The Customer Contact Approach to Designing Service Processes
Service systems are generally classified -along industry lines (financial services health services transportation services and so on). These groupings though useful in presenting aggregate economic data are not particularly appropriate for OM purposes because they tell us little about the process. In manufacturing by contrast there are as we have seen fairly well defined terms for classifying production activities that transcend industry lines (such as intermittent and continuous production when applied to a manufacturing setting they readily convey the essence of the process. While it is possible to describe services in these same terms we need another item of information to reflect the level of customer involvement in the process. That item which we believe operationally distinguishes one type of service from another in its production function is the extent of customer contact in the creation of service. Customer contact refers to the presence of the customer in the system and creation of the service refers to the work process that is involved in providing the service itself. Extent of
contact here may be roughly defined as the percentage of time the customer must be involved ill the system relative to the total time it takes to perform the customer service. Generally speaking the greater the percentage of contact time between the service system and the customer the greater the degree of interaction between the two during the production process.
From this concept of customer contact it follows that service systems with a high degree of customer contact are usually more difficult to manage and consequently harder to justify than those with a.low degree of customer contact. In high-contact systems the customer can affect the time of demand the exaction true of the service and the quality of the service since the customer is involved in the process Exhibit illustrates the differences between high- and low-contact service systems in a bank. Here we see that each design decision is impacted by whether or not the misrepresentation during the service delivery. We also see that when work is done behind the scenes (in this case a bank's processing center it is performed on substitutes for the customer that is customer reports databases and invoices We therefore can design these behind-the-scenes operations according to the same principles we would use in designing a factory-that is to maximize the amount of items processed during the production day Obviously there can be tremendous diversity of customer influence and hence system variability within high-contact service systems. For example a bank branch offers both simple services such as cash withdrawals that take just a minute or so as well as complicated services such as loan application preparation that can take in excess of an bout. Moreover these activities may range from being self-service through an ATM to co production where bank personnel and the customer work together as a team to develop the loan application. In another attempt to better understand services in general Roger Schindler proposes a method for classifying services along two dimensions." The first dimension degree of customer interaction and customization closely parallels the degree of customer contact
we discuss above In addition Scotchmen also includes the degree of labor intensity required to deliver the service From these two factors he develops a service process matrix as shown in Exhibit Within this matrix Schmenner defines four broad categories of service
- Service factory is characterized by a low degree of labor intensity and a low degree of customer interaction and customization.
- Service shop has the same low degree of labor intensity but has a higher degree of customer interaction and customization.
- Muss service is defined by a high degree of labor intensity but have relatively degree of customer interaction.
- Professional service require: both a high degree of labor intensity as well as a high degree of customer interaction and customization.
This type of classification scheme provides service managers with some insights in developing' strategies for their respective organizations. For example those services that exhibit a low degree of labor intensity are usually capital intense with high fixed costs. These firms cannot easily adjust capacity to meet changes in demand and therefore must attempt to smooth out the demand during peak periods by shifting it to off-peak times. The issues confronting service managers with high labor intensity operations require a different focus. Here workforce management is paramount with emphasis being placed on
hiring training and scheduling. More important this approach to classifying services cuts across industry lines providing
service managers with a better understanding of the strengths and weaknesses within their own operations. Through this perspective managers can look to similar operations in other service industries to seek ways for improving their respective operations.