shipments on their websites, which helps customers to track their
shipments and have a fair idea when their products will be delivered to them.

Examples: Mobile App based Services

 1. Service Development Process

1. Determine the requirement of a new service: In this step, the service provider
assesses whether there is a need to provide a new kind of service to customers or not.

2. Understand and analyse service specifications: After the service provider identifies
the need for a new service, it is essential to gather information regarding the
expected characteristics and functionalities of the new service.

3. Conduct feasibility study for the service: Under this stage, it is determined
whether it is feasible to offer a prospective service.

4. Develop service design: After a feasibility study is conducted, the service system
design is developed and rules are set as to how the entire service operation will be
broken into manageable sub-operations and other minute details.
 2. Service Development Process

5. Service testing: After the service design is decided, the service provider prepares
for a trial run of services. In this stage, a platform is created in order to simulate the
service as if they are performed under real-life conditions.

6. Service rollout: After successfully testing the service, it is offered to customers.

Before rolling out, the service provider needs to decide about the timings, pricing and
other aspects of the service.

7. Post rollout monitoring: Once the service provider starts offering the service,
he/she needs to continuously monitor the service and keep taking feedback from
customers and employees on service response. This ensures that the service provider
stays competent in the market.
 Identifying and Meeting Customer Requirements

• Identifying the requirement of a new service and analysing service specification

is crucial in the service development process.

• This is because without determining the requirement of a new service and its
specifications the service cannot be designed and customers’ needs cannot be
fulfilled.

• Requirements gathering begins with customer interviews and feedback analysis.

• After gathering data from interviews, feedback and questionnaires, the data is
analysed in order to derive useful information on customer requirements.

• Once the customer requirements are identified, they are segregated and classified
based on parameters such as geographical distribution, income distribution, etc.
1. Resources Management & Planning Capacity Management

• Managing resources and capacity are complementary to each other and are of
utmost importance in a service organisation.

• Resources are required for delivering services so that customers’ demands are
met on time.

• It is important to maintain resources at an optimal level because under and over

utilised resources can lead to high operating costs for the organisation.

• This can be possible if capacity is well managed by the service organisation.

• Capacity management is all about developing a plan stating how to make the
best use of resources in accordance with the expected or the forecasted demand
for services.
2. Resources Management & Planning Capacity Management

• A service provider must manage its resources and capacity in order to provide
quality and consistent services to customers. However, resource and capacity
planning depends on various factors. Some of these factors are:

Service trends and patterns

‰
Return on investment

Supply and demand of resources

‰

Service capacity
‰
 Layout of Facilities

• Facility layout refers to the way in which different components of a service

facility are arranged.

• This is done to maximise efficiency of processes, which leads to the achievement

of organisational goals.

• Services often require participation of customers in the service delivery system.

In such cases, it becomes necessary to carefully design and implement the facility
layout.

• Facility layout design involves taking into consideration various factors such as
physical environment, space consideration, aesthetic factors, flexibility, etc.
 1. Service Blueprinting

• A service blueprint refers to a diagram or pictorial representation of all aspects

related to the service and its delivery from the viewpoint of the organisation and
customers. It represents how different components of a service are related to each
other along with different contact points.

• A service blueprint maps all interactions happened between an organisation and

its customers in a chronological manner. It also helps in the design and redesign
of the service development process.

• It is important to understand logical components in isolation as well as their role

and value-addition in the entire chain.

• The blueprint also depicts steps in service processes, the means by which
processes are executed and the evidence of service as consumer experiences it.
 2. Service Blueprinting

• There are five components of a service blueprint,

which are:
– Customer actions: This component includes a
description of all actions taken by a customer in a
chronological order from start to finish.
– Onstage actions taken by employees: This
component includes actions taken by front-end
employees during the course of service delivery.
– Backstage actions taken by employees: This
component includes those actions of employees
that are not observed directly by customers.
– Support processes: For delivering services to a
customer, employees need help of certain support
processes in the absence of which service delivery
and quality suffer.
– Physical evidence: It refers to any tangible
components that facilitate performance or
communication of the service.
2. Service Blueprinting
 1. Process Design and Improvement

• Service process design forms an important part of the service development

process. It refers to an activity under which a service provider determines the
workflow, equipment and materials required along with the implementation
requirements for a particular process.

• To design a service process, various tools are used such as flowcharts, process
simulation software, service blueprint, etc.

• There are various methods that can be used to improve service process design
such as standardisation and variety reduction, mass customisation and modular
design, Taguchi method, and quality function deployment.
 2. Process Design and Improvement

Degree of Standardisation and Variety Reduction

• Standardisation refers to the absence of variety in a service.

• The greater the degree of standardisation, the lower will be the variety.

• Standardised processes deliver standardised services. In case of services, it

means that each customer or the item will get exactly the same treatment.

• The main advantages of standardisation is that despite the complexity of the

service process, the components and methods of service delivery remain the same.

• In addition, standardisation reduces the chances of errors and omissions

drastically.

• The major disadvantage that comes with standardisation is a reduction in

variety.
 3. Process Design and Improvement

Mass Customisation and Modular Design

• In the context of products, mass customisation means that the
organisation produces a large number of standardised products and
some degree of customisation incorporated into it. However, to achieve
mass customisation in services, there arises a need for direct
involvement of customers and service employees.
– Eg: Thali Restaurants; Garibrath trains

• In the modular design approach, a final product is made by a

combination of different standardised components. Different components
are assembled together to form a product. In such a design, if there
occurs a problem in the product, the component that is affected can be
easily replaced without affecting other components.
– Eg: McDonalds layouts; Multi-point charging slots
 4. Process Design and Improvement

Taguchi Method
• Genichi Taguchi was a Japanese engineer who developed Taguchi methods in
1950s-60s.

• Taguchi methods are a set of statistical methods used to improve product/service

quality.

• According to this approach, it is much easier to design products and services that
are insensitive to environmental factors rather than controlling environmental
factors.

• Taguchi methods make use of parameter design that involves specification

settings for the service and the service process. They use conventional statistical
methods of experimental design.
 5. Process Design and Improvement

Quality Function Deployment

• Quality Function Deployment (QFD) is a method that translates the voice of a
customer into quality characteristics of products/services in order to reach
customer satisfaction.

• It is a planning and quality tool that is used to implement quality considerations

of the customer into the design of service. Major aspects of QFD are cost, quality
and opportunity.

• QFD is based on the analysis of hidden customer requirements such as comfort,

safety, luxury, etc. These requirements are first seized which are then translated
into service design requirements that are further translated into service process
requirements. Services are developed by integrating various components.
 Let’s Sum Up

• Service design refers to the plan or drawing that shows a detailed layout of how a
service will be delivered to the customer.

• Service design is developed using inputs from various disciplines such as

ethnography, consumer research, interaction design, product design, industrial
design, service marketing and corporate strategy.

• Four approaches to the service system design are: production line approach,
customer as a co-producer approach, customer contact approach, and information
empowerment approach.

• Service blueprinting is a technique of bringing innovation in services.

• There are a few methods that can be used to improve service design such as
standardisation and variety reduction, mass customisation and modular design,
Taguchi method, etc.