SERVICE

OPERATIONS
MANAGEMENT
ITH2213N

ITH2213N SERVICE OPERATION MANAGEMENT

 COURSE BRIEFING

CLASS ASSESSMENT

ITH2213N SERVICE OPERATION MANAGEMENT

 CHAPTER 1
INTRODUCING SERVICE OPERATIONS MANAGEMENT

ITH2213N SERVICE OPERATION MANAGEMENT

 SERVICE OPERATION
MANAGEMENT

WHAT IS YOUR IDEA ON

THIS ????

ITH2213N SERVICE OPERATION MANAGEMENT

 CHAPTER
OBJECTIVES
• This chapter is about how to
understand the role of service
operations management and its
contribution to organizational
success.
• What are services?
• What is ‘service’?
• What is service operations
management?
• Why is service operations
management important?

ITH2213N SERVICE OPERATION MANAGEMENT

 • We all come into contact
with service operations
and experience their
services every single
day.
• We are customers or
users of a wide range of
commercial and public
services, such as
childcare services,
hospitals, shops,
schools, holiday firms,
restaurants, television
and the internet.

ITH2213N SERVICE OPERATION MANAGEMENT

 • Every single
organisation is
involved in service
and so a knowledge
and understanding of
service operations
management can
make a real
difference to their
success.

ITH2213N SERVICE OPERATION MANAGEMENT

 WHAT ARE SERVICES?
• Services come in many shapes and forms provided by a variety
of types of organisations, including:

BUSINESS-TO- BUSINESS-TO- INTERNAL PUBLIC VOLUNTARY

CONSUMER BUSINESS (B2B) SERVICES SERVICES AND SERVICES
(B2C) SERVICES SERVICES NOT-FOR-
PROFIT

ITH2213N SERVICE OPERATION MANAGEMENT

 BUSINESS-TO-CONSUMER SERVICES
• Services provided by organisations to individuals

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)

Hospitality services (restaurants and

hotels)

ITH2213N SERVICE OPERATION MANAGEMENT

 • 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.

ITH2213N SERVICE OPERATION MANAGEMENT

 BUSINESS-TO-
BUSINESS
SERVICES
• Services provided between
businesses and include
consulting, office
equipment provision and
support, communications,
corporate travel services,
business insurance,
finance and legal services.

ITH2213N SERVICE OPERATION MANAGEMENT

 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.
• Sometimes organisations subcontract or
outsource such services so they become b2b
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.

ITH2213N SERVICE OPERATION MANAGEMENT

 PUBLIC 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.
ITH2213N SERVICE OPERATION MANAGEMENT
NOT-FOR-PROFIT AND
VOLUNTARY SERVICES
• Not-for-profit and voluntary services
include the services provided by non-
governmental organisations (NGOs) such
as aid organisations like Oxfam, Red
Crescent and Médecinssans Frontières.
• Other not-for-profit and voluntary
organisations include faith organisations,
charities, trusts, the Scouting Association
and the many small voluntary clubs and
societiessuch as sports clubs and
photographic societies.
 SERVICE – THE OPERATION’S PERSPECTIVE
• A hospital is a very complex service organisation that employs large numbers of staff. It
will care for hundreds of patients each day, through many different specialist
departments, each providing a range of treatments.

• Managing this type of service operation is extremely challenging, not only because they
are dealing with life and death situations every hour, but also because of the complexity
of the operation. The complexity is in part due to the volumes of patients and the wide
range of treatments available, but also due to the fact that, like many service
organisations, hospitals comprise many different service operations that must be
coordinated and linked together in order to deliver healthcare to their customers.

• For the hospital, these include reception services, diagnostics, pharmacy, theatres
(where operations on people are carried out), catering, portering, physiotherapy and so
forth. In addition, there are the internal services such as information systems support,
human resource services, training and finance.

ITH2213N SERVICE OPERATION MANAGEMENT

 • Each of these service operations uses and manages many input
resources, such as nurses, surgeons, drugs, equipment such as
defibrillators, scanning and X-ray machines, and facilities such as wards,
beds and theatres. One important input is also the customer – the patient
who is getting the treatment or the internal member of staff who requires
IT support or training services for example. Thus the hospital has many
operations that ‘process’ customers whether they are patients or
members of staff.

• These processes (activities) are the services they provide, such as

reception services, diagnostic services, heart transplant surgery,
intensive care treatment, or staff catering, IT support and training. The
outputs of these processes are, hopefully, cured patients, fed staff and
more knowledgeable operators, for example.

ITH2213N SERVICE OPERATION MANAGEMENT

 • 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.

• This involvement may be limited, in the case of pharmacy services

for example, or significant, for diagnostic and surgical services for
example. Services are therefore ‘co-created’ or ‘co-produced’ along
with the customer. Thus the service provided occurs, or is enacted,
where the operation and the customer meet as represented by the
overlap.

ITH2213N SERVICE OPERATION MANAGEMENT

ITH2213N SERVICE OPERATION MANAGEMENT
 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.
ITH2213N SERVICE OPERATION MANAGEMENT
 THE CUSTOMER
EXPERIENCE
• The customer experience is the customer’s direct
and personal interpretation of, and response to,
their interaction with and participation in the
service process, and its outputs, involving their
journey through a series of touch points/steps.

• An experience is perceived purely from the point

of view of an individual customer and is inherently
personal, existing only in the customer’s mind.
Thus, NO TWO PEOPLE CAN HAVE THE SAME
EXPERIENCE.

ITH2213N SERVICE OPERATION MANAGEMENT

 • 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

ITH2213N SERVICE OPERATION MANAGEMENT

 THE SERVICE OUTCOMES
• We use the term service outcomes to describe the results for
the customer of the service process and their experience.

Products
• One key and important outcome is the ‘functional’ output of the
service provided,
• ‘Products’ such as the food and drink provided by a restaurant, or the
ability of a delegate on
• A training course to construct a spreadsheet, or the new heart for
the heart operation patient.

ITH2213N SERVICE OPERATION MANAGEMENT

 Benefits Emotions
The benefits are important to the customer. Experiencing a service results in the customer
This is why they have chosen or used the feeling emotions, of which there are many
service provider. hundreds, including joy, surprise, love, fear,
anger, shame and sadness
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.
Example :
• The patient who has undergone the heart
operation will benefit from a longer and more
active life.

ITH2213N SERVICE OPERATION MANAGEMENT

 Judgements Intentions
Another outcome of the service from a These judgements, good, bad or indifferent,
customer’s point of view will be their will result in intentions, such as the
conscious or unconscious assessment of intention to repurchase or not the intention
the service provided, their experience and to recommend to others, or the intention to
the perceived benefits gained. complain or not. These intentions may or
This results in judgements about fairness may not result in action.
(or equity), and, importantly, their perceived
value of the service received.
Value is the customer’s assessment of the
service provided, their experience and the
benefits derived weighed against all the
costs involved.

ITH2213N SERVICE OPERATION MANAGEMENT

 • 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.
• Service operations management plays a vital role in both of
these.

ITH2213N SERVICE OPERATION MANAGEMENT

 PRODUCTS, SERVICES AND VALUE
Most, if not all,
organisations provide a
combination of products
(things) and services
(activities).
ITH2213N SERVICE OPERATION MANAGEMENT
A manufacturer of Service organisations Consultants provide
washing machines or such as restaurants tangible reports, but their
cars not only makes the ‘manufacture’ food and main value is their
machine – they also the restaurant would be diagnostic and advice
provide sales services, of little value without it. services.
and after-sales services
such as servicing and
repairs.
 • One could argue that ‘product’ versus ‘service’ is now an old fashioned
distinction and the boundaries between them are blurred. What is more
important to customers, the product or the service?

• What is a ‘product’? Is Amazon a product or a service organisation? The critical

point is not the relative amount of product versus service that an organisation
delivers, or whether it sees itself as a product producer or service provider, but
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. 11 Importantly, the customer is the ultimate judge
of value. Value is perceived by the customer over the time we keep the car and
we hope that its value-in-use is at least as good as the price we had to pay for it;
though we may often not realise this until the car breaks down

ITH2213N SERVICE OPERATION MANAGEMENT

 CO-PRODUCTION

One of the most important, intriguing and challenging aspects of managing service operations
(certainly when compared to manufacturing operations) is that many, though not all, service
operations ‘process’ customers.

These are sometimes referred to as customer processing operations. The theme park cannot
physically give you the rides unless you turn up, the doctor cannot give you an injection unless
you are physically in the same place. This means that the customer’s experience is an intrinsic
part of the operation’s process.

The part played by customers in the service process is referred to as co-production (or
cocreation).

ITH2213N SERVICE OPERATION MANAGEMENT

 • So, besides managing materials, technology, people and
processes, service operations managers also have to manage
the customer as a resource too.

• This overlap of the process and the customer’s experience,

together with the direct involvement of the customer in many
services, makes the job of a service operations manager
particularly challenging, exciting and, at times, frustrating

ITH2213N SERVICE OPERATION MANAGEMENT

 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 organisation’s
objectives are met, while also paying
attention to the continual improvement
of the services.
ITH2213N SERVICE OPERATION MANAGEMENT
 • 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.

ITH2213N SERVICE OPERATION MANAGEMENT

 Customer

• Customers will be satisfied, even delighted if they are

provided with the right service, a good experience and the

WHY IS
desired outcomes.
• This delivers value for the customer.

SERVICE Staff

OPERATIONS
• Good service operations management and the provision of
the right services, experiences and outcomes for the
customer will also mean a better experience for the staff

MANAGEMENT Organization

IMPORTANT? • 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.

ITH2213N SERVICE OPERATION MANAGEMENT

 END OF CHAPTER
*Please refer to blackboard for discussion

ITH2213N SERVICE OPERATION MANAGEMENT