Unit 2: Service process design
SERVICE PROCESS DESIGN
Service process design refers to planning how a service will be delivered, step-by-step. It aims to make the service efficient, consistent, customer-friendly, and cost-effective.
Flow Diagrams (Process Flow Charts)
A flow diagram visually shows the sequence of activities in a service delivery process.
Purpose
- To understand how work flows
- To identify delays, bottlenecks, wastage
- To improve speed and quality
Common Symbols
| Symbol | Meaning |
|---|---|
| ○ | Start/End |
| □ | Process/Activity |
| ◆ | Decision point |
| → | Flow/Direction |
Example: Hospital Visit
Service Blueprinting
A service blueprint is a detailed map of the service process showing:
- Customer actions
- Frontstage (visible) employee actions
- Backstage (invisible) actions
- Support processes
- Physical evidence (documents, website, building etc.)
6. Lines:
- Line of Interaction
- Line of Visibility
- Line of Internal Interaction
Why It Is Important
- Clearly separates what the customer sees vs. what happens backstage
- Helps identify service gaps and failures
- Useful for training and standardization
Example: Restaurant Blueprint
- Customer actions: Enters → Seated → Orders → Eats → Pays
- Frontstage: Host welcomes → Waiter takes order → Serves food → Gives bill
- Backstage: Chef prepares food → Billing system updates
- Physical evidence: Menu, ambience, plates, bill, table layout
Process Analysis in Services
Process analysis examines each step of the service process to identify:
- Bottlenecks
- Redundant steps
- Long waiting times
- Resource underutilization
Techniques
- Time study – measuring process times
- Value analysis – checking “value-added” vs “non-value-added” activities
- Bottleneck analysis
- Cause-and-effect (Ishikawa) diagrams
Outcome
- Faster process
- Lower cost
- Improved customer satisfaction
Service Capacity Planning and Management
Capacity planning determines the maximum output a service system can handle during a given period.
Characteristics of Services Impacting Capacity
- Services are perishable (unused capacity is lost)
- Demand fluctuates widely
- Cannot store inventory
- Human-based performance varies
Key Capacity Measures
- Design capacity – maximum possible output
- Effective capacity – practical, realistic output
- Actual capacity – current achieved output
Examples
- Number of seats in a restaurant
- Number of patients a hospital can treat per day
- Number of calls a call center can handle per hour
Capacity Strategies
| Strategy | Meaning | When Used |
|---|---|---|
| Lead capacity | Add capacity before demand increases | high-growth markets |
| Lag capacity | Add after demand is confirmed | cost-sensitive situations |
| Match capacity | Add capacity gradually | stable, predictable demand |
Managing Demand and Capacity Mismatches
Demand ≠ Capacity is a major challenge in services because services cannot be stored.
A. If Demand > Capacity (Shortage)
Approaches:
1. Manage Demand
- Higher prices during peak hours
- Promotions for off-peak times
- Priority systems (fast track, VIP lines)
- Reservations and booking systems
- Differential pricing (movie tickets on weekdays cheaper)
2. Increase Capacity
- Hire part-time employees
- Cross-train staff
- Extend working hours
- Add temporary facilities
- Self-service options (ATM, kiosks, mobile check-in)
B. If Capacity > Demand (Excess)
Approaches:
1. Stimulate Demand
- Discounts
- Special events
- Bundling offers
- Loyalty programs
2. Reduce Capacity
- Reduce staff
- Close some counters/sections
- Reassign employees to productive tasks
Summary Table
| Topic | Meaning | Tools/Outcome |
|---|---|---|
| Flow Diagram | Visual steps of service | Identify delays & improve flow |
| Blueprinting | Frontstage & backstage mapping | Improve service quality & consistency |
| Process Analysis | Breakdown of process efficiency | Reduce waste, improve speed |
| Capacity Planning | Determine service output limits | Lead/Lag/Match strategies |
| Demand–Capacity Management | Balancing demand with available capacity | Pricing, scheduling, adding capacity |
SERVICE PROCESS MANAGEMENT
Service process management ensures that the service system runs efficiently, customers face minimal delays, and resources are optimally utilized.
Queue Management
Queue management involves designing systems to reduce waiting time, manage customer flow, and improve the overall service experience.
Why Queues Occur?
- Random customer arrivals
- Variability in service time
- Limited capacity
Types of Queues
| Type | Example |
|---|---|
| Single queue – single server | ATM |
| Single queue – multiple servers | Bank counter, hospital registration |
| Multiple queues – multiple servers | Supermarket checkout |
| Virtual queues | Online appointment, token system |
Queue Management Techniques
- Token systems
- Appointment scheduling
- Online check-in
- Fast-track / priority lanes
- Real-time queue updates (screens, SMS)
- Self-service options
Psychological Principles of Waiting
- Unoccupied time feels longer
- Uncertain waits feel longer
- Anxiety increases perceived wait
- Fairness in queue matters
Waiting Line Models
Waiting line (queueing) models help managers predict waiting time, queue length, and service capacity.
Common Waiting Line (Queuing) Models
| Model | Structure | Example |
|---|---|---|
| M/M/1 | 1 server, exponential service & arrival | ATM |
| M/M/c | c servers, exponential | Call center with many agents |
| M/D/1 | 1 server, deterministic service time | Car wash |
| M/G/1 | 1 server, general service time | Repair shop |
Key Formulas (Simple MBA Level)
- Utilization (ρ) = λ / μ
- λ = arrival rate, μ = service rate
- More utilization → longer waiting time
Goal: Keep utilization < 80% in service industries.
Service Facility Location Decisions
Choosing the right location is critical because it affects customer convenience, cost, and demand.
Factors Affecting Location
A. Customer-Focused Factors
- Proximity to customers
- Footfall/customer traffic
- Accessibility & parking
- Visibility
B. Cost-Focused Factors
- Rent/land cost
- Labor availability
- Utilities (electricity, water)
- Taxes & regulations
C. Competition & Market Factors
- Closeness to competitors
- Market size & growth
- Demand patterns
D. Service Nature
- High-contact service → near customers (restaurants, retail)
- Low-contact service → can be distant (call centers, warehouses)
Tools for Location Decision
- Factor rating method
- Center of gravity method
- GIS mapping
- Break-even analysis
Facility Layout and Service Environment Design
A. Facility Layout
Layout determines the physical arrangement of resources to ensure efficiency and good customer experience.
Types of Service Layouts
| Layout Type | Features | Examples |
|---|---|---|
| Process layout | Similar functions in one area | Hospital departments |
| Product layout | Sequential operations | Fast-food assembly |
| Fixed-position layout | Service goes to customer/object | Home repair, hotel room service |
| Retail layout | Maximize sales & flow | Supermarket, shopping mall |
| Office layout | Information flow | IT office, bank |
Objectives of Facility Layout
- Reduce movement (customers, staff)
- Improve service speed
- Ensure safety and comfort
- Enhance ambiance and experience
B. Service Environment (Servicescape) Design
Includes the physical surroundings where service is delivered.
Elements
- Ambient conditions – lighting, music, temperature
- Spatial layout – arrangement of furniture, counters
- Signs and symbols – direction boards, branding
- Aesthetics – colors, design theme
Impact
- Influences customer mood and behavior
- Affects perceived service quality
- Supports employee efficiency
Employee Scheduling and Service Staffing Strategies
Services rely heavily on employees; scheduling ensures there are enough staff during peak hours and costs are controlled.
A. Employee Scheduling
Key Approaches
- Shift Scheduling - Morning, afternoon, night shifts, Used in hospitals, hotels, call centers
- Staggered Scheduling - Employees start at different times to match demand peaks , Example: Restaurant staff increasing during lunch and dinner hours
- Flexible Scheduling - Part-time, seasonal, weekend staff
- Rotational Scheduling - Employees rotate roles/time slots, Reduces monotony and improves skill variety
Tools
- Demand forecasting
- Workforce management software
- Time-motion study
- Historical sales/traffic data
B. Service Staffing Strategies
1. Full-Time vs Part-Time Mix
- Full-time for consistency
- Part-time for peak periods
2. Cross-Training
Employees are trained to handle multiple roles (billing, customer support, desk operations).
3. Outsourcing
For non-core services (security, housekeeping).
4. Self-Service Technologies
Reduce staffing needs:
- ATMs
- Kiosks
- Online check-in
5. Hiring On-Demand Staff
Useful for special events, festivals, holiday seasons.
Summary Table
| Topic | Meaning | Key Tools |
|---|---|---|
| Queue Management | Control waiting lines | Token, priority queues, appointments |
| Waiting Line Models | Predict wait times | M/M/1, M/M/c models |
| Facility Location | Selecting best service location | Factor rating, GIS, CoG |
| Facility Layout | Arrangement of physical space | Process, product, retail layouts |
| Service Environment | Physical surroundings/ambience | Lighting, signs, decor |
| Employee Scheduling | Matching staff with demand | Shifts, staggered, flexible |
| Staffing Strategies | Right number & type of employees | Full-time/part-time mix, cross-training |