Chapter 1. Introducing service operations management
They include the services organisations provide to each other such as procurement or consulting
services; services inside organisations (internal services) such as information technology (IT) or
human relations (HR) support; public services provided by governments (social services, police
services or fi re and rescue services); and the many and diverse services provided by not-for-profit
and voluntary organisations such as faith organisations or international aid organisations.
Business-to-consumer services are services provided by organisations to individuals, examples being
financial services (from banks and insurance providers), retail services (from supermarkets and
clothes shops), travel services (airlines and bus companies), leisure services (cinemas and gyms), and
hospitality services (restaurants and hotels). A subset of B2C services are those organisations which
facilitate communication and service provision between customers (sometimes described as
customer-to-customer or C2C services); examples are social networks such as Facebook, business
networks such as LinkedIn, video-sharing sites such as YouTube, peer-to-peer games such as
Farmville and Cafe World, and buying and selling sites such as eBay.
Business-to-business services are services provided between businesses and include consulting,
office equipment provision and support, communications, corporate travel services, business
insurance, finance and legal services. Internal services are the many sorts of formal and informal
services that people inside organisations provide to each other. The formal ones include internal
services such as personnel, IT, HR, payroll or security services. Furthermore, almost everyone
working in an organisation provides some form of service to other people in the organisation, such
as writing reports, arranging meetings, taking part in discussions or providing information. These are
informal internal services. Public services (sometimes referred to as G2C – government-to-
consumer) cover the wide range of services provided by local, regional and central governments to
their citizens and communities. These include social housing, police, education, welfare and health
services. Not-for-profit and voluntary services include the services provided by non-governmental
organisations (NGOs)
1.3.1 Service – the operation’s perspective
,So from the operation’s point of view, the service provided is the service process and its outputs
which have been designed, created and enacted by the operation using its many input resources,
including the customer, where the customer also takes some part in the service process. Thus the
service provided occurs, or is enacted, where the operation and the customer meet as represented
by the overlap in Figure 1.1 .
1.3.2 Service – the customer’s perspective
So while a service is the process or activity, from the customer’s perspective, sometimes referred to
as the customer-dominant logic perspective, the service received is their experience of the service
provided which results in outcomes such as ‘products’, benefits, emotions, judgements and
intentions.
The customer experience
The customer experience is the customer’s direct and personal interpretation of their interaction
with and participation in the service process, and its outputs, involving their journey through a
series of touch points/steps.
Aspects of the customer experience include:
the degree of personal interaction
the responsiveness of the service organisation
the flexibility of customer-facing staff
customer intimacy
the ease of access to service personnel or information systems
the extent to which the customer feels valued by the organisation
the courtesy and competence of customer-facing staff
interactions with other customers.
The service outcomes
We use the term service outcomes to describe the results for the customer of the service process
and their experience. The key outcomes are ‘products’, benefits, emotions, judgements and
intentions.
Benefits: The benefits of a service are how the customer perceives they have ‘profited’ or gained
from the service provided, their experience of it and the ‘products’ provided, i.e. how well their
requirements and needs have been met.
Emotions. Experiencing a service results in the customer feeling emotions, of which there are many
hundreds, including joy, surprise, love, fear, anger, shame and sadness.
Judgements. Another outcome of the service from a customer’s point of view will be their conscious
or unconscious assessment of the service provided, their experience and the perceived benefits
gained. This results in judgements about fairness (or equity), and, importantly, their perceived value
of the service received. These assessments and feelings, conscious or unconscious, will then be
rationalised into a feeling of satisfaction or dissatisfaction (an emotion) about the overall service.
Intentions. These judgements, good, bad or indifferent, will result in intentions, such as the intention
to repurchase or not, the intention to recommend to others, or the intention to complain or not.
,The outcomes outlined above are from a customer perspective. There are also important outcomes
from the organisation’s perspective. Organisational outcomes will be concerned with meeting
targets and objectives. To be successful an operation has to meet both its desired customer
outcomes and organisational outcomes. Service operations management plays a vital role in both of
these.
1.3.3 Products, services and value
Many product-based organisations see ‘service’ as a means of differentiating themselves from the
competition, and they recognize the value provided by their ‘add-on’ services.
The movement towards thinking in terms of the complete product-service offering, and changing
product-based organisations’ business models to market and deliver this, is often referred to as
servitisation.
The critical point is where the value is for the customer. Value is created in the experience and the
outcomes (in particular the benefits) at the point(s) of consumption. Importantly, the customer is
the ultimate judge of value. One important corollary to this is that the customer has a significant role
in value creation in services. The role the customer plays in service delivery is referred to as co-
production.
1.3.4 Co-production
Many service operations ‘process’ customers --> customer processing operations. This means that
for example, a doctor cannot give you an injection unless you are physically in the same place. This
mean that the customer’s experience is an intrinsic part of the operation’s process. As a result, the
customer sees much of the process and plays a key role in the process itself as well as receiving the
service – thus service is a two way flow. The part played by customers in the service process is
referred to as co-production. ( We do everything in the supermarket, and at the doctors need to
explain what our symptoms are).
1.4 what is service operations management?
Service operations management is the term that is used to cover the activities, decisions and
responsibilities of operations managers in service organisations. It is concerned with providing
services, and value to customers or users, ensuring they get the right experiences and the desired
outcomes. It involves understanding the needs of the customers, managing the service processes,
ensuring the organisations objectives are met, while also paying attention to the continual
improvement of the services. Operations managers are responsible for most of an organisation’s
assets, for managing most costs and staff and for generating the organisation’s revenues. As such,
operations management is a central organisational function and one that is critical to organisational
success.
1.5. why is service operations management important?
In essence, service operations managers
- are responsible for managing the design and delivery of services to organisations’ customers,
- are responsible for managing most of organisation’s resources,
- have a significant impact on the success of an organisation.
, Good service operations management should lead to better (or more appropriate) services and
experiences that are better for the customer, better for the staff and also better for the organisation
– the ‘triple bottom line’.
1.5.1 Better for the customer
The service operations manager must be aware of the full range of influences on the customer’s
assessment of value. A key element in this understanding is the relationship between the service
brand values as communicated to the customer and the potential mismatch in terms of customer
experience.
1.5.3 Better for the organisation
Delivering the right service and experience through good operations management delivers many
organisational benefits:
- Satisfied customers who perceive value from the service are more likely to return and also
more likely to provide positive word-of-mouth and recommend the organisation and its
services to others, thus generating more revenue
- improved processes which should be cheaper and more efficient, reducing the organisation’s
costs.
- Good service operations management which thinks both reactively and proactively should
be able to help shape and develop the organisation’s future intent and develop skills and
competencies that will support the development of the organisation.
1.5.4 Economic contribution
Service activities are a vital and significant part of most developing and developed economies.
Service organisations provide employment for the vast majority of the working population in most
developed and developing countries. In many economies the service sector is the only area where
new jobs are being created, notably in tourism and leisure.
They include the services organisations provide to each other such as procurement or consulting
services; services inside organisations (internal services) such as information technology (IT) or
human relations (HR) support; public services provided by governments (social services, police
services or fi re and rescue services); and the many and diverse services provided by not-for-profit
and voluntary organisations such as faith organisations or international aid organisations.
Business-to-consumer services are services provided by organisations to individuals, examples being
financial services (from banks and insurance providers), retail services (from supermarkets and
clothes shops), travel services (airlines and bus companies), leisure services (cinemas and gyms), and
hospitality services (restaurants and hotels). A subset of B2C services are those organisations which
facilitate communication and service provision between customers (sometimes described as
customer-to-customer or C2C services); examples are social networks such as Facebook, business
networks such as LinkedIn, video-sharing sites such as YouTube, peer-to-peer games such as
Farmville and Cafe World, and buying and selling sites such as eBay.
Business-to-business services are services provided between businesses and include consulting,
office equipment provision and support, communications, corporate travel services, business
insurance, finance and legal services. Internal services are the many sorts of formal and informal
services that people inside organisations provide to each other. The formal ones include internal
services such as personnel, IT, HR, payroll or security services. Furthermore, almost everyone
working in an organisation provides some form of service to other people in the organisation, such
as writing reports, arranging meetings, taking part in discussions or providing information. These are
informal internal services. Public services (sometimes referred to as G2C – government-to-
consumer) cover the wide range of services provided by local, regional and central governments to
their citizens and communities. These include social housing, police, education, welfare and health
services. Not-for-profit and voluntary services include the services provided by non-governmental
organisations (NGOs)
1.3.1 Service – the operation’s perspective
,So from the operation’s point of view, the service provided is the service process and its outputs
which have been designed, created and enacted by the operation using its many input resources,
including the customer, where the customer also takes some part in the service process. Thus the
service provided occurs, or is enacted, where the operation and the customer meet as represented
by the overlap in Figure 1.1 .
1.3.2 Service – the customer’s perspective
So while a service is the process or activity, from the customer’s perspective, sometimes referred to
as the customer-dominant logic perspective, the service received is their experience of the service
provided which results in outcomes such as ‘products’, benefits, emotions, judgements and
intentions.
The customer experience
The customer experience is the customer’s direct and personal interpretation of their interaction
with and participation in the service process, and its outputs, involving their journey through a
series of touch points/steps.
Aspects of the customer experience include:
the degree of personal interaction
the responsiveness of the service organisation
the flexibility of customer-facing staff
customer intimacy
the ease of access to service personnel or information systems
the extent to which the customer feels valued by the organisation
the courtesy and competence of customer-facing staff
interactions with other customers.
The service outcomes
We use the term service outcomes to describe the results for the customer of the service process
and their experience. The key outcomes are ‘products’, benefits, emotions, judgements and
intentions.
Benefits: The benefits of a service are how the customer perceives they have ‘profited’ or gained
from the service provided, their experience of it and the ‘products’ provided, i.e. how well their
requirements and needs have been met.
Emotions. Experiencing a service results in the customer feeling emotions, of which there are many
hundreds, including joy, surprise, love, fear, anger, shame and sadness.
Judgements. Another outcome of the service from a customer’s point of view will be their conscious
or unconscious assessment of the service provided, their experience and the perceived benefits
gained. This results in judgements about fairness (or equity), and, importantly, their perceived value
of the service received. These assessments and feelings, conscious or unconscious, will then be
rationalised into a feeling of satisfaction or dissatisfaction (an emotion) about the overall service.
Intentions. These judgements, good, bad or indifferent, will result in intentions, such as the intention
to repurchase or not, the intention to recommend to others, or the intention to complain or not.
,The outcomes outlined above are from a customer perspective. There are also important outcomes
from the organisation’s perspective. Organisational outcomes will be concerned with meeting
targets and objectives. To be successful an operation has to meet both its desired customer
outcomes and organisational outcomes. Service operations management plays a vital role in both of
these.
1.3.3 Products, services and value
Many product-based organisations see ‘service’ as a means of differentiating themselves from the
competition, and they recognize the value provided by their ‘add-on’ services.
The movement towards thinking in terms of the complete product-service offering, and changing
product-based organisations’ business models to market and deliver this, is often referred to as
servitisation.
The critical point is where the value is for the customer. Value is created in the experience and the
outcomes (in particular the benefits) at the point(s) of consumption. Importantly, the customer is
the ultimate judge of value. One important corollary to this is that the customer has a significant role
in value creation in services. The role the customer plays in service delivery is referred to as co-
production.
1.3.4 Co-production
Many service operations ‘process’ customers --> customer processing operations. This means that
for example, a doctor cannot give you an injection unless you are physically in the same place. This
mean that the customer’s experience is an intrinsic part of the operation’s process. As a result, the
customer sees much of the process and plays a key role in the process itself as well as receiving the
service – thus service is a two way flow. The part played by customers in the service process is
referred to as co-production. ( We do everything in the supermarket, and at the doctors need to
explain what our symptoms are).
1.4 what is service operations management?
Service operations management is the term that is used to cover the activities, decisions and
responsibilities of operations managers in service organisations. It is concerned with providing
services, and value to customers or users, ensuring they get the right experiences and the desired
outcomes. It involves understanding the needs of the customers, managing the service processes,
ensuring the organisations objectives are met, while also paying attention to the continual
improvement of the services. Operations managers are responsible for most of an organisation’s
assets, for managing most costs and staff and for generating the organisation’s revenues. As such,
operations management is a central organisational function and one that is critical to organisational
success.
1.5. why is service operations management important?
In essence, service operations managers
- are responsible for managing the design and delivery of services to organisations’ customers,
- are responsible for managing most of organisation’s resources,
- have a significant impact on the success of an organisation.
, Good service operations management should lead to better (or more appropriate) services and
experiences that are better for the customer, better for the staff and also better for the organisation
– the ‘triple bottom line’.
1.5.1 Better for the customer
The service operations manager must be aware of the full range of influences on the customer’s
assessment of value. A key element in this understanding is the relationship between the service
brand values as communicated to the customer and the potential mismatch in terms of customer
experience.
1.5.3 Better for the organisation
Delivering the right service and experience through good operations management delivers many
organisational benefits:
- Satisfied customers who perceive value from the service are more likely to return and also
more likely to provide positive word-of-mouth and recommend the organisation and its
services to others, thus generating more revenue
- improved processes which should be cheaper and more efficient, reducing the organisation’s
costs.
- Good service operations management which thinks both reactively and proactively should
be able to help shape and develop the organisation’s future intent and develop skills and
competencies that will support the development of the organisation.
1.5.4 Economic contribution
Service activities are a vital and significant part of most developing and developed economies.
Service organisations provide employment for the vast majority of the working population in most
developed and developing countries. In many economies the service sector is the only area where
new jobs are being created, notably in tourism and leisure.
