Des ning the Service Eimerprise (Unit-2) 39 UNIT 2 Designing the Service Enterprise 2. NEW: SERVICE DEVELOPMENT. 2.1.1. Introduction AL servi success industries are experiencing cut-throat competition and rising desires of the customers. Hence, im be ensured not only by offering current service in a good manner but also establishing the 1c ways of catering the services, As service industry involves a right blend of processing and delivering the services for ensuring a satisfied clientele, both these aspects must be given due importance. Environment for diversion or expansion is crucial for making strategic decisis especially for the marketers who are already engaged in offer All the processes and procedures concerning the recognition of new service opportunities like designing the services and its model and service marketing come under the scope of new service development. Usually, service development is the enterprise development by adopting various marketing techniques. Following are the necessary questions pertaining to this approach: 1) What are the ways to discover, reach, and appeal customers? 2) What are the ways for ensuring satisfaction of these customers with a novel approach? ns about the new services, ng services. 2.1.2. Types of New Services ‘The types of new services are as follows: 1) Style Modifications: Style modifications refer to the basic form of innovation, which usually does not involve any changes in either process or efficiency. Yet, modification in style is frequently seen, which helps in arousing enthusiasm, and it can also encourage the staff. For example, giving a new colour to the retail outlets aid means of transportation, redesigning the uniform of the employees, introducing payments through a new bank check or introducing trivial change in the service guidelines for the staff. 2) Service Improvements: Service improvement is the usual form of innovation. It involves moderate changes in the efficiency of the products by either enhancing the basic product or adding the additional services. For example, extending service hours of banks, adding facilities to the hotel room, etc, 3) Supplementary-Service Innovations: Supplementary-service innovations include adding supplementary service to a basic service or further enhancing the supplementary services, 4) Process-Line Extensions: Process-line extensions are not as innovative as process innovations. However, it involves novel ways of delivering the products or services, which offers more comfort and a novel experience for the present customers. It is also helpful in attracting those customers who find the traditional methods unattractive. Usual types of process-line extensions include introducing a lower-contact distribution channel to a current high-contact channel, like offering internet or telephonic banking services to the customers to ease the processes. 5) Product-line Extensions: Product-line extension refers to adding more products to the existing product lines. Those who take the first move are considered as pioneers and the rest as followers. These services can cater to serve broader needs of the existing customers and/or attract new ones with varying needs. 6) Major Process Innovations: When the existing core services of an organisation are offered with, new service processes alongwith additional benefits, it is called process innovation, These innovations help in ‘adding new customers to the organisation. 7) Major Service Innovations: Major service innovations refer to introducing novel services in the market which have never seen before. Generally, these services have new features/benefits and are offered through new processes. Scanned with CamScanner40 [MBA Second Semester (Service Operations Management-}) SPPU 2.1.3. Pre-Requisites for New Service Development Following are the pre-requisites for new service development: 1) Organisational Feasibility: Prior to even thinking about a new service concept, it is vital to assess if it will 0 s und objective of the organisation, Different product levels and hierarchies need t0 new service, If an organisation's strategy is to serve only corporate or bu: customers it would be a unique idea to launch services for the retail consumers. 2) Market Analysis: After matching the new service idea with the organisational strategy it is required to have the market analysis report for any new service development. Market analysis encompasses identifying the possible market for the new service. Only after conducting market analysis, the next formalities n new service design can be implemented. 3) Business Case Development and Pricing: The next essential pre-requisite is the establishment of a business case for a new service, after deciding about its market prospects. Though the service may have an abundant market potential but if its business case is absurd (;e., it will net be able to bring sufficient returns or the return on investment (ROI) would take a long time), there will be no point to initiate it with the service des 4) Service Description: The service description (or service definition) is the most vital document related to the service requirements. It helps in determining the questions like: i) What is the actual service? What are the drivers for developing the service? i) What service features are offered to the customers? iv) What will be the reaction of the customers on using the service? v) How the service features would be used by the customers? And how would they get benefited from it? vi) What service levels are expected to be supported by the new service? 5) Understanding the Requirements: A very important pre-requisite for new service development is understanding the requirements for the new service and comprehending why they are essential. Requirements refer to the needs or the desires of the customers/end users as they only can define basic standards and situations in which these needs can be fulfilled. process, 2.1.4. | New Service Development Process The NSD process involves the following steps: Stage 1: Generating the Concept: The ideas about new services can be eee generated internally or externally. Internally, the sources can emerge from sales staff, [ront office staff or specifically R&D department, whereas the 1 external sources can be the information about customers’ needs or the actions ‘Concep Screening ‘of the competitors in the market. The data can be acquired in a structured and formal manner through various data collection tools like questionnaire and J interviews. For example, the insurance agents, the operational staffs can help Preliminary Design the company to know more about the customers as well as their perspectives T ‘on the various policies. : ‘Design Bvahaton and improvement Stage 2: Concept Screening: It is not possible to market all conéepts or variants of concepts. The concept screening stage involves understanding and y assessing the flow of concepts. There can be different stages of screening | Frtyping and Final sign involving different functions. Usually, there are three set of criteria for assessing market positioning of the products, its operations/technical i 1s and assessment of finance. This concept screening stage Developing the Operations Process iplics involves answering the following questions: Figure 2.1: New Service 1) Does the proposed product or service possess an attractive position in the Developmen: Process ‘market which also matches with the marketing strategy of the organisation? 2) Does the proposed product or service use current resources capabil capabilities? 3) Is it feasible to invest in the proposed product or service, and is the return on investment is sat this product or service? 'S satisfactory on or can help in developing new Scanned with CamScannerDesigning the Service Enterprise (Unit-2) 41 For example, the senior managers and officers can analyse all the ideas they can get from the sources and then they can find out where they can change the policies or bring some newness so that it can tick in the minds of consumers. Stage 3: Preliminary Design: The detailed work on the design of the product or service starts from this stage. It includes deciding what the product or service would encompass. Different important information are collected for this, like the elements required to make the product or service, the manner in which these elements have to be arranged to finally make the package (ie., product/service structure) and the exact quantities of each element required to finalise the package (i, bill of materials). Stage 4: Design Evaluation and Improvement: At this stage, attempts ate made to improve the preliminary design, before introducing the prototypes/samples in the market, Various techniques can be used at this point for assessing and improving the preliminary design. A few techniques are related with finding the total expense incurred and making it cost-effective. Others are related with finding technical features of the product or service for improving the total worth. Most techniques are concerned with step-by-step interrogation to find out what each component contributes towards its total worth, why things are done in a manner and how can be things done differently. Stage 5: Prototyping and Final Design: Usually ‘close to final’ designs are “prototyped’. Sometimes, the design activity is also partially carried in next stage to make an improved design as a prototype, which can be tested. It may help in kaowing more about the nature of the projected product or service but usually, it helps in lowering the risk factor associated with introducing it directly in the market. For example, computer simulations and clay models of car design are used for product prototypes. For service prototypes, computer simulations can be used and these can also be used in pilot testing of the product/service, Different new products or services or pilot tested by the retailers in few stores to test the reactions of the customers, Stage 6: Developing the Operations Process: Almost every model of product and service development works ‘on the assumption that the final stage will help in developing the operations processes which witl finally help in producing the intended product or service. However, practically product/service development and process development are inevitably linked. However, keeping this step in the end does not support the idea that development process for designing products and services, as per the market needs, can take place after deciding, on its features. Only, when the operations processes are comfortable with the service design, the process decisions can be taken. g SOURCES OF SERVICE SECTOR GROWTH. ‘There are numerous sources behind the success of service sector in India which are explained as below: 2.2.1. Information Technology (IT) The implementation of advanced tools and methods is commonly known as technology. There is a continuous attempt from the innovative service providers to look for the different methods of reducing the processing time, automating the service providing, reducing the cost (and thus prices), having close connection with the customers, developing new services, creating appeal for the existing products, enabling fast delivery of services, etc. The service sector has also helped the way for continuous growth of IT and IT enabled services. IT sector of the country has developed as young and powerful sector. It has eared brand identity in global market. Its main components are IT services, engineering products. IT and IT enabled services sector has generating considerable amount of revenue and employment in our economy. ture driven economy IT services industry ecosystem has played a part in helping India leap frog from an aj to aservices driven economy. 2.2.2. Innovation Tndia has always been a leader in frugal innovation. Innovation researchers have, for this reason, stressed that much service innovation is hard to capture in traditional categories like product or process innovation. The co-producti process, and the interactions between service provider and client, can also form the focus of innovation. A growing ‘number of professional association have service sections that promote service innovation. Scanned with CamScanner2 -MIBA Second Semester (Service Operations Management-}) SPPU 2.2.3. Changing Demographics : Demographic change describes a population's age structure adjusting to changes in fiving conditions. Consequently, changes in the composition of a society's age structure are the result of social shifts. population Demographic changes can affect GDP growth through several channels. First, lower growth i directly implies reduced labor input. Second, lower population growth has an indirect potentially negative impact on individual labor supply insofar as it leads to higher tax rates which reduce the incentive to work. nch Revolution provides an interesting historical example of how a social change resulted in a new \dustry. Before the revolution, only two restaurants were in existence in Paris; shortly afterwards, there were more than 500. The deposed nobility had been forced to give up their private chefs, who found that ng their own restaurants was a logical solution to their unemployment. Changing demographics poses a great challenge and an ocean of opportunities for the retailers- both in the organized and in the unorganized retail. Retailers need to stay ahead of consumers and try to exceed the ‘expectations of the consumers. They need to evolve new business models, adopt effective pricing strategies and ‘must bring about radical changes, 2.2.4. Cultural Changes Different types of knowledge, taboos, behaviour, values, and traditions which are passed from one generation to another are known as ‘culture’. There is a very strong impact of culture on the life style of individuals. As culture is a process of development, it is dynamic in nature, Change is the inevitable part of culture. Different societies have different pace of changing. Some cultures change fast, some moderately, and some very slowly. ‘There is no uniformity in the changes which occur in Indian culture. The effects of these changes are felt more in last century. 2. INFORMATION TECHNOLOGY IN SERVICE INDUSTRY 2.3.1. Introduction An extensive range of transformational activities is facilitated through a variety of services and software tools. New technological innovations are appearing on a continuous basis and any type of technology that is required by IT professionals is ready to be employed. Recognising and capitalising transformational technologies and services are important for a suecessful transformational drive. Services are shifting towards technology to tackle the issues particularly related to customer contact and increased demand. For a service firm, the advantages of technology are visible in the form of cost savings and productivity. Nevertheless, customers are the ones who commence and execute most the services delivered through technology. Also, there is no direct or indirect interaction with the service provider representatives, Technologies are drastically changing the interpersonal encounter relationships and also terminating them completely in some cases. In a service organisation, technologies are not only used to provide services to the customer but are also used at workplace. Mainly the purpose is to achieve twin objective of efficiency and managerial control. 2.3.2. Internet as a Service Enabler 1) E-commerce: ‘E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the Internet, especially the World Wide Web. In practice, this term and a new term, 'ebusiness’, are often used interchangeably. For online retail selling, the term e-tailing is sometimes used. It reality following a convergence of several technologies. 2) Extailing or the Virtual Storefront and the Virtual Mall: As a place for direct retail shopping, with its 24-hour availability, 2 global reach, the ability to interact and provide custom information and ordering, and multimedia prospects, the Web is rapidly becoming a multibillion-dollar source of revenue for the world's businesses. A number of businesses already report considerable success. As early as the middle of 1997 Dell Computers reported orders of a million dollars a day. By early 1999, projected ecommerce revenues for business were in the billions and the stocks of companies deemed most adept at e-commerce were Scanned with CamScannerDesigning the Service Enterprise (Unit2) 4B skyrocketing. Apart from computer and network products, books (Amazon.com), gardening products (Garden.com), music on compact disks (CDNow), and office supplies (SuppliesOnline) were a few of the better-known e-commerce sites. By carly 1999, even businesses that have always counted on face-to-face customer interaction were planning e-commerce Web sites and many businesses were planning how to coordinate in-store and Web store retail approaches. Meanwhile, new businesses based entirely on Web sales were being invented daily. 3) Electronic Data Interchange (EDI): EDI is the exchange of business data using an understood data format. It predates today’s Internet. EDI involves data exchange among parties that know each other well ‘and make arrangements for one-to-one (or point-to-point) connection, usually dial-up. 4) E-Mail, Fax, and Internet Telephony; E-commerce is also conducted through the more limited electronic forms of communication called e-mail, facsimile or fax, and the emerging use of telephone calls over the Internet, Most of this is business-to-business, with some companies attempting to use e-mail and fax for unsolicited ads (usually viewed as online junk mail or spam) to consumers and other business prospects. An increasing number of business Web sites offer e-mail newsletters for subscribers. A new trend is ‘opt-in’ e- mail in which Web users voluntarily sign up to receive e-mail, usually sponsored or containing ads, about product categories or other subjects they are interested in. 5) Business-to-Business Buying And Selling: Thousands of companies that sell products to other compat have discovered that the Web provides not only a 24-hour-a-day showcase for their products bat a quick way to reach the right people in a company for more information. 6) Security of Business Transactions: Security includes authenticating business transactors, controlling access to resources such as Web pages for registered or selected users, encrypting communications, and, in general, ensuring the privacy and effectiveness of transactions. Among the most widely used security technologies are SSL and RSA. Secure Electronic Transactions (SET) is an emerging industry standard,’ 7) To Play Games: Online games provide a convenient outlet of entertainment, Treeloot.com is a game site that obviously is supported by forcing players to view advertisements, but other sites focus just on games. 8) Other Internet Services i) Providing information and knowledge directly to consumers. Before the Internet, consumers used a variety of sources for acquiring knowledge including libraries, phone calls, universities and personal contacts. Now information can be provided immediately as a service by searching the Internet. ii) Providing service at a distance. Services such as call centers, barking, entertainment and legal services ccan be provided over long distances, even internationally. iii) Reservations can be made on the Internet to reserve capacity more easily than by calling ahead for the reservation. iv) Facilitating goods can be ordered directly by the Internet and delivered without traveling to a retail store. The services provided includes browsing for merchandise, order entry, order checking, payment, order confirmation, notification of delivery and return services. v) Internal information systems now provide an array of management information to help managers make better decisions. 2.3.3. Role of Technology in Services Industry ‘Technology has following role to play in services industry: 1) Improves Service Operations: Day to day activities has changed in many service sectors with the introduction of information technology, particularly in the sectors of banking and finance. It allows a manager to design, implement, and assess the result with high speed and accuracy, which in turn enhances his/her efficiency in planning, evaluating, and monitoring the process of service. 2). Provides New Means of Services: In the service industry, technology has paved the way for new services, new products, efficient delivery channels, and new markets. Some of the examples are mobile services, intemet banking, and online electronics services. 3) ‘Overcomes the Problem of Standardisation: Technology can help service organisation in various ways, It can help in tackling the issues of standardisation and maintaining uniformity in delivery of service, and thus, making the service operations more efficient and cost-effective. For this, backend operations are required to be updated and restructured in order to give a suitable backing to the automated activities. Scanned with CamScanner“4 MBA Second Semester (Service Operations Management-1) SPPU 4). Enables Services Meeting High Expectations: Customers of today are more demanding and te 5) Helps 6) Pro we vices, anywhere and anytime. rs, the service organisations are assisted by ‘compare them with customers of earlier generations. They want immediate ‘Therefore, in order to fulfil the requirements of such custon information technolos Designing Innovative Services or Products: Generation of new E-products (i.e., Facebook, Google, eBay, etc.) has increased with the advent of new technologies. These enable us to interact with friends, make purchases, go shopping, perform banking, and endorse our products and services without going through the regular hustle related with standard services and products. Location: One of the most affected components of service marketing is the location of goods and services. With the advent of online marketing, the technology has changed the functioning of markets, The overall process of purchasing has become safe and convenient, Customers from all around the globe can now purchase goods and services and get it delivered at their desired place. 7) Creates Fast Growing Environment: Technology has enabled the service industry to move at a fast pace with the emergence of telephone services, mobile services, ATMs, on-line services, etc. Currently, the use of plastic cards is increasing ata rapid pace. Its a banking product that meets the requirements of retail customers. 8) Improved Promotion: Technology has impressively changed marketing of services by shifting from the traditional promotional strategy of magazine and newspaper advertisements to cable and T.V. advertisements, banner ads, search engine optimisation, pop-in and pop-out, etc. eg INNOVATION IN SERVICES 2 4.1, Introduction Service innovation is used to refer to many things. These include but not limited to: 1) Innovation in services, in service products — new or improved service products (commodities or public 3) services). Often this is contrasted with “technological innovation”, though service products can have technological elements. This sense of service innovation is closely related to service design and "new service development”. Innovation in service processes ~ new or improved ways of designing and producing services. This may include innovation in service delivery systems, though often this will be regarded instead as a service product innovation. Innovation of this sort may be technological, technique- or expertise-based, or a matter of work organisation (e.g. restructuring work between professionals and paraprofessionals). Innovation in service firms, organisations, and industries - organisational innovations, as well as service product and process innovations, and the management of ifinovation processes, within service organisations. 2.4.2. Areas of Innovation in Services - den Hertog's Model den Hertog (2000) who identifies four “dimensions” of service innovation, takes quite a different direction to much standard innovation theorizing. 1) 2 The Service Concept refers to a service concept that is new to its particular market ~ a new service in effect, or in Edvardsson’s terminology, a “new value proposition”. Many service innovations involve fairly intangible characteristics of the service, and others involve new ways of organising solutions 19 problems (be these new or familiar ones), Examples might include new types of bank account or information service. In some service sectors, such as retail, there is much talk about “formats' the organisation of shops in different ways (more or less speci cost-saving, etc.). such as zed, more or less focused on quality or ‘The Client Interface refers to innovation in the interface between the service provider and its customers. Clients are often highly involved in service production, and changes in the way in which they play their roles and are related to suppliers can be major innovations for many services, E3 : i major innayations am might include a greater amount of self-service for clients visting service organisations, There nes French literature on service innovation that focuses especially on this type of innovation, identifies as innovation in “servuction”. Ving it Scanned with CamScannerDesigning the Service Enterprise (Unit-2) 4s 3) The Service Delivery System also often relates to the linkage between the service provider and its client, since delivery does involve an interaction across terface. However, there are also intemal organizational trrangements that relate to the ways in Which service workers perform their job so as to deliver the critical services. Much innovation concems the electronic delivery of services, but we can also think of, for instance, transport and packaging innovations (c.g. pizza delivery). An emerging concept of SDP is the idea of taking a “factory” approach to Service Innovation. A "service factory" approach is a standardised and industrialised environment for more effective service innovation, development and operations for the IP era. 4) Technological Options resemble most familiar process innovation in manufacturing sectors. New information technology is especially important to services, since it allows for greater efficiency and effectiveness in the information-processing elements that are, as we have seen, prevalent to a great extent in services sectors. We also often see physical products accompanying services, such as customer loyalty cards and “smart” RFID cards for transactions, and a wide range of devices for communication services. 2.4.3. Technology in Service Innovation With the objective of enhancing the current process of the services delivery and reducing the costs in offering, those services, service organisations make use of technology. Different types of technologies used by service organisations are discussed below: 1) Automated Teller Machines (ATM): Nearly 3.3 million ATMs are functioning all around the world, ATMs enable the customer to carry out various financial transactions ~ from deposit and withdrawal of cash, to buying’ mutual funds, trading in stock, fund transfer, routine transactions such as making hotel reservations, booking air-tickets, and payment of electricity bills. 2) Image Processing: A lot of documentation is required in industries Tike banking and capital market. Therefore, image processing technology will have a high influence on the activities of such industries because of its feature of minimum paperwork. 3) Virtual Bank: A virtual bank handles all its transactions and services through technology. It may be a customer activated terminal (CAT) or Kiosk, which normally comprises a monitor, a card reader, a video disk player, and computer workstation. It enables the customers to use the banking services as per their pace and convenience. 4) Electronic Funds Transfer at Point of Sale (EFTPOS): Though credit cards were introduced with the intent to buy-now-pay-later and travellers’ cheques with the intent to pay-now- buy-later benefit, debit cards or EFTPOS on the other hand, are intended for buy-now-pay-now, however without any cash transaction. While making a purchase through this system, the user presents the ATM card and the bank account of the user is instantly debited through EFTPOS. 5) Home Banking: It enables the user to access all the banking services from their homes with the help of smartphones having integrated modems and programmable microprocessors built-in, 6 Electronic Data Interchange (EDI): Electronic Data Interchange commonly means carrying out financial transactions without using paper. Using the corporate banking terminal which is linked to the bank ‘computers, companies can access their bank account for various transactions such as opening letters of credit, transferring funds, managing its flow of cash, etc. 7) Smart Cards: A smart card offers the user an extensive range of transactional possibilities even from distant locations. It consists of a card which is in-grained with integrated circuits (ICs) or micro-chips. It is widely used for employee clock-ins, payment of various bills, withdrawal of cash from ATMs, ete. 8) SMART Technologies: It is an interactive white board that enables teachers to show images and texts from the laptop to students in the classroom. A phenomenal feature of SMART board is that the instructor can write or draw anything on it with the help of a light pen. 9) E-CRM: Insurance industry is an information rich industry, it requires large amount of data for service customisation and analysing the market trends. Customer relationship is very important in insurance industry, however it not possible for the insurance agent to keep in touch with every customer. Therefore, e- CRM assists the agent in having knowledge about their customers and furnishing information straight to them. It increases business while decreasing the marketing cost. 10) Electronic Medical Record (EMR): An electronic medical record system can maintain the complete details of the medical history of a patient that can eventually assist the physician in taking beneficial decision when the patient enters the hospital. Scanned with CamScanner46 MBA Second Semester (Service Operations Management) SPPUS 2.4.4. Challenges of Adopting New Technology in Services When introducing new technologies there are a number of challenges that face an organisation 1) Focusing on Benefits Versus Costs: Organisations who are considering new technologies must be laser clear as to the benefit and let that drive the prioritisation process versus weighting projects by cost or complexity. 2) Anticipating the Needs of the User: Replicating existing technology creates a follower positioning, for organisations in a competitive industry this in the long-run amounts to investing in a position that lags behind rather than surges past competitors. 3) Validating Technology Use Cases: Companies no longer can afford to guess if their technology investment can make an impact, leading organisations now validate from the get-go to determine the impact and viability of proposed investments. 4) Need to Define Robust Processes: Implementing technology also creates momentum to converge processes, it forces an organisation to identify what are their leading practices, and doubling down on making those more precise and efficient. 5) Pressure to Run Large Corporations Like a Start Up: A natural human tendency is seek comfort and rest in the status-quo but technology introduces change and new practices into an organisation that can ‘cause resistance in upper and executive levels of management. 6) Changing Convention from Drawn Out Projects to Short Delivery Increments: If technology is to make a lasting impact on an organisation it needs to continue to evolve. Sprint sized or story centric delivery is no longer a mantra buta reality that focuses on delivering organisation outcomes regularly while avoiding the inherent risks in large project scope. 7) Vying for Competitiveness Amidst Backdrop of Regulations: Enabling operation of new technologies may sometimes be at odds with regulatory bodies, the added burden to an organisation is lobbying and getting clearance to utilise technology and data in new ways for large institutions versus nimble start-ups. 8) User Adoption Challenges: Users will often resist change and adopting new systems particularly when they haven’t been consulted nor if their reporting organisations do not incentivise them to do so. 2.4.5. Readiness to Embrace New Technology 1) Commit to a Culture of Learning and Responsiveness: Organisations must quickly validate their planned investments in technology and determine operating models around these big bets. Despite the many failed start up stories the ones who are disciplined and are focused around a rigorous validation and response process end up changing their industries and shifting influence away from established industry players. Industry banners who quietly took the lunch away established industries include Amazon, UBER, and SalesForce have all been pivotal to ushering new eras in their industries. These organisations have created a DNA that simply operates and recognises the need to lean and respond to what is happening versus delivering on a established schedule and plan. 2) Create a Talent Brand to Attract and Retain the Right People: Organisations that attract the best and brightest talents have compelling brand statements that aren’t simply centred around shareholders in fact its actually more about changing the world: i) Amazon: Work Hard. Have Fun. Make History. ii) UBER: Build Together, Grow Together. Solve big problems that make the world move. iii) SalesForce: We believe everyone can be a Trailblazer, and we're building the technology to make it happen. ‘Commit to a talent brand and experience for the team and ensure executives are accountable, without great people, innovation doesn’t happen, without innovation technology simply is reduced to bits and bytes that don’t add up to very much. 3) Avoid Missing Powerful Resource Behaviour Changes when Focusing Only on Project Goals: Despite projects being driven by scope, schedules, and budgets if an organisation fails to harmonise and integrate Jearning within these projects it risks realising only part of the benefit of undertaking innovative risks. Leading innovation requires organisation to not only define project success in terms of attainment of triple constraints of. cost, schedule, and scope. But rather a focus on developing its only source of innovation its own people, One of the key paradigm shifts is embarking on. projects to improve behaviours rather than simply focu delivering projects. This is a key insight to the latest Agile practices to delivering scalable systems and teams, Scanned with CamScannerDesigning the Service Enterprise (Uni a 4) Lead your Industry: Despite the many challenges that come with new technologies being introduced within an organisation and outside of it, each organisation and its’ people are given the choice to lead or follow in their industry in how they serve customers. Organisations that seek to stay ahead of the technological waves should focus, not on reacting to digital changes, but instead fixating themselves on their customers. Technology doesn't simply drive change within an industry or ecosystem but rather the combination of technical advancement and the gaps and shortages faced by their customers, 2.5. SERVICE PROCESSES 2.5.1. Introduction Process is an essential component of marketing mix of services and is also an important element of the value chain; the other elements of value chain are production, marketing, after-sales service, etc. ‘Process’ contributes as a significant part of marketing objectives, then also less attention has been paid to it. The processes, which add some value to the services without incurring much cost, benefit the organisation as well as the customers. Performing transactions, delivering information, and offering a service in most suitable way to the customers as well as to the company, is known as the process. Several disciplines such as decision theory, operations ‘management, computer programming, etc., define the term ‘process’ in a different way by using different words but the basic concept behind it remains the same. All the disciplines believe that a process should comprise of logical sub-processes that can be used for making the process more efficient. In case of manufacturing industry, itis not necessary for the marketers to keep informed about how the physical goods are being manufactured; rather the individuals who own the manufacturing unit are required to know this. On the other hand, in case of service industry, the marketer is expected to keep well-informed about all the services and the process of manufacturing and delivering these services to the end customers. This is because the customers here are directly involved in the manner in which a service product is created and they may have some specific requirements regarding the services. Marketers also need to be involved in the design or the redesign of a service process as the same can influence the consumers. The customer views every service as an experience. For example, visiting a doctor or lodging a complaint at a call centre. On the other hand, organisations view services as a process which needs to be designed so’that the required experience is delivered to the customer. The process is thus the backbone of the service. It is nothing but a method or sequence of activities which service organisations need to undertake and also co-ordinate in order to create value proposition for the customers, In today’s customer-oriented business, environment, all areas of manufacturing, engineering and computer programming focus towards understanding the process through which a task is undertaken and the various steps involved in achieving the bottom-line results. This has given birth to various revolutionary concepts like ‘Just in Time’, ‘flexible manufacturing’, ‘lean production’ ‘efficient customer response system’, etc. The companies have recently started giving so much importance to the process of delivering services and are using it as a strategic tool in gaining a competitive edge. . 2.5.2. ‘Types of Service Process ‘The different types of service process are as follows: ; : 1) People Processing Services: As the name suggests, people processing services are directly targeted at the individuals. Here, the customers need to physically enter the service environment to avail the service that he desires. An example of this is the Airlines, where the service is created a delivered through a combination of people or technology (or both). It is also possible that the service provider may reach the customer along with the required tools for delivering services. The idea is to create a new set of values for the customers in the service industry. For example, banking services which are offered by personally visiting at the office or residence of the customer and completing the transactions and other services desired by the customers. 2) Product Processing or Possession Processing: In product or possession processing services, the ‘volvement of the customer in the service is comparatively less. Here, the role of the consumer is typically imited to calling the service provider for explaining the problems faced by him and making the necessary payment for the service, The pre and post sales services involved here are problems that need to be tackled Scanned with CamScanner4) ) SPPU MBAS rad Semester Service Operations Managem through customer response management. The marketer needs to understand the entire value chain of such vices as these can add a lot of to the customer experience. For example, the logistics partner needs to understand how important his services are to the exporter in executing his onders on time. The customer ually gauges the performance of the service in terms of delivery against the promised parameters of quality and time, The marketer, therefore, needs to take care that there is no divergence between What has been promised to the customer and what is actually delivered, Mental Stimulus Processing: The kinds of servi education and mana c can also include various religious services offered by the spiritual gurus and societies. This has a profound impact on the mental makeup of the consumer and. helps to shape his attitudes, interests and opinions. The relationship between the marketer and the consumer can be considered to be one of dependence where the customer is dependent on the service provider. However. this can lead to malpractices like extortion, manipulation and other unethical practices. In order to oid these problems, the organisations need to develop a code of conduct and ethical standards, communicating the same to the customer. the entertainment, 's that get listed under this type are Information Processing Services: In the case of information processing industries the marketer needs 10 learn that the *information’ is the most intangible type of service output. It is crucial from both customer a Well as competitive perspective. The ease of access and retrieval of information has made it possible for consumers (0 seek information on as wide topics as medical research, secountit insurance. etc. The customer has a very high involvement in all these ived risk in all these situations is quite high, The risk associated here as per customer's viewpoint is highly risky service situation, huge financial and non-financial costs. The customer tends to avoid going to service factory to buy the products & services and the challenge before the marketer is to motivate the consumers to purchase the product and hence reduce the risk perception that consumers have of the service situation. 2.5.3. Steps for Managing Service Processes The steps involved in creating service processes are as follow’ 1) Flowcharting: Flowcharting is a very simple manner of depicting the naa various sequences that are involved in the service process. It explains the = entire service experience of the customer ina very simple manner. The Sense Beate 2) sequence of expected customer encounters: with the service industry is portrayed in this step. Marketers need to -understand that a value proposition that is offered to the customer may combine all or some of the intended benefits that the firm is providing to its target customers. It is therefore essential to rationally integrate all service offerings so that the necessary value is delivered Flowcharting the process also helps the service marketer to understand those elements of the service process which are core to service experience and distinguish these parameters from those ingredients which are supporting the core produet. For example, in case of restaurants, food and Figur 23 Managing beverage can be regarded as core product. However, other facilities like Service Process reserving seats, place for parking. menu, onder placement, billing, ete, act as supplementary services supporting the core product. When the flowchart for various services is drawn, it will be seen that the core services that are being offered would differ widely but the supporting services (billing, reservations, onder taking, etc.) would retain a certain commonality and will Keep repeating, Service Blueprinting: In the case where the processes in offering services are complicated and involves high service encounters, it becomes significant for the organisati insights about how the various service components are linked to each other. There are particularly three muin elements of service blueprint: i) The functions that are involved in creating the service experience are identified, This includes the people who are responsible for creating the servic ii) Sequence and time relationship is represented graphically. This means the time when the service has to be performed and the order in which it has to be performed are also noted. iif) The maximum deviation that is possible for each function és identified. This is that level of deviation Which does not impact the quality of the service significantly and ean be attributed to chance, Nunging Quussion Eliana Scanned with CamScannerDesigning the Service Enterprise (L 4) + 6) | 3) Identifying 2) 49 's: A successful blueprint should be able to identify the points in the service process which are the likely failure points or point at which the service can go wrong. In terms of the customer, the ‘most painful fail points would be those that prevent him from enjoying the service. They include things like the reservation process (Is a table Ie) seating (can a place be found where the customer can sit), order placing (did the order placed at the table was accurate or the order taken was not noted wrongly by the waiter), ete. The service delivered to the customer takes some time; hence, there are also chances of delay. Inordinate amounts of waiting time can end up annoying the customer. In reality, every step in the service process — back end or front end can be a potential fail point. These failures increase the service and waiting time for the customer and can be a cause for major service dissatisfaction, Failure Proofing: Once the potential failure points are identified the organisation needs to do a root cause analysis about why such failures happen. This equips the service provider with opportunities for making the service “failure proof”. One technique which is widely used in this regard is the Poka Yoke technique. Setting Service Target: The service enanagers can gain an understanding of the expectations of the customer from the service process through formal research and by tracking on the job experiences of the service personnel. The customer expectations are typically in the form of a spectrum referred as zone of tolerance. There is an ideal service and then there are thresholds which are defined for every aspect of the service. The service manager should set appropriate standards and make every effort to satisfy the customers. In case this is not possible then the service managers need to modify the expectations of the customer. The various standards can include time taken to perform a service, the definition of a technically exact performance and also the various style features that should accompany the service. Redesigning Service Process: The service redesign process is meant to stimulate new life in the service process which may have become outdated in the current scenario. However, this does not mean that there ‘was a flaw in the initial process design. It is more likely that there may have been changes in other variables, like technology, customer demographics, introduction of new features, trends and performance in market which may have put an excessive burden on the old process. Redesigning is considered as a feasible approach to development and growth of services. It is far better than discarding the outdated services in ‘order to infuse service innovations. Service process redesign can be of the following types: i) Eliminating Non-value Adding Steps: There are many activities in the service process which are not adding value to the service experience. Service process redesign helps to identify such redundant activities and remove them. This helps the organisation to increase its productivity and also customer satisfaction. ii) Self-Service: Another approach is to make the customer adopt a productive role rather than a passive ‘of the services. The redesign, in this case, will aim at increasing the control of the customer, ‘lity and better timing. Self-service kiosks or Internet services like Internet banking are some examples of self-service. iit) Direct Service: In direct service, the service is brought tothe customer and not the other way around. This means making the service available to the customers at their residence or office premises. For example, home delivery services which are offered by many restaurants, pet grooming services, home tutorials, training or home banking facilities which are offered to HNis. iv) Pre-Service: This redesign aims at encouraging the part of service which activates the service request, typically the front end processes. For example, express check-in at many hotels or pre-payment of toll Charges atthe highways. Another example can be pre check-in boarding cards that are issued by many airlines. ¥) Bundled Service: Services can also be bundled together and offered together. The customer gains by Superior value especially ifthe services are synergistic in nature and deliver a greater value together than if they. were consumed separately. i ice: In the physical redesign, the focus is on adding value to customer's experience vu nen caries related to the service or its physical surrounding. For example, Midway Express serine has tried to recreate the customer experience by altering the interior design of the planes. This anid features like new leather seats, china plates, cloth napkins, ete, Scanned with CamScannertel) SPU 50 MBA Second Semester (Service Operations M 7) Managing Customers Effectively: The service experience can also be augmented if the customers are treated as “partial employee”. This also has the benefit of decreasing customer induced service failures. The steps involved are the same as that which involves the selection of the paid employees by HR. ‘These are as follows: i) Recruitment and Selectior given towards the recruitment and selection process, ‘This Human Resource management becomes successful when adequate Iso applies 0 the “partial skills then the m ary skills, For example, if co-production requires speci irketing efforts of the company should target those new customers who have the nec ii) Job Analysis: A job analysis needs to be conducted for comparing the customer's present role in the company against the roles that the company expects them to play. One should also ensure that the customers are aware of the performance expected by them and they hold required skills for reaching the expectations. iii) Education and Training: The next critical aspect is that of education and training. This is particularly tue if the job analysis throws up a major gap in the shill sets of customers. The education can be in several ways, The advertisement for new services often has great content. The company can also employ automated machines which have instructions on how the tasks can be performed effectively. Websites also have a FAQ (Frequently Asked Questions) section which guides the customers on the critical aspects of the service. For example, e-commerce websites like Amazon, Flipkurt, E-bay, etc. provide detailed instruction guide to their customers regarding how to auction an item on the website and how to purchase and make payments, iv) Motivate: Customers also need to be motivated by rewarding instances of good performance. For example, delivering high level customer satisfaction, enjoying the role as a participant, providing more customised services. etc. are some of the ways of motivating the customers. ¥) Appraise: The performance of the customers need to be evaluated on regular basis. When the performance is not satisfactory then the customers need to be educated properly vi) Ending: When the relationship between the service provider and the customer reaches a dead end then ending the same becomes the last resort, For example, Doctors have a duty to treat patients but this is based on a relation of mutual trust and respect. Many times doctors encounter patients who are abusive and uncouth, dishonest — in these situations, doctors can ask the patient to seek the services of some other physician, The process of terminating relationships has to be done properly, This inay also mean that there are problems in the way the customers have been acquired or recruited in the first place. 2.5.4. Importance of Service Process Planning and understanding the service process is important because of the following reasons: 1) Indispensable for Service Success: Service process is crucial for the successful delivery of competent services. In manufacturing scenario, the activity takes place on the shop floor away from the gaze of the customers. The manufacturing process is controlled by the operations team and is away from the influence of the customer. However, in services, the customer is an integral part of the service creation and consumption. The service failures are often a result of faulty design of the service process. Their carefully planning the service process as per customers’ needs and demands become inevitable part of service firms. 2) Critical for Delivering Satisfying Response: The service proce: designed keepi ng in minds the needs of the customer. This helps in achieving high customer satisfaction rate. However, there are stances of service organisations which have failed because they have not kept the needs of the nes, the customer gets annoyed by the bureaucratic processes at the front n cause a flaw in the design process, This may lead to many customer in mind. Many t end. At other times the back end operations failure of the services. Scanned with CamScannerDesigning the Service Enterprise (Unit-2) st SU cia saab aise 2.6.1. Introduction Service design is the activity of planning and organising people, infrastructure, communication and material components of a service, in order to improve its quality, the interaction between service provider and customers, The purpose of service design methodologies is to design according to the needs of customers or participants, so that the service is user-friendly, competitive and relevant to the customers. Service design can be seen as gathering service needs and mapping them to requirements for integrated services, and creating the design specifications for service assets needed to provide services. A particular feature of this approach is a strong emphasis on re-use during design, Service design helps create new services or helps improve the existing services. It helps make the service interfaces useful, usable and desirable from the client's perspective, Utilising the available resources, service cesign helps connect organisation, supplier, and service provider to its clients in a desirable way. Service design helps create experience for its user and thereby helps improve everyday life. It therefore helps creates brand affinity. Service design helps bring true understanding of the market, it's users and their experiences and expectations. 2.6.2. “Service Design Standards Service standards can be explained in terms of hard and soft measures. These have been described below: 1) Hard Measures: Hard measures relate to measurement aspects of the service — how many, with what accuracy, with what speed, etc. Generally, two out of the five quality dimensions are open to hard measures. The first dimension being reliability of services is measured in terms of “right first time” or being “right on time”. For example, arrival of flights or trains, scheduled appointment with doctor, delivery date given by dry cleaners, boutiques, etc. Similarly, responsiveness is another dimension which is given consideration while evaluating service design standards. Responsiveness tries to gauge the time the customer has to wait between asking for a service and getting it delivered, For example, waiting in the restaurant for the order or waiting for the electrician to come after placing the request for a defective electrical appliance. 2) Soft Measures: In comparison with hard measures, evaluating soft measures is relatively more both factually and against a standard. They are often developed in response to customers. For exampl i) How did the customer feel? ii) What was the level of information and consultation that was given to the customer? iii) How was the customer treated during the process? 2.6.3. Components of Service Design ‘The three main components of service design are: : * 1) People: This component includes anyone who creates or uses the service, as well as individuals who may be indirectly affected by the service. Examples include: i) Employees ii) Customers ; iii) Fellow customers encountered throughout the service iv) Partners 2) Props: This component refers to the physical or digital artifacts (including products) that are needed to perform the service successfully. Examples include: i) Physical space like storefront, teller window, conference room. * ii) Digital environment through which the service is delivered. a) Webpages b) Blogs ©) Social Media iii) Objects and collateral a) Digital files b) Physical products Scanned with CamScanner2 ‘MBA Second Semester (Service Operations Management) SPPU 3) Processes: These are any workflows, procedures, or rituals performed by either the employee or the user throughout a service. Examples include: i) Withdrawing money from an ATM )) Getting an issue resolved over support iii) Interviewing a new employee iv) Sharing a file Retuming to the restaurant example, people would be farmers growing the produce, restaurant managers, chefs, hosts, and servers. Props would include (amongst others): the kitchen, ingredients, POS software, and uniforms. Processes would include: employees clocking in, servers entering orders, cleaning dishes. and storing food. 2.6.4. Tools for Designing Service Processes ‘There are many tools which help in designing a good service process. These are as follows: : 1) Service Blueprinting: Service blucprinting is a customer-oriented technique which fosters innovation and improvement in the service process. Service blueprinting is a customer-oriented technique which fosters innovation and improvement in the service process. This includes elements like defining the customer target segment, the various processes that comprise the service, create a map of the various activities that are involved in the service process, identifying the various customer touch points that spearhead the service proce: Service blueprinting highlights the role of the customer and identifies the source of value in the service process. It also helps in finding the various service failure points which can derail the service. as well as ‘opportunities for service improvement. It aids in continuous evaluations of the service process and helps in identifying measures by which the service can be appraised. It also acts as a source of new service development. 2) Quality Function Deployment (QFD): QFD is a type of product development where the source is the Voice of the Customer (VOC). The VOC is used to identify service requirements, design specifications. the configuration and the process control. QED is very structured where the needs of the customers are understood and then converted into specific plans for producing the products or services for fulfilling these needs. In fact, it is more of a planning technique than a quality technique where teamwork is directed towards customer satisfaction. 3) Servicescape: The concept of servicescape is developed by Booms and Bitner. This concept tries to sive credence to the physical environment in which service is created. The serviceseape can be considered as a service landscape. This landseape may comprise external and internal components of services. The external components involve landscape, design, and surrounding environment of service while the interior ‘components involve design of service area, ambience, layout, temperature, etc. Servicescape together with other tangible elements (like stationary, business cards, dress code, web pages, brochures, reports and documents) form the “Physical Evidence’ in marketing of services. In order to design service process, the organisation should consider the servicescape as it involves all those elements which are encountered by the customers in first look. 4) Back Office and Front Office Processes: Manufacturing and service firms differ in several ways. The main focus of manufacturing firm is on the back office where all the operational activities related to production takes place. However, service firms mainly focus on the front office where interaction with the customers in regards with service offerings is undertaken. Hence, the planning for front and back office processes may also act as an important tool in designing the service processes. 5) Waiting Line Analysis: Waiting lines are very important in management because they help in the balancing of demand and supply. In general, a waiting line occurs when there is a mismatch between the excess demand and the supply. Waiting strategies are thus used to resolve uncertain capacity issues. Waiting line strategies or models use a set of mathematical formulas which is derived from the field of queuing theory. There are different queuing models and steategies for different types of queuing problems. However, this technique is very complex and difficult to understand, Hence, it is not very feasible in enhancing the service process. ° Scanned with CamScannerDesigning the pve (Unit2) 33 2.6.5, Benefits Servive design b 1) Surfacing Conflicts: Business models and serviee-design models are often in conflict because business models do not always align with the service that the orginisition delivers. Service design triggers thought and provides context around systems that need to be in phice in order to adequately provide a service Cand in some cases, beyond), tutions: Focused discussion on procedures and policies exposes weak links and nd enable organizations to devise collaborative and cross functional solutions. Redundancies With A Bird’s-Eye View: Mapping out the whole cycle of internal service companies a bird's-eye view of its service ecosystem, whether within one large offering, or cross multiple sub offerings, ‘This process helps pinpoint where duplicate efforts occur, likely causing employee frustration and wasted resources, Eliminating redundancies conserves energy, improves employees’ elficiency, and reduces costs. 4) Forming Relations! helps align internal service provisions like roles, backstage actors, to the equivalent front ‘To come back to our initial example, with m provided to one agent should be available to all other agents who interact with 2.6.6. Service Design Elements Service ‘design has following elements: 1) Structural Elements: It involves components like delivery system, facility design, location, capacity planning, etc. i) Delivery System: The delivery system of services is significantly different from that of products. In the case of services, they cannot be separated from the service provider. Therefore the delivery channel for a service has to be short and easy. ii) Facility Design: Service provider needs to be alert in the way the service has been designed especially in cases where the customer is also taking part in the service process. Facility design comprises the physival environment in which the service is being given, the hygiene factors and how flexible or rigid the service architecture has to be. The physical environment or the servicescape needs to be understood carefully since it impacts the service a great deal. For example, infrastructure of cinema halls, restaurants, hospitals, beauty salons, spa centres, stores, etc. iii) Location: A service which is a Location-based service (LBS) is a type of information which can easily be availed through mobile devices these days. It makes use of the geographical position of the mobile device in identifying routes from the location of the customer to the location of service facility, It has wide-ranging application sectors ranging from health, work issues, personal issues, entertainment, etc. For example, location services help in locating nearest bank or ATM from customer's current location. iv) Capacity Planning: Capacity planning refers to the capacity that the organisation requires producing the necessary product or service as per the changing needs and demands of customers. Capacity can also be defined as the maximum output that the organisation can deliver in a given period of time, It can be explained as : Capacity = (Number of Machines or Workers) x (Number of Shifts) x (Utilisation) x (Efficiency). 2) Managerial Elements: Service encounter, quality, managing capacity and demand, information, etc. comes under managerial elements. i) Service Encounter: The service encounter generally starts after the application is submitted, an order is placed or the request for a reservation is made by the customer. The interactions can be between customers ‘and the service provider or can be between machines or computers. In many high contact services example restaurants, hotels, hospitals, ete. the customers may also get engaged with the service process. ii) Quality:,The term quality is often very difficult to define since it depends to a great deal on customer perception. The term quality is widely sought while evaluating standards; however, it does not have any specific definition. Scanned with CamScanners MBA Second Semester (Service Operations Mi ) Managing Capacity and Demand: Lack of inventory is one of the major problems faced when analysing the supply and demand of services. In case of manufacturing firms, it is possible to keep stock of inventory in advance for meeting the contingent future demands, However, this is not possible in the case of service firms as services cannot be kept as inventory. This is because, services are created and consumed simultancously, and are also perishable in nature. A train seat which is not sold expires. Similarly, an hour of a Doctor's visit cannot be carried over to the next day. It is also not possible to transport service from one place to another. This is also one major difference with products. iy) Information: Another managerial element in service design is information. Appropriate information regarding the customer helps in establishing loyal customer base that further benefits the organisation by acting as medium for word-of-mouth advertising. Sometimes, service firms use discounts and free services offers for attracting huge customer base. 2.6.7. Customer Value Equation Customer Value is the level of satisfaction of the customer towards the business. Both products and services have value. Price is only a small part of the value. Customer value is dependent upon three factors ~ Quality, Price, and Service. The value of the product tends to increase with its service and quality as its benefits increase. On the contrary, the value of a product reduces with an inerease in its price. Customer Value = (Benefits ~ Costs) Value equation is the most fundamental conscious or subconscious calculation made by a customer. when comparing products, or purchasing goods and services. For a couple of reasons, it also presents a real challenge for marketers: 1) Benefits and costs incorporate both tangible (quantitative) and intangible (qualitative) concems, and consumers will also base assessments on both rational and emotional needs. 2) Although tangible components may be relatively simple to identify and understand (such as the benefit of a widget or feature versus how much it will cost), intangible components can be much harder to quantify, ‘Changes in the value equation can be seen all around us, creating changes in either benefit or cost — these are just a sample of changes: 1) Online purchases linked to an excessive (three page) sign-up process (increased cost), 2) Android phone sign-up, ranging across three screens and requiring two new passwords (increased cost). 3) Xero accepting photos of receipts directly into their platform (increased benefit). 4) Sony offering to repair an out of warranty e-reader for free (increased benefit). 5) Improvements made to the Food Bag around packaging and recycling (increased benefit). 6) The introduction of text authentication processes for large bank transfers (neutral — the increase in cost [time] is offset by increase in benefits {security]). ‘The example of two bottles of Coca-Cola; one being a large family size and the other being an individual serving size. In supermarkets, in particular, the family size bottle sits on the shelves at room temperature, whereas the smaller size isin a refrigerator near the checkout. In many supermarkets, the smaller bottle is equal in price and sometimes greater in price than the larger bottle. If we take the view that value is simply how much 1 get for what I pay, this situation makes no sense at all. It only makes sense when you think about the range of benefits that the consumer will receive from a particular purchase. In this case, the benefits received from the smaller bottle purchase are: 1) Convenience, easy to carry, easier to fit in a bag, 2) Less socially conspicuous, 3) Less wastage, and 4) More refreshing. Therefore, because the smaller product, in many ways provides a greater range of benefits for an individual, consumers willbe willing to purchase such an item, even though on a straight value for money (on a quantity basis) itis no as auactive as the larger family size bottle. The family size botle, siting at oom temparatre however, is attractive to the household buyer, who has no need for immediate consumption of the beverage. Instead, they are secking the benefit of having a suitable beverage available at home when requied fog the family, or perhaps when catering for a party or a family function, Scanned with CamScannerUnit-2) 55 Strategic Positioning Through Process Structure Strategic pos outward-focused, more fully recognizing the competitive and market environment within which an organization operates, Positioning defines an organization’s specific niche within its sphere of influence. With a strong strategic position, the organization is poised for ongoing success, sustainability, and inct competitive advantage. Positioning is also an imperative when an organization has outgrown the market or has the capacity to expand, Changing the Process Complexity and divergence are not fixed and immutable. They are factors that can be changed. Once a service has been documented accurately, it can be analysed for opportunites either to increase or decrease one or both variables. Alternative Directions for Structural Change A change in overall complexity or divergence generally indicates one of four overall strategic directions. Each fone has management consequences as well as certain market risks: 1) Reduced Divergence: Reducing divergence leads to uniformity which tends to reduce costs, improve Productivity, and make distribution easier. It usually indicates a shift to a volume-oriented positioning strategy based on economies of scale. The positive market effects of such a move can include perceived increases in reliability — more uniform service quality and greater service availability. However, reducing divergence also can have negative market effects. It dictates conformity as well as inflexibility in operating procedures. Customers may perceive the shift as one that lowers customisation and limits their options, and may reject a highly standardised service even if it costs less 2) Increased Divergence: Raising divergence is the service equivatent of creating a “job shop.” Greater customisation and flexibility tend to command higher prices. Increased divergence usually indicates a niche positioning strategy, dependent less on volume and more on margins. The market can respond positively to such a shift if the service taps a desire for prestige, customisation, or personalisation. Here, too, however, care is needed in making such a shift. A divergent service is moreover, customers may not be willing to pay the price that customisation demands, 3) Reduced Complexity: Reduced complexity usually indicates a specialisation strategy. AS steps or functions are dropped from the system, resources can be focused on a narrower service offering (radiology, eg. versus general medical services). Narrowing the service offering usually makes distribution and control easier. Such a service can be perceived positively by the market if the provider stands out as an expert. However, reduced complexity also can cause a service to be perceived as “stripped down” of so limited that its specialised quality is not enough to overcome the inconvenience ot price of obtaining it. 4) Increased Complexity: Higher complexity usually indicates a strategy to gain greater penetration in a market by adding more services or enhancing current ones. Supermarkets, banks, and retailers have expanded their service lines with this strategic goal in mind, Increasing complexity can increase efficiency by maximising the revenue generated from each customer. In contrast, too much complexity can be confusing to customers and can cause overall service quality to fall. Thus, a highly complex service system may be vulnerable to inroads by competitors who specialise. Example of Changing the Process Structure In retailing, there are many examples of adding to the complexity of service systems. Supermarkets began as specialty food stores and have added banking services, pharmacist services, flowers, books and magazines, and even food preparation to their basic food retailing structure. In the fast-food industry, what were once simple hamburger outlets have become providers of breakfast, dining room services, and even entertainment. Retailing also affords many examples of reducing complexity, as evidenced by the emergence of businesses specialising only in pasta, only in cookies, and only in ice cream. For examples of lowered divergence, we nced only took at professional services. Legat services, €.., have historically had both high complexity and high divergence. A consumer needing legal assistance first had to seek out and select an attorney, and was then dependent upon the variable performance of that individual. Over the past few years, however, this service has been repositioned through the actions of business-minded entrepreneurs who perceived a market need for less complex, less divergent alternatives. The result has been the creation of legal “clinics” and chains that offer a limited menu of services executed uniformly at published Tales. This repositioning not only has opened a new market for legal services, but also has had and will continue tohave a profound effect on the positioning strategies of traditional law firms. Scanned with CamScannermnagement-l) SPPU 56 MBA Second Semester (Service Operation ri SERVICE BLUEPRINT 2.7.1. Introduction Blueprint is generally referred to the design of a plan. Similarly, service blueprinting is a technique which is used when planning a new or revised process and prescribing how it ought to function. ‘The process of service delivery is broken down into individual elements through a step-by-step mapping. This technique helps the organisitions in designing, monitoring, controlling and improving the service process on a regular basis. The service blueprint can also be referred as a visual representation of the service delivery process. It can be linked to a detailed map or flowchart, Service blueprinting is a customer-oriented approach that aims at creating service improvement and innovative practices. It aims to chart out the entire service experience. It also identifies the customer segment that is being targeted, the sequence of actions that are involved in creating the service and also the various touchpoints and likely service failures that are expected in the service process. ‘The service blueprint helps to highlight the customer's role and also points the value that exists in the experience that is being created. It also helps to identify the likely service failures that can derail service process. It can be used as a means of designing a new service. It aids in the designing of customer-oriented matrices which can be used to gauge how efficiently the service is performing. 2.7.2. Components of Service Blueprint A service blueprint has five components which are as follows: ‘Gomponenis of Service Blueprint ‘Customer Actions ‘Onstage/ Visible Ceniact Employes ‘Actions Backstage/invsible Contact Employee Actions ‘Support Processes Physical Evlenee 1) Customer Actions: Customer actions mean all the activities of the customer as a part of the service delivery process, ‘The blueprint at its top mentions the activities of the customers in a systematic manner. It is different from other flowcharting processes because it makes the customer's activities central to the creation of the- blueprint. Other functions in blueprint support the value proposition offered to the customers. 2) Onstage/Visible Contact Employee Actions: Another critical component of the blueprint is “onstage/visible contact employee actions” which is separated from the customer by the line of interaction. ‘The activities of the front line staff in the form of face to face to encounters are depicted on the service blueprint as onstage contact employee actions. Every such interaction between the customer and the employee is considered a moment of truth. 3) Backstage/Invisible Contact Employee Actions: The next vital component of the service blueprint is the backstage or the invisible employee actions. Everything seen above the line can be seen by the customers whereas everything below the line is not visible to the customers. ‘The activities which are below the line of visibility are explained, These can be in the form of tele-calling activities or activities that employees engage in to cater to customers as a part of their job roles. 4) Support Processes: Support processes are another vital component of service blueprint. An internal line of. interaction separates these processes from contact employees. These support activities are performed by entities in the organisation who are not contact employees but such support activities are important for successfully delivering the services» The supporting activities are shown in the form of vertical lines which originate from the support area and connect with other functional areas. These vertical lines also represent the total support required by the service firm in delivering its services to the end customers. 5) Physical Evidence: The last part of the service blueprint is the physical evidence. This comprises all the tangible elements of the service which are essential o influence the quality perception of the customers, ‘These elements of the physical evidence are necessary at every moment of truth. Scanned with CamScanner