Chap 4 New Service Development and Process Design

7/30/2019 Chap 4 New Service Development and Process Design

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New Service Development

and Process Design


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Origin of new services

Human needsstimulus for new services

Need for survival and growth in the private

sectorSocial needs not adequately covered by

private sectorstimulus for public sector


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Life cycle of a service

Infancy: many risks; high mortality rate; slow growth of

demand

Growth: acceptance by customer

Pressures for additional capacityMore efficient service

Adjustments in managerial style

Maturity: demand reaches saturation level (long durationfor services that meet genuine need)

Decline: changes in economy, new improved services,

changes in technology

When to introduce new services?


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Steps in service design

Idea generation

Selection: compatibility with organizations

goals and resourcesPrivate sector, drop the idea if:

Not much profit

Deteriorates company image

Incompatible with skills, facilities

Public sector

Goals less easily definable (public welfare)

Little attention to operational issues


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Steps in service design

Preliminary design: little product testing.

Marketing present

Specify key attributes of service package

Final design: specify service level


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New Service Development Cycle

People

Technology Systems

Product

Full Launch Development

Design Analysis

Tools

Enablers

Formulation

of new servicesobjective / 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


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Levels of Service InnovationMajor 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

(some courses on-line)

Service Line Extensions: augmentation of existing

service line (e.g. new elective courses)

Service Improvements: changes in features of

currently offered service (bidding system)

Style Changes: modest visible changes ina earance


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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


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Adoption of New Technology in

Services

Challenges of Adopting New Technology

The Process is the Product

Back Office vs Front Office Changes

Need for Standardization

Managing the New Technology Adoption

Process


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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 $ ==== =====

ReceivePayment

FinalpaymentDecline Notify

customerIssuecheck

Confirm

Creditcheck

AcceptPrint

paymentbook

DelinquentClose

account

Verifyincome

dataInitial

screening

VerifypayerEmployer Credit

bureau Branchrecords

Bankaccounts

Accounting

Data baserecords

FW

ww

F

F

F

F

F

F


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Service Blueprint of Luxury Hotel


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Service design=process selection

Customer Technology

Worker

Uncertainty and complexity

Service design = procedures through which workers carry out theprocess

Procedures for:

Information exchange

Material delivery/exchange

Monetary exchange

Contact

Variable sequence, occur concurrently, differ in duration

Service Design and Process

Selection in HC system


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Service Design and Process

Selection in LC system

Similar to manufacturing tangible output

Worker Technology

Process selection through a range of optionsavailable with respect to equipment and

procedures


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Basic Types of Processes

Project

Long duration

Low volume

One of a kind

Well-defined activities

Duration affected by completion of criticalactivities


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Batch (job shop)

Short duration

Low volume

Custom made

Different sequence of activities for each

customer

Scheduling


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Line (flow shop)

Short duration

High volume

Standard product

Standardised services

Routine sequencingLine balancing


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Continuous

Critical issue: deployment of service

resourcesA measure of performance: travel time to

customer


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Process Selection

Steps arranged in a logical sequence

Capacity at each step must be balanced to

minimise bottlenecksCertain steps can be eliminated, or process

shortened by paralleling steps

Appropriate flexibility at each step


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Process Selection - Time

Access time: from first attempt to obtain

service until the start of customer service

Queuing time: length of queue, integrity ofqueue

Action time: time to provide the service

S i P i i i


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Strategic Positioning

Through Process Selection

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.


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Structural Alternatives for a Restaurant

No Reservations

Self-seating. Menu on Blackboard

Eliminate

Customer Fills Out Form

Pre-prepared: No Choice

Limit to Four Choices

Sundae Bar: Self-service

Coffee, Tea, Milk only

Serve Salad & Entree Together:Bill and Beverage Together

Cash only: Pay when Leaving

TAKE RESERVATION

SEAT GUESTS, GIVE MENUS

SERVE WATER AND BREAD

TAKE ORDERS

PREPARE ORDERS

Salad (4 choices)

Entree (15 choices)

Dessert (6 choices)

Beverage (6 choices)

SERVE ORDERS

COLLECT PAYMENT

Specific Table Selection

Recite Menu: Describe Entrees & Specials

Assortment of Hot Breads and Hors Doeuvres

At table. Taken Personally by Maltre d

Individually Prepared at table

Expand to 20 Choices: Add Flaming Dishes;

Bone Fish at Table; Prepare Sauces at Table

Expand to 12 Choices

Add Exotic Coffees; Sherbet between

Courses; Hand Grind Pepper

Choice of Payment. Including House Accounts:

Serve Mints

LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE

P d i li A h


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Production-line Approach to

Service Design

Design the system to control the process

Limit Discretion of Personnel: standardization andconsistency

Division of Labor: specialisation of skills; pay onlyfor required skills

Substitute Technology for People: soft technology(marker card in display for replenishment)

Standardize the Service: limit service array Opportunity for pre-planning; predictability

Uniformity in quality

Franchising possible


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Customer Participation

Ranges from self-service to complete dependence onservice provider

Substitution of consumer labor for provider labor:encourage co-production by customer (free air

miles for Internet ticketing). Lower cost service Promote Demand Smoothing: requires

participation of customer. They must adjust thetime of their demand to service availability

Half-price drinks before 6:00pm Reservations & appointments: compensation for

customer is to avoid waiting time

Use customer to assume a diagnostic role


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Methodology for Process Selection

Determine service stages

Determine alternative methods ortechnologies to perform operations at each

stage (involves distributing tasks betweenmen and machines)

Preliminary selection of alternative

methods: must meet expected level andtiming of output


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Methodology for Process Selection

Detailed alternative service production: combine

alternatives at each stage

Methods must be compatible

Each combination is analysed on the basis of Performance criteria: capacity

Economic criteria: purchase, installation, start-up costs,

production costs)

Qualitative criteria: operating flexibility, safety, intangibles,

negatives (noise)

Evaluation and final selection


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100 Yen Sushi House Layout

Miso and Tea Station

CONVERSATION AREA

CONVERSATIONAREA

Dishwashing Counter in Back

ENTRANCE

CONVEYOR

BELT

TAKE-OUT

POSITION

= CHEF


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100 Yen Sushi House Blueprint

Customer Provider

Activities Activities

Enter Welcome Customers

Seat Themselves Serve Accessories

Make Paste

Make Selection Prepare Selections Review Demand

Make Tea Cook with Attn. to Flavor

Eat Fill Tea Remove Uneaten Sushi

Stack Plates Get from Inventory

Pay Count PlatesLeave Thank Customer Stock Inventory

Remove Accessories

Line of Visibility

Tell Friends Wash Plates, etc.P id Hi h Q lit I di t

F

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Chap 4 New Service Development and Process Design

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