1. Ch. 4 Product & Service Design
SCM 352 Operations Mgt
Dr. Ron Lembke

2. How are Services Different?
 Everyone is an expert on services
 What works well for one service provider doesn’t
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necessarily carry over to another
Quality of work is not quality of service
“Service package” consists of tangible and intangible
components
Services are experienced, goods are consumed
Mgmt of service involves mktg, personnel
Service encounters mail, phone, F2F

3. Degree of Customer Contact
 More customer contact, harder to standardize
and control
 Customer influences:
 Time of demand
 Exact nature of service
 Quality (or perceived quality) of service

4. 3 Approaches
 Which is Best?
 Production Line
 Self-Service
 Personal attention

5. What do People Want?
 Amount of friendliness and helpfulness
 Speed and convenience of delivery
 Price of the service
 Variety of services
 Quality of tangible goods involved
 Unique skills required to provide service
 Level of customization

6. Service-System Design Matrix
Degree of customer/server contact
High
Buffered
core (none)
Permeable
system (some)
Reactive
system (much)
Low
Face-to-face
total
customization
Face-to-face
loose specs
Sales
Opportunity
Face-to-face
tight specs
Internet &
on-site
Mail contact technology
Low
Production
Efficiency
Phone
Contact
High

7. Impact of Life Cycle
iTunes
CDs
DVD
Audio
Cassettes
Records
MiniDisc
DAT
8-Tracks
Introduction
Growth
Maturity
Decline

8. Impact of Life Cycle
Records
DAT
Introduction
Growth
Maturity
Decline

9. Applying Behavioral Science
 The end is more important to the lasting
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impression (Colonoscopy)
Segment pleasure, but combine pain
Let the customer control the process
Follow norms & rituals
Compensation for failures: fix bad product,
apologize for bad service

10. Restaurant Tipping
Normal
Experiment
Introduce self(Sun brunch)
15%
23%
Smiling (alone in bar)
20%
48%
 Waitress
28%
33%
 Waiter (upscale lunch)
21%
18%
“…staffing wait positions is among the most
important tasks restaurant managers perform.”

11. Modular Components
 Take advantage of modules: parts or products
previously prepared
 Restaurants: prepared ingredients, assembled to
order
 Suppliers can develop new, interesting products
to use more quickly, cheaply
 Variety is gained by different combinations of
same components

12. Mass Customization
 Highly customized
 Integrate design, processes, supply network
 Supply components cheaply to production points
 Fast, responsive production, quick delivery
 Higher weight, lower value

13. Fail-Safing
 “poka-yokes” – Japanese for “avoid mistakes”
 Not possible to do things the wrong way
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Indented trays for surgeons
ATMs beep so you don’t forget your card
Pagers at restaurants for when table ready
Airplane bathroom locks turn on lights
Height bars at amusement parks

19. Blueprinting
Fancy word for making a flow chart
“line of visibility” separates what customers can see
from what they can’t
Flow chart “back office” and “front office” activities
separately.

20. Review on Flow Chart Mapping
Symbols
Start or finishing point
Step or activity in the process
Decision point (typically requires a “yes” or “no”)
Input or output (typically data or materials)
Document created
Delay
Inspection
Move activity
Typical, but others may be used as appropriate
© 2008 Pearson Prentice Hall --- Introduction to
pter 3, Slide 20
Operations and Supply Chain Management, 2/e
--- Bozarth and Handfield, ISBN: 0131791036

21. Our Flow Chart Example
Dealer
Faxes
Order
Paper
Order
Created
4% of
orders lost
Order Sits
In Fax
In Box
0 to 4 hours
2 hours on average
Order Sits
In Clerk’s
In Box
Internal Mail
Delivers Fax
0.5 to 1.5 hours
1 hour on average
1% of orders lost
0 to 2 hours
1 hour on average
Clerk
Processes
Order
5 minutes
10 to 45 minutes
20 minutes on average
Dealer
Receives
Order
Transport Firm
Delivers Order
1 to 3 hours
2 hours on average
No history of lost,
damaged, or incorrect
deliveries
Inspector
Checks
Order
Worker
Picks
Order
2 minutes
0.5% of orders incorrect
© 2008 Pearson Prentice Hall --- Introduction to
pter 3, Slide 21
Operations and Supply Chain Management, 2/e
--- Bozarth and Handfield, ISBN: 0131791036
YES
Is Item
In Stock?
NO
Clerk Notifies
Dealer and
Passes Order
On to Plant

22. Group
 Group yourselves into three (3)
 Design a service and create a flow chart
describing the flow of the service you will
introduce. (Use proper flowchart symbols)
 Submit this on Jan. 16, 2013 (short bondpaper)