Concepts of service management should be applicable to all service organizations. For example, hospital administrators could learn something about their own business from the restaurant and hotel trade. Professional services such as consulting, law, and medicine have special problems because the professional is trained to provide a specific clinical service (to use a medical example) but is not knowledgeable in business management.
Thus, managing professional service firms offers attractive career opportunities for business school graduates. A service classification scheme can help to organize our discussion of service management and break down the industry barriers to shared learning. As suggested, hospitals can learn about housekeeping from hotels. Less obviously, dry-cleaning establishments can learn from banks cleaners can adapt the convenience of night deposits enjoyed by
Thus, managing professional service firms offers attractive career opportunities for business school graduates. A service classification scheme can help to organize our discussion of service management and break down the industry barriers to shared learning. As suggested, hospitals can learn about housekeeping from hotels. Less obviously, dry-cleaning establishments can learn from banks cleaners can adapt the convenience of night deposits enjoyed by
banking customers by providing laundry bags and after-hours dropoff boxes. For professional firms, scheduling a consulting engagement is similar to planning a legal defense or preparing a medical team for open-heart surgery. To demonstrate that management problems are common across service industries, Roger Schmenner proposed the service process matrix in Figure 2.2 . In this matrix, services are classified across two dimensions that significantly affect the character of the service delivery process. The vertical dimension measures the degree of labor intensity, which is defined as the ratio of labor cost to capital cost. Thus, capital-intensive services such as airlines and hospitals are found in the upper row because of their considerable investment in plant and equipment relative to labor costs. Labor-intensive services such as schools and legal assistance are found in the bottom row because their labor costs are high relative to their capital requirements.
The horizontal dimension measures the degree of customer interaction and customization, which is a marketing variable that describes the ability of the customer to affect personally the nature of the service being delivered. Little interaction between customer and service provider is needed when the service is standardized rather than customized. For example, a meal at McDonald’s, which is assembled from prepared items, is low in customization and served with little interaction occurring between the customer and the service providers. In contrast, a doctor and patient must interact fully in the diagnostic and treatment phases to achieve satisfactory results. Patients also expect to be treated as individuals and wish to receive medical care that is customized to their particular needs. It is important to note, however, that the interaction resulting from high customization creates potential problems for management of the service delivery process.
The four quadrants of the service process matrix have been given names, as defined by the two dimensions, to describe the nature of the services illustrated. Service factories provide a standardized service with high capital investment, much like a line-flow manufacturing plant. Service shops permit more service customization, but they do so in a high-capital environment. Customers of a mass service will receive an undifferentiated service in a labor-intensive environment, but those seeking a professional service will be given individual attention by highly trained specialists.
Managers of services in any category, whether service factory, service shop, mass service, or professional service, share similar challenges, as noted in Figure 2.3 . Services with high capital requirements (i.e., low labor intensity), such as airlines and hospitals, require close monitoring of technological advances to remain competitive. This high
The horizontal dimension measures the degree of customer interaction and customization, which is a marketing variable that describes the ability of the customer to affect personally the nature of the service being delivered. Little interaction between customer and service provider is needed when the service is standardized rather than customized. For example, a meal at McDonald’s, which is assembled from prepared items, is low in customization and served with little interaction occurring between the customer and the service providers. In contrast, a doctor and patient must interact fully in the diagnostic and treatment phases to achieve satisfactory results. Patients also expect to be treated as individuals and wish to receive medical care that is customized to their particular needs. It is important to note, however, that the interaction resulting from high customization creates potential problems for management of the service delivery process.
The four quadrants of the service process matrix have been given names, as defined by the two dimensions, to describe the nature of the services illustrated. Service factories provide a standardized service with high capital investment, much like a line-flow manufacturing plant. Service shops permit more service customization, but they do so in a high-capital environment. Customers of a mass service will receive an undifferentiated service in a labor-intensive environment, but those seeking a professional service will be given individual attention by highly trained specialists.
Managers of services in any category, whether service factory, service shop, mass service, or professional service, share similar challenges, as noted in Figure 2.3 . Services with high capital requirements (i.e., low labor intensity), such as airlines and hospitals, require close monitoring of technological advances to remain competitive. This high
capital investment also requires managers to schedule demand to maintain utilization of the equipment. Alternatively, managers of highly labor-intensive services, such as medical or legal professionals, must concentrate on personnel matters. The degree of customization affects the ability to control the quality of the service being delivered and the perception of the service by the customer.
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