IEN11 – OPERATIONS MANAGEMENT

1. Explain the strategic importance of product and service

design.
2. Identify some key reasons for design or redesign.
3. Recognize the key questions of product and service design.
4. List some of the main sources of design ideas.
5. Discuss the importance of legal, ethical, and sustainability
considerations in product and service design.
6. Explain the purpose and goal of life cycle assessment.
7. Explain the phrase “the 3 Rs.”
8. Briefly describe the phases in product design and
development.
9. Name several key issues in manufacturing design.
10. Recognize several key issues in service design.
11. Name the phases in service design.
12. List the characteristics of well-designed service systems.
13. Assess some of the challenges of service design.
1. Translate customer wants and needs into product and service
requirements. (marketing, operations)
2. Refine existing products and services. (marketing)
3. Develop new products and/or services. (marketing, operations)
4. Formulate quality goals. (marketing, operations)
5. Formulate cost targets. (accounting, finance, operations)
6. Construct and test prototypes. (operations, marketing, engineering)
7. Document specifications.
8. Translate product and service specifications into process specifications.
(engineering, operations)
 From a buyer’s standpoint, most purchasing decisions entail two
fundamental considerations; one is cost and the other is quality or
performance.
 From the organization’s standpoint, the key questions are:
1. Is there demand for it? What is the potential size of the
market, and what is the expected demand profile (will demand
be long term or short term, will it grow slowly or quickly)?
2. Can we do it? Do we have the necessary knowledge, skills,
equipment, capacity, and supply chain capability? For products,
this is known as manufacturability; for services, this is known
as serviceability. Also, is outsourcing some or all of the work
an option?
3. What level of quality is appropriate? What do
customers expect? What level of quality do
competitors provide for similar items? How would it fit
with our current offerings?
4.Does it make sense from an economic
standpoint? What are the potential liability issues,
ethical considerations, sustainability issues, costs, and
profits? For nonprofits, is the cost within budget?
 The main forces that initiate design or
redesign are market opportunities
and threats.
 The factors that give rise to market opportunities and threats can
be one or more changes:
▪ Economic (e.g., low demand, excessive warranty claims, the need to
reduce costs).
▪ Social and demographic (e.g., aging baby boomers, population shifts).
▪ Political, liability, or legal (e.g., government changes, safety issues, new
regulations).
▪ Competitive (e.g., new or changed products or services, new
advertising/promotions).
▪ Cost or availability (e.g., of raw materials, components, labor, water,
energy).
▪ Technological (e.g., in product components, processes).
 Ideas for new or redesigned products or  Customer input can come from
services can come from a variety of surveys, focus groups, complaints,
sources, including and unsolicited suggestions for
▪ customers, improvement.
▪ the supply chain,  Input from suppliers, distributors,
▪ competitors, and employees can be obtained
from interviews, direct or indirect
▪ employees, and suggestions, and complaints.
▪ research  Suppliers are still another source of
ideas, and with increased emphasis
on supply chains and supplier
partnerships, suppliers are
becoming an important source of
ideas.
 One of the strongest motivators for new and
improved products or services is competitors’
▪ The Ford Motor Company used
products and services. this tactic in developing its
▪ By studying a competitor’s products or highly successful Taurus model:
services and how the competitor operates It examined competitors’
(pricing policies, return policies, automobiles, searching for best-
warranties, location strategies, etc.), an in-class components (e.g., best
organization can glean many ideas.
▪ Beyond that, some companies purchase a
hood release, best dashboard
competitor’s product and then carefully display, best door handle).
dismantle and inspect it, searching for ways
to improve their own product. This is called ▪ Enable a company to leapfrog
reverse engineering. the competition by developing
an even better product.
IDEA GENERATION

Research and development (R&D)

refers to organized efforts that are
directed toward increasing scientific
knowledge and product or process
innovation.

Most of the advances in

semiconductors, medicine,
communications, and space
technology can be attributed to R&D
efforts at colleges and universities,
research foundations, government
agencies, and private enterprises.
 Organizations generally want designers to adhere to guidelines
such as the following:
▪ Produce designs that are consistent with the goals of the organization. For
instance, if the company has a goal of high quality, don’t cut corners to save cost,
even in areas where it won’t be apparent to the customer.
▪ Give customers the value they expect.
▪ Make health and safety a primary concern. At risk are employees who will
produce goods or deliver services, workers who will transport the products,
customers who will use the products or receive the services, and the general
public, which might be endangered by the products or services.
 Human factor issues often arise in the design of consumer
products. Safety and liability are two critical issues in many
instances, and they must be carefully considered.
 Companies in certain businesses may seek a competitive edge by
adding new features. Although this can have obvious benefits, it
can sometimes be “too much of a good thing,” and be a source of
customer dissatisfaction.
▪ This “creeping featurism” is particularly evident in electronic products
such as handheld devices that continue to offer new features, and more
complexity, even while they are shrinking in size. This may result in low
consumer ratings in terms of “ease of use.”
CULTURAL FACTORS

Product designers in
companies that
operate globally also
must take into
account any cultural
differences of
different countries or
regions related to the
product. This can
result in different
designs for different
countries or regions.
 Organizations that operate globally uses the  Global product design can provide
combined efforts of a team of designers who design outcomes that increase the
work in different countries and even on
different continents (virtual teams).
marketability and utility of a product.
 Advantages: Engaging the best human  The diversity of an international team
resources from around the world without the may yield different points of view and
need to assemble them all in one place, and ideas and information to enrich the
operating on a 24-hour basis, thereby design process.
decreasing the time-to-market.
 The use of global teams also allows for
 However, care must be taken in
customer needs assessment to be done in more managing the diversity, because if it is
than one country with local resources, mismanaged, that can lead to conflicts
opportunities, and constraints to be taken into and miscommunications.
account.
 Product and service design is a focal point in the quest for sustainability.
Key aspects include
▪ cradle-to-grave assessment,
▪ end-of-life programs,
▪ reduction of costs and materials used,
▪ reuse of parts of returned products, and
▪ recycling.
 Cradle-to-grave assessment, also  For products, cradle-to-grave analysis takes
known as life cycle analysis , is the into account impacts in every phase of a
product’s life cycle, from raw material
assessment of the environmental extraction from the earth, or the growing and
impact of a product or service harvesting of plant materials, through
throughout its useful life, focusing on fabrication of parts and assembly operations,
such factors as global warming (the or other processes used to create products, as
amount of carbon dioxide released into well as the use or consumption of the product,
and final disposal at the end of a product’s
the atmosphere), smog formation, useful life.
`oxygen depletion, and solid waste  It also considers energy consumption,
generation. pollution and waste, and transportation in all
phases.
 Although services generally  GOAL: Choose products and
involve less use of materials, services that have the least
cradle-to-grave assessment of environmental impact while
services is nonetheless still taking into account
important, because services economic considerations.
consume energy and involve
many of the same or similar
processes that products involve.
 End-of-life (EOL) programs deal with products that have reached the end of their
useful lives. The products include both consumer products and business equipment.
 PURPOSE: To reduce the dumping of products, particularly electronic equipment, in
landfills or third-world countries, as has been the common practice, or incineration,
which converts materials into hazardous air and water emissions and generates toxic
ash.
 Although the programs are not limited to electronic equipment, that equipment poses
problems because the equipment typically contains toxic materials such as lead,
cadmium, chromium, and other heavy metals.
▪ IBM provides a good example of the potential of EOL programs. Over the last 15 years, it has collected about
2 billion pounds of product and product waste.
 Designers often reflect on three particular aspects of potential
cost saving and reducing environmental impact:
1. reducing the use of materials through value analysis;
2. refurbishing and then reselling returned goods that are
deemed to have additional useful life, which is referred to
as remanufacturing; and
3. reclaiming parts of unusable products for recycling.
  Typical questions that would be asked as part
 Reduce: Value Analysis of the analysis include:
 Value analysis refers to an ▪ Could a cheaper part or material be used? Is the
function necessary?
examination of the function ▪ Can the function of two or more parts or components
be performed by a single part for a lower cost?
of parts and materials in an ▪ Can a part be simplified?
▪
effort to reduce the cost Could product specifications be relaxed, and would
this result in a lower price?
and/or improve the ▪ Could standard parts be substituted for nonstandard
parts?
performance of a product.
 Remanufacturing refers to  There are a number of important reasons for doing this.
refurbishing used products by ▪ Can be sold for about 50 percent of the cost of a new
replacing worn-out or defective product.
▪ Process requires mostly unskilled and semiskilled
components, and reselling the workers.
products. This can be done by the ▪ And in the global market, European lawmakers are
original manufacturer, or another increasingly requiring manufacturers to take back used
products, because this means fewer products end up in
company. landfills and there is less depletion of natural resources
▪ Among the products that have remanufactured such as raw materials and fuel.
components are automobiles, printers, copiers,  Designing products so that they can be more
cameras, computers, and telephones. easily taken apart has given rise to yet another
design consideration: Design for disassembly
(DFD).
 Recycling means recovering materials for  An interesting note: Companies that
future use. This applies not only to want to do business in the European
manufactured parts but also to materials used
during production, such as lubricants and
Union must show that a specified
solvents. proportion of their products are
▪ Reclaimed metal or plastic parts may be melted down recyclable.
and used to make different products.
 The pressure to recycle has given rise
 Companies recycle for a variety of reasons,
including to the term design for recycling
(DFR), referring to product design that
1. Cost savings.
takes into account the ability to
2. Environment concerns. disassemble a used product to recover
3. Environmental regulations. the recyclable parts
 Designers must also take into account
▪ product or service life cycles,
▪ how much standardization to incorporate,
▪ product or service reliability, and
▪ the range of operating conditions under which a
product or service must function.
 Demand
typically varies
by phase.
 Different phases
call for different
strategies.
 In every phase,
forecasts of
demand and
cash flow are key
inputs for
strategy.
INTRODUCTION GROWTH

 Product or service may be treated as a  It is important to obtain accurate

curiosity item. projections of the demand growth rate
 Many potential buyers may suspect and how long that will persist, and
that all the bugs haven’t been worked then to ensure that capacity increases
out and that the price may drop after coincide with increasing demand.
the introductory period.
 It is important to have a reasonable
forecast of initial demand so an
adequate supply of product or an
adequate service capacity is in place.
MATURITY DECLINE

 Demand levels off.  Decisions must be made on whether

 Few, if any, design changes are to discontinue a product or service
needed. and replace it with new ones or
 Generally, costs are low and abandon the market, or to attempt to
productivity is high. find new uses or new users for the
 An accurate forecast of how long this existing product or service.
phase will last before the market ▪ Example: Duct tape and baking soda are
becomes saturated and the decline two products that have been employed
phase begins is important. well beyond their original uses of taping
heating and cooling ducts and cooking.
 Some products
do not exhibit
life cycles:
wooden pencils;
paper clips; nails;
knives, forks,
and spoons;
drinking glasses;
and similar
items.
 Some service life cycles are related to the life cycles of
products.
▪ For example, as older products are phased out, services such as
installation and repair of the older products also phase out.
 Wide variations exist in the amount of time a particular
product or service takes to pass through a given phase of its
life cycle: some pass through various stages in a relatively
short period; others take considerably longer.
 Often it is a matter of the basic need for the item and the rate
of technological change.
▪ Some toys, novelty items, and style items have a life cycle of less
than one year, whereas other, more useful items, such as clothes
washers and dryers, may last for many years before yielding to
technological change.
 Standardization refers to the  Standardized service implies that
extent to which there is absence every customer or item processed
of variety in a product, service, receives essentially the same
or process. service.
 Standardized products are made ▪ Example: An automatic car wash is a good
example; each car, regardless of how clean
in large quantities of identical or dirty it is, receives the same service.
items; calculators and computers  Standardized processes deliver
are examples. standardized service or produce
standardized goods.
 Companies like standardization  Mass customization, a strategy
because it enables them to of producing standardized goods
produce high volumes of or services, but incorporating
relatively low-cost products, some degree of customization in
albeit products with little variety. the final product or service.
 Customers, on the other hand,  Several tactics make this
typically prefer more variety, possible.
although they like the low cost. 1. delayed differentiation,
2. modular design.
 Delayed differentiation The process  Result: A product
or service with
of producing, but not quite customized features that can be
completing, a product or service
quickly produced, appealing to
until customer preferences are
known. the customers’ desire for variety
 For example, furniture makers can and speed of delivery, and yet one
produce dining room sets, but not that for the most part is standardized,
apply stain, allowing customers a enabling the producer to realize the
choice of stains. benefits of standardized production.
 Modular design A form of standardization in
which component parts are grouped into modules
that are easily replaced or interchanged.
 Modules represent groupings of component parts
into subassemblies, usually to the point where the
individual parts lose their separate identity.
▪ One familiar example of modular design is computers, which
have modular parts that can be replaced if they become
defective.
▪ By arranging modules in different configurations, different
computer capabilities can be obtained.
 For mass customization, modular design enables
producers to quickly assemble products with
modules to achieve a customized configuration for
an individual customer, avoiding the long
customer wait that would occur if individual parts
had to be assembled.
 Disadvantages of Modular Design
 The number of possible
configurations of modules is much
less than the number of possible
configurations based on individual
components.
 The inability to disassemble a
module in order to replace a faulty
part; the entire module must be
scrapped—usually at a higher cost.
 Reliability The ability of a product, part, or  The term failure is used to describe a situation
system to perform its intended function under in which an item does not perform as intended.
a prescribed set of conditions.  This includes not only instances in which the
▪ Is use by prospective buyers in comparing item does not function at all, but also instances
alternatives and by sellers as one determinant of in which the item’s performance is
price. substandard or it functions in a way not
▪ Can have an impact on repeat sales, reflect on intended.
the product’s image, and, if it is too low, create  For example, a smoke alarm might
legal implications. ▪ fail to respond to the presence of smoke (not operate at
▪ Also a consideration for sustainability; the all),
higher the reliability of a product, the fewer the ▪ sound an alarm that is too faint to provide an adequate
resources that will be needed to maintain it, and warning (substandard performance), or
the less frequently it will involve the three Rs. ▪ sound an alarm even though no smoke is present
(unintended response)
 Reliabilities are always specified with respect to certain  Potential ways to improve reliability
conditions, called normal operating conditions.
 These can include load, temperature, and humidity
ranges as well as operating procedures and maintenance
schedules.
 Failure of users to heed these conditions often results in
premature failure of parts or complete systems.
 Examples:
▪ Using a passenger car to tow heavy loads will cause
excess wear and tear on the drive train;
▪ driving over potholes or curbs often results in
untimely tire failure
▪ using a calculator to drive nails might have a marked
impact on its usefulness for performing
mathematical operations.
 Robust design Design that results in  The more robust a product or
products or services that can function service, the less likely it will fail
over a broad range of conditions.
due to a change in the
 Consider a pair of fine leather boots—
obviously not made for trekking environment in which it is used
through mud or snow. Now consider a or in which it is performed.
pair of heavy rubber boots—just the  Results in a higher level of
thing for mud or snow. The rubber customer satisfaction
boots have a design that is more
robust than that of the fine leather
boots.
 Product or service design change can  The degree of change affects the newness to the
organization and the newness to the market.
range from the modification of an  For the organization:
existing product or service to an ▪ A low level of newness can mean a fairly quick and
easy transition to producing the new product.
entirely new product or service: ▪ A high level of newness would likely mean a slower
and more difficult, and therefore more costly,
1. Modification of an existing product transition.
or service.  For the market:
▪ A low level of newness would mean little difficulty
2. Expansion of an existing product with market acceptance, but possibly low profit
line or service offering. potential.
▪ A high level of newness, on the other hand, might
3. Clone of a competitor’s product or mean more difficulty with acceptance, or it might
service. mean a rapid gain in market share with a high potential
for profits
4. New product or service.
 Quality function deployment  Requirements often take the form of a
general statement such as, “It should be easy
(QFD) An approach that to adjust the cutting height of the lawn
integrates the “voice of the mower.”
 For example, a statement about changing the
customer” into both product height of the lawn mower may relate to the
and service development. mechanism used to accomplish that, its
 Once the requirements are position, instructions for use, tightness of the
spring that controls the mechanism, or
known, they must be translated materials needed.
into technical terms related to  For manufacturing purposes, these must be
related to the materials, dimensions, and
the product or service. equipment used for processing.
 The structure of QFD is
based on a set of matrices.
The main matrix relates
customer requirements
(what) and their
corresponding technical
requirements (how).
 This matrix is illustrated in
Figure 4.2 . The matrix
provides a structure for
data collection.
 Additional features are usually added to
the basic matrix to broaden the scope of
analysis.
 Typical additional features include
importance weightings and competitive
evaluations.
 A correlational matrix is usually
constructed for technical requirements;
this can reveal conflicting technical
requirements.
 With these additional features, the set of
matrices has the form illustrated in
Figure 4.3 . It is often referred to as the
house of quality because of its houselike
appearance.
 The data relate to a commercial printer
(customer) and the company that supplies
the paper.
 To start, a key part is the list of customer
requirements on the left side of the figure.
 Next, note the technical requirements, listed
vertically near the top.
 The key relationships and their degree of
importance are shown in the center of the
figure.
 The circle with a dot inside indicates the
strongest positive relationship; that is, it
denotes the most important technical
requirements for satisfying customer
requirements.
 On the right side of the figure is a
competitive evaluation comparing the
supplier’s performance on the customer
requirements with each of the two key
competitors (A and B).
 For example, the supplier (X) is worst on the
first customer requirement and best on the
third customer requirement.
 The line connects the X performances.
 Ideally, design will cause all of the Xs to be in
the highest positions.
 Across the bottom of Figure 4.4 are
importance weightings, target values, and
technical evaluations.
 The technical evaluations can be interpreted
in a manner similar to that of the competitive
evaluations (note the line connecting the Xs).
 The target values typically contain technical
specifications.
 The importance weightings are the sums of
values assigned to the relationships (see the
lower right-hand key for relationship
weights).
 The 3 in the first column is the product of the
importance to the customer, 3, and the small
(Δ) weight, 1.
 The importance weightings and target
evaluations help designers focus on desired
results.
 In this example, the first technical
requirement has the lowest importance
weighting, while the next four technical
requirements all have relatively high
importance weightings.
 The house of quality approach involves a sequence of “houses,” beginning with
design characteristics, which leads to specific components, then production
processes, and finally, a quality plan.
 The sequence is illustrated in Figure 4.5 It provides a conceptual understanding of
the progression involved.
 Feasibility analysis. Feasibility analysis entails  Process specifications. Once product
market analysis (demand), economic analysis specifications have been set, attention turns
(development cost and production cost, profit to specifications for the process that will be
potential), and technical analysis (capacity
needed to produce the product. Alternatives
requirements and availability, and the skills
needed). Also, it is necessary to answer the
must be weighed in terms of cost, availability
question, Does it fit with the mission? It requires of resources, profit potential, and quality. This
collaboration among marketing, finance, involves collaboration between accounting
accounting, engineering, and operations. and operations.
 Product specifications. This involves detailed  Prototype development. With product and
descriptions of what is needed to meet (or exceed) process specifications complete, one (or a
customer wants, and requires collaboration few) units are made to see if there are any
between legal, marketing, and operations. problems with the product or process
specifications.
 Design review. At this stage, any necessary  Product introduction. The new
changes are made or the project is
abandoned. Marketing, finance, engineering, product is promoted. This phase
design, and operations collaborate to is handled by marketing.
determine whether to proceed or abandon.
 Follow-up evaluation. Based on
 Market test. A market test is used to
determine the extent of consumer user feedback, changes may be
acceptance. If unsuccessful, the product made or forecasts refined. This
returns to the design review phase. This
phase is handled by marketing. phase is handled by marketing.
 Concurrent engineering. Bringing
engineering design and manufacturing
personnel together early in the design phase
to simultaneously develop the product and
the processes for creating the product.
 More recently, this concept has been
enlarged to include manufacturing personnel
(e.g., materials specialists) and marketing
and purchasing personnel in loosely
integrated, cross-functional teams.
 In addition, the views of suppliers and
customers are frequently sought.
 Purpose: To achieve product designs that
reflect customer wants as well as
manufacturing capabilities.
 Key advantages of this approach are the following: 3. The technical feasibility of a
1. Manufacturing personnel are able to identify
particular design or a portion of
production capabilities and capacities.
Knowledge of production capabilities can help a design can be assessed early
in the selection process. In addition, cost and on.
quality considerations can be greatly
influenced by design, and conflicts during 4. The emphasis can be on problem
production can be greatly reduced. resolution instead of conflict
2. Design or procurement of critical tooling, resolution.
some of which might have long lead times,
can occur early in the process.
 However, despite the advantages of
concurrent engineering, a number of
potential difficulties exist in this co-
development approach. Two key ones are
the following:
1. Long-standing boundaries between
design and manufacturing can be
difficult to overcome. Simply bringing
a group of people together and thinking
that they will be able to work together
effectively is probably naive.
2. There must be extra communication
and flexibility if the process is to
work, and these can be difficult to
achieve.
 Computer-aided design (CAD) uses
computer graphics for product design.
 The designer can modify an existing
design or create a new one on a monitor
by means of a light pen, a keyboard, a
joystick, or a similar device.
 Once the design is entered into the
computer, the designer can maneuver it on
the screen: It can be rotated to provide the
designer with different perspectives, it can
be split apart to give the designer a view
of the inside, and a portion of it can be
enlarged for closer examination.
 The designer can obtain a printed version
of the completed design and file it
electronically, making it accessible to
people in the firm who need this
information (e.g., marketing, operations).
 Benefits:
▪ Increased productivity of designers.
▪ The creation of a database for manufacturing that can supply needed
information on product geometry and dimensions, tolerances, material
specifications, and so on.
 Design needs to clearly understand the  Forecasts of future demand can be very useful,
capabilities of production (e.g., supplying information on the timing and
volume of demand, and information on
equipment, skills types of materials, demands for new products and services.
schedules, technologies, special  Manufacturability is a key concern for
abilities). manufactured goods: Ease of fabrication
▪ When opportunities and capabilities do not and/or assembly is important for cost,
match, management must consider the productivity, and quality. With services, ease
potential for expanding or changing of providing the service, cost, productivity, and
capabilities to take advantage of those quality are of great concern.
opportunities.
 The term design for  A related concept in manufacturing is
design for assembly (DFA). A good
manufacturing (DFM) is design must take into account not only
used to indicate the how a product will be fabricated, but also
how it will be assembled.
designing of products that ▪ Focuses on reducing the number of parts in an
are compatible with an assembly, as well as on the assembly methods
and sequence that will be employed
organization’s capabilities.  Manufacturability refers to the ease with
which products can be fabricated and/or
assembled.
 Companies often have multiple products or services to offer
customers.
 Often, these products or services have a high degree of
similarity of features and components.
 This is particularly true of product families, but it is also true
of many services. Companies can realize significant benefits
when a part can be used in multiple products.
▪ For example, car manufacturers employ this tactic by using internal
components such as water pumps, engines, and transmissions on
several automobile nameplates.
 In addition to the savings in design time, companies reap benefits through standard training for
assembly and installation, increased opportunities for savings by buying in bulk from suppliers,
and commonality of parts for repair, which reduces the inventory dealers and auto parts stores
must carry.
 Similar benefits accrue in services.
▪ For example, in automobile repair, component commonality means less training is needed because the variety of jobs is
reduced.
▪ The same applies to appliance repair, where commonality and substitutability of parts are typical.
▪ Multiple-use forms in financial and medical services is another example.
▪ Computer software often comprises a number of modules that are commonly used for similar applications, thereby
saving the time and cost to write the code for major portions of the software. T
▪ Tool manufacturers use a design that allows tool users to attach different power tools to a common power source..
 System design involves development or refinement of the overall service package:
1. The physical resources needed.
2. The accompanying goods that are purchased or consumed by
the customer, or provided with the service.
3. Explicit services (the essential/core features of a service, such
as tax preparation).
4. Implicit services (ancillary/extra features, such as friendliness,
courtesy).
 2 Key Issues In Service Design
1. Degree of variation in service requirements
2. Degree of customer contact and customer involvement in the delivery system
 These have an impact on the degree to which service can be standardized or must
be customized.
▪ The lower the degree of customer contact and service requirement variability,
the more standardized the service can be. Service design with no contact and
little or no processing variability is very much like product design.
▪ Conversely, high variability and high customer contact generally mean the
service must be highly customized.
 A related consideration in service design is the opportunity for selling: The greater
the degree of customer contact, the greater the opportunities for selling.
 When demand variability is a factor, designers may approach
service design from one of two perspectives.
1. Cost and efficiency perspective
▪ Basing design objectives on cost and efficiency is essentially a “product design
approach” to service design.
▪ Because customer participation makes both quality and demand variability
more difficult to manage, designers may opt to limit customer participation in
the process where possible.
 In services, a significant aspect of perceived quality relates to the intangibles that are part of the
service package. Designers must proceed with caution because attempts to achieve a high level of
efficiency tend to depersonalize service and to create the risk of negatively altering the
customer’s perception of quality. Such attempts may involve the following:
1. Reducing consumer choices makes service more efficient, but it can be both frustrating and
irritating for the customer. An example would be a cable company that bundles channels,
rather than allowing customers to pick only the channels they want.
2. Standardizing or simplifying certain elements of service can reduce the cost of providing a
service, but it risks eliminating features that some customers value, such as personal
attention.
3. Incorporating flexibility in capacity management by employing part-time or temporary staff
may involve the use of less-skilled or less-interested people, and service quality may suffer.
2. Customer perspective
▪ Involves determining consumer wants and needs in order
to understand relationships between service delivery and
perceived quality.
▪ Customers may not want or be willing to pay for highly
personalized service
 Phases in Service Design Process
 A useful tool for
conceptualizing a service
delivery system is the
service blueprint, which is
a method for describing
and analyzing a service
process.
 Shows basic customer and
service actions involved in
a service operation.
 Figure 4.7 illustrates a
simple service blueprint for
a restaurant.
 At the top of the figure are the
customer actions, and just
below are the related actions of
the direct contact service
people.
 Next are what are sometimes
referred to as “backstage
contacts”—in this example, the
kitchen staff—and below those
are the support, or “backroom,”
operations.
 In this example support
operations include the
reservation system, ordering of
food and supplies, cashier, and
the outsourcing of laundry
service.
 Figure 4.7 is a simplified
illustration; typically time
estimates for actions and
operations would be included.
 The major steps in service
blueprinting are as follows:
1. Establish boundaries for the
service and decide on the level
of detail needed.
2. Identify and determine the
sequence of customer and
service actions and
interactions. A flowchart can
be a useful tool for this.
3. Develop time estimates for
each phase of the process, as
well as time variability.
4. Identify potential failure points
and develop a plan to prevent
or minimize them, as well as a
plan to respond to service
errors.
 There are a number of characteristics 6. Having value that is obvious to customers.
of well-designed service systems. 7. Having effective linkages between back-of-
the-house operations (i.e., no contact with
They can serve as guidelines in the customer) and front-of-the-house
developing a service system. They operations (i.e., direct contact with
include the following: customers). Front operations should focus on
1. Being consistent with the customer service, while back operations
organization mission. should focus on speed and efficiency.
8. Having a single, unifying theme, such as
2. Being user-friendly.
convenience or speed.
3. Being robust if variability is a factor. 9. Having design features and checks that will
4. Being easy to sustain. ensure service that is reliable and of high
5. Being cost-effective. quality.
 Because services generally cannot be stored, there is the additional
challenge of balancing supply and demand. This is less of a problem
for systems in which the timing of services can be scheduled (e.g.,
doctor’s appointment), but not so in others (e.g., emergency room
visit).
 Another challenge is that services can be difficult to describe
precisely and are dynamic in nature, especially when there is a
direct encounter with the customer (e.g., personal services), due to
the large number of variables.
1. Define the service package in detail. A service blueprint may be
helpful for this.
2. Focus on the operation from the customer’s perspective. Consider
how customer expectations and perceptions are managed during
and after the service.
3. Consider the image that the service package will present both to
customers and prospective customers.
4. Recognize that designers’ familiarity with the system may give
them a quite different perspective than that of the customer, and
take steps to overcome this.
5. Make sure that managers are involved and will support the design
once it is implemented.
6. Define quality for both tangibles and intangibles. Intangible
standards are more difficult to define, but they must be
addressed.
7. Make sure that recruitment, training, and reward policies are
consistent with service expectations.
8. Establish procedures to handle both predictable and unpredictable
events.
9. Establish systems to monitor, maintain, and improve service.