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New Service Development and Process Design
Customer Benefit Package
Hierarchy Level
Element Core Good Example
Core Service Example
Category Business Custom clothier
Business hotel
First Core Business suits
Room for the night
Second PeripheralGood
Garment bag
Bath robe
Peripheral Service
Deferred payment plans
In house restaurant
Third Variant Coffee lounge
Airport shuttle
Learning Objectives Discuss the new service development process. Prepare a blueprint for a service operation. Describe a service process using the dimensions of divergence
and complexity. Use the taxonomy of service processes to classify a service
operation. Compare and contrast the generic approaches to service system
design. Place an example of service automation in it proper category. Discuss the managerial issues associated with the adoption of
new technology.
Levels of Service InnovationRadical Innovations
Major Innovation: new service driven by information and computer based technology
Start-up Business: new service for existing market New Services for the Market Presently Served: new services to
customers of an organization
Incremental Innovations Service Line Extensions: augmentation of existing service line
(e.g. new menu items) Service Improvements: changes in features of currently offered
service Style Changes: modest visible changes in appearances
New Service Development Cycle
People
Technology Systems
Product
Full Launch Development
Design Analysis
Org
aniz
atio
nal
Con
text Team
s
Tools
Enablers
• Formulation of new services objective / strategy• Idea generation and screening• Concept development and testing
• Business analysis• Project authorization
• Full-scale launch• Post-launch review
• Service design and testing• Process and system design and testing• Marketing program design and testing• Personnel training• Service testing and pilot run• Test marketing
Technology Driven Service Innovation
Power/energy - International flights with jet aircraft
Physical design - Enclosed sports stadiums Materials - Astroturf Methods - JIT and TQM Information - E-commerce using the Internet
Classification of Service Automation
Fixed-sequence (F) - parking lot gate Variable-sequence (V) - ATM Playback (P) - answering machine Numerical controlled (N) - animation Intelligent (I) - autopilot Expert system (E) - medical diagnosis Totally automated system (T) - EFT
Adoption of New Technology in Services
Challenges of Adopting New TechnologyThe Process is the ProductBack Office vs Front Office ChangesNeed for Standardization
Managing the New Technology Adoption Process
Ten step process with concern for employees and customers
Example of Service Blueprinting
Brushshoes
Applypolish
Failpoint
BuffCollect
payment
Cleanshoes Materials
(e.g., polish, cloth)
Select andpurchasesupplies
Standardexecution time
2 minutes
Total acceptableexecution time
5 minutes
30secs
30secs
45secs
15secs
Wrongcolor wax
Seen bycustomer 45
secs
Line ofvisibility
Not seen bycustomer butnecessary toperformance
Service Blueprinting (Bank Lending Operation Example)
Loan application Branch Officer Pay book
30min--1hr.
Line of visibility
Deny
1 day 2 days 3 days
Fail point Customer wait Employee decision
===========
===== $ 0 $ ==== =====
Receive Payment
Final paymentDecline Notify
customerIssuecheck
Confirm
Creditcheck
AcceptPrint
paymentbook
DelinquentClose
account
Verifyincome
dataInitial
screening
Verifypayer
Employer Creditbureau Branch
recordsBank
accountsAccounting
Data baserecords
FW
Con
firm
ww
F
F
F
F
F
F
Service Blueprint of Luxury Hotel
Strategic Positioning Through Process Structure
Degree of Complexity: Measured by the number of steps in the service blueprint. For example a clinic is less complex than a general hospital.
Degree of Divergence: Amount of discretion permitted the server to customize the service. For example the activities of an attorney contrasted with those of a paralegal.
Structural Alternatives for a Restaurant
No Reservations
Self-seating. Menu on BlackboardEliminate
Customer Fills Out Form
Pre-prepared: No Choice
Limit to Four Choices
Sundae Bar: Self-service
Coffee, Tea, Milk onlyServe Salad & Entree Together:
Bill and Beverage Together
Cash only: Pay when Leaving
TAKE RESERVATIONSEAT GUESTS, GIVE MENUSSERVE WATER AND BREAD
TAKE ORDERSPREPARE ORDERS
Salad (4 choices)
Entree (15 choices)
Dessert (6 choices)
Beverage (6 choices)SERVE ORDERS
COLLECT PAYMENT
Specific Table SelectionRecite Menu: Describe Entrees & SpecialsAssortment of Hot Breads and Hors D’oeuvresAt table. Taken Personally by Maltre d’
Individually Prepared at table
Expand to 20 Choices: Add Flaming Dishes;Bone Fish at Table; Prepare Sauces at TableExpand to 12 Choices
Add Exotic Coffees; Sherbet betweenCourses; Hand Grind Pepper
Choice of Payment. Including House Accounts:Serve Mints
LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE
Structural Positioning of Healthcare Services
HIGH COMPLEXITY
* Hospitals Services
* General Practitioner:
* Forensic-Testing Lab Diagnosis & Treatment
* Diagnostic services only
Specialist:
* Treatment only
LOW DIVERGENCE HIGH DIVERGENCE
Outpatient Clinic: Limited
* Treatment: e.g. Broken
Bones/Minor Burns only
* Retailer of
Orthopedic Supplies
* X-Ray Lab * Medical
Counseling
LOW COMPLEXITY
Taxonomy of Service Processes Low divergence High divergence
(standardized service) (customized service)
Processing Processing Processing Processing Processing Processing
of goods Information of people of goods Information of people
Dry Check Auto repair Computer
No Cleaning processing Tailoring a programming
Customer Restocking Billing for a suit Designing a
Contact a vending credit card building
machine
Ordering Supervision
Indirect groceries of a landing
customer from a home by an air
contact computer controller
No Operating Withdrawing Operating Sampling Documenting Driving a
customer- a vending cash from an elevator food at a medical rental car
service machine an ATM Riding an buffet dinner history Using a
worker Assembling escalator Bagging of health club
interaction premade groceries Searching for facility
(self- furniture information
Direct service) in a library
Customer Customer Food Giving a Providing Home Portrait Haircutting
Contact service service in a lecture public carpet painting Performing
worker restaurant Handling transport- cleaning Counseling a surgical
interaction Hand car routine bank a tion Landscaping operation
washing transactions Providing service
mass
vaccination
Generic Approaches to Service Design
Production-line• Limit Discretion of Personnel• Division of Labor• Substitute Technology for People• Standardize the Service
Customer as Coproducer• Substitution of Customer Labor for Provider• Smoothing Service Demand
Customer Contact• Degree of Customer Contact• Separation of High and Low Contact Operations
Information Empowerment• Employee and Customer
Production-line Approach to Service Design
Limit Discretion of Personnel
Division of Labor
Substitute Technology for People
Standardize the Service
Customer Participation
Encourage Co-production by CustomerFree air miles for Internet ticketing
Promote Demand Smoothing Half-price drinks before 6:00pm
Customer Contact View of Services
Degree of Customer Contact Influences Potential Efficiency of Service
Separate High- and Low-Contact Operations
Consider Sales Opportunity and Production Efficiency Tradeoff
Service-System Design Matrix
Mail contact
Face-to-faceloose specs
Face-to-facetight specs
PhoneContact
Face-to-facetotal
customization
Buffered core (none)
Permeable system (some)
Reactivesystem (much)
High
LowHigh
Low
Degree of customer/server contact
Internet & on-site
technology
SalesOpportunity
ProductionEfficiency
Information Empowerment
EmployeesRelational Databases
CustomersInternet Web Site
Discussion Questions
What ethical issues are raised in the promotion of sales during a service transaction?
What are some drawbacks of customer participation in the service delivery process?
What are the limits in the production-line approach to service?
Give an example of a service in which isolation of the technical core would be inappropriate.
INTERACTIVE CLASS EXERCISE
The class breaks into small groups and prepares a service blueprint for Village Volvo.