SERVICE OPERATION MANAGEMENT

Nguyen Ky Vien
viennk@due.udn.vn | 0905.539.161
 Course Introduction
 Duration: 03 credits
 Prerequisite: Management

Course objectives:
 To provide background knowledge of
service and distinctive characteristics of
service operations
 To provide principles and knowledge
about different managerial perspectives
of service process
 To guide to flexibly apply management
principles to different operational contexts
in service organizations.
 Course Learning Outcomes

CLO 1 CLO 3 CLO 5

Define service and
analyze distinctive
characteristics of
service operations
Offer recommendations for
service environment
management, customer
participation management and
human resource management.
Demonstrate propensity and
passion for serving
customers, sense of
responsibility, eagerness to
learn and effective teamwork.

CLO 2
Explain administrative
decisions related to
service structure of any
service organization
CLO 4
Propose resolutions of
each type of service
quality gaps and
precautions against the
gaps
COURSE CONTENTS

 Chapter 1: Introduction to services

 Chapter 2: Service structure and

service systems in service firms

 Chapter 3: Designing and

managing service delivery
processes

 Chapter 4: Physical environment

in service firms
COURSE CONTENTS

 Chapter 5: Human resources

management in service firms

 Chapter 6: Customer participation

management in service firms

 Chapter 7: Service quality

management in service firms
 LEARNING MATERIALS
Textbook
LM1. J. A. Fitzsimmons, M. J. Fitzsimmons and S.
Bordoloi (2018) Service Management: Operations,
Strategy, Information Technology. McGraw-Hill
Education, New York;
LM2. C. Gronroos (2011) Service Management
and Marketing: Customer Management in Service
Competition. 3th edition. Wiley, West Sussex.
LM3. Course handout from group of lecturers
References
R1. R. Johnston, G. Clark and M. Shulver (2021)
Service Operations Management: Improving
Service Delivery. 5th edition. Pearson.
R2. Lưu Đan Thọ, Vương Quốc Duy, Trần Hữu
Ái, Lượng Văn Quốc (2016) Quản trị dịch vụ - Lý
thuyết và thực hành ứng dụng của các công ty
Việt Nam, NXB Tài chính
 ASSESSMENT

10% 10%
Discussions
Personal/small group
and attendance
assignments

20% 60%
Group project
Writing exam
presentation
 CLASS REGULATIONS

 Prepare required personal and group work before the class

 Complete individual and group activities in the class

 Raise questions, critically argue and make constructive

comments

 No phone for personal matters

 GROUP FORMATION

5-6 members for each group

 Set group objectives
 Set group rules
 Prepare an introduction
CHAPTER 1
INTRODUCTION TO SERVICES
 Definition of “Service” Reflection

By statisticians:  Used for collecting statistical data, not

“The service sector includes fully describe the nature of service
activities that do not belong to the  Ignore hidden services
first sector (agriculture, forestry
 Consider service as an economic
and fishery) and second sector
sector, not from business competitive
(industry and construction)
perspective
 Definition of “Service” Reflection

By service researchers:  Take business perspective into account

“A service is something which can
 Consider service’s intangibility
be bought and sold but which you
cannot drop on your feet.”  Ignore non-commercial services
Gummesson (1987)
 Definition of “Service” Reflection
“A service is a process consisting of a series of
more or less intangible activities that normally, but  Emphasize service as a process
not necessarily always, take place in interactions  Take service’s intangibility,
between the customer and service employees customer participation and
and/or physical resources or goods and/or systems
of the service providers, which are provided as
simultaneity into account
solutions to customer problems.”
Gronroos (2000)
 Which of the
companies listed in the
Fortune 100 in 2022 are
service companies?
SERVICE-DOMINANT
LOGIC
SERVICE-DOMINANT
LOGIC

 Service is the fundamental basis of

exchange.
 The customer always is a co-creator
of value.

Enterprise’s purpose is to support customers in creating their own values instead of

producing and distributing valued tangible units.
GOODS-DOMINANT
LOGIC

 Manufacturing is separated from

marketplace.
 Value is created by producer.

Enterprise’s purpose is to produce and sell valued products to

maximize profit.
GOODS-DOMINANT
LOGIC

 Manufacturing is separated from

marketplace.
 Value is created by producer.

Enterprise’s purpose is to produce and sell valued products to

maximize profit.
SERVICE CLASSIFICATION

1. By system of national accounts of

Vietnam
2. By Vietnam’s WTO Commitments on
Services
3. By main resources used for service
delivery process
4. By degree of labor intensity,
interaction and customization
5. By nature of service activities
 SERVICE CLASSIFICATION
By system of national accounts of
Vietnam - SNA

1st level industries

• Agriculture, forestry and fishing • Wholesale and retail distribution

• Machinery, equipment and construction • Financial services
• Transportation and storage • Research and development
…

Used for collecting statistical data

 SERVICE CLASSIFICATION
By Vietnam’s WTO Commitments
on Services

(1) Business services: Professional services, (5) Educational services

Computer and related services, Research and
development services, Rental/Leasing
services without operators, Other business
services.
(2) Communication services
(3) Construction and related engineering
services
(4) Distribution services
(6) Environmental services
(7) Financial services
(8) Health related and social services
(9) Tourism and travel related services
(10) Recreational, cultural and sporting services
(11) Transport services

Used as a reference for negotiation and business planning

 SERVICE CLASSIFICATION
By main resources used for
service delivery process

High-touch Services High-tech Services

Affecting investment decisions, recruitment policies, organizing

service process, especially in for non-billable services
 SERVICE CLASSIFICATION
By main resources used for
service delivery process

High-touch services

Personnel with less Personnel with Experts

specialized skills specialized skills
 SERVICE CLASSIFICATION
By main resources used for
service delivery process

High-touch services

Investment and Recruiters pays

Human resources
communication attention to employees’
become a key tool in
emphasize staff to characteristics
creating competitive
attract investors and corresponding to each
advantage
customers type of services
 SERVICE CLASSIFICATION
By main resources used for
service delivery process

High-tech services

Automatic or Facilities operated by Facilities operated by

self-service skilled employees experts
 SERVICE CLASSIFICATION
By main resources used for
service delivery process

High-tech services

Investment and Depending on the type of

communication services that human
Facilities become a key
emphasize equipment resources need to be
tool in creating
to attract investors and emphasized as an
competitive advantage
customers important combination with
physical facilities
 SERVICE CLASSIFICATION
By degree of labor intensity, interaction and customization

Degree of interaction and customization

Low High

SERVICE FACTORY SERVICE SHOP

(Airlines, Hotels, trucking) (Hospitals, auto repair, repair services)
Degree of labor intensity

Low (Capital
– intensive) High cost of facilities, standard
High cost of equipment, high
operating procedure, concentration of
interaction, customized service
service activities

MASS SERVICE PROFESSIONAL SERVICE

(Retailing, wholesaling, schools) (Lawyers, accountants, architects)
High (Labor –
intensive)
High cost of staff, standard operating
Interactional services
procedure
 Challenges for manager?
(Low labor intensity)

SERVICE FACTORY
[High cost of facilities, standard SERVICE SHOP
operating procedure, [High cost of equipment, high
concentration of service interaction, customized service]
Challenges for activities]
Challenges for
manager? manager?
(Low (High
interaction/ low MASS SERVICE PROFESSIONAL SERVICE interaction/ High
customization) [High cost of staff, standard [High labor/ High interaction and customization)
operating procedure] customization]

Challenges for manager?

(High labor intensity)
 SERVICE CLASSIFICATION
By nature of service activities

Nature of Object directly benefiting from the service

service
activities People Physical things

Services for properties and other

Services for body
physical possessions
Visible
outcome Goods transportation, maintaining and
Healthcare, passenger transportation,
repairing industrial equipment,
salons, accommodation,…
veterinary,…

Services for intangible

Services for mind
possessions
Invisible
outcome
Education, communications, cinemas, Banking, law consultants, accounts,
museums,… insurance,…
 DISTINCTIVE
CHARACTERISTICS OF
SERVICE OPERATIONS
 DISTINCTIVE CHARACTERISTICS OF SERVICE OPERATIONS
Tangible product Service

Tangible
Homogenous
The production and distribution processes are
separate from the consumption of the product.

An item
Value is created in the factory.

Customers do not (usually) participate in the

production process.
Be able to be stored
The transfer of ownership exists.
 DISTINCTIVE CHARACTERISTICS OF SERVICE OPERATIONS
Tangible product Service

Tangible Intangible
Homogenous
The production and distribution processes are
separate from the consumption of the product.

An item
Value is created in the factory.

Customers do not (usually) participate in the

production process.
Be able to be stored
The transfer of ownership exists.
 DISTINCTIVE CHARACTERISTICS OF SERVICE OPERATIONS
Tangible product Service

Tangible Intangible
Homogenous Heterogenous
The production and distribution processes are
separate from the consumption of the product.

An item
Value is created in the factory.

Customers do not (usually) participate in the

production process.
Be able to be stored
The transfer of ownership exists.
 DISTINCTIVE CHARACTERISTICS OF SERVICE OPERATIONS
Tangible product Service

Tangible Intangible
Homogenous Heterogenous
The production and distribution processes are The production, distribution and consumption
separate from the consumption of the product. happen at the same time.

An item
Value is created in the factory.

Customers do not (usually) participate in the

production process.
Be able to be stored
The transfer of ownership exists.
 DISTINCTIVE CHARACTERISTICS OF SERVICE OPERATIONS
Tangible product Service

Tangible Intangible
Homogenous Heterogenous
The production and distribution processes are The production, distribution and consumption
separate from the consumption of the product. happen at the same time.

An item An activity or a process

Value is created in the factory.

Customers do not (usually) participate in the

production process.
Be able to be stored
The transfer of ownership exists.
 DISTINCTIVE CHARACTERISTICS OF SERVICE OPERATIONS
Tangible product Service

Tangible Intangible
Homogenous Heterogenous
The production and distribution processes are The production, distribution and consumption
separate from the consumption of the product. happen at the same time.

An item An activity or a process

Value is created in the factory. Value is created through the interaction between
the service firm and the customer.
Customers do not (usually) participate in the
production process.
Be able to be stored
The transfer of ownership exists.
 DISTINCTIVE CHARACTERISTICS OF SERVICE OPERATIONS
Tangible product Service

Tangible Intangible
Homogenous Heterogenous
The production and distribution processes are The production, distribution and consumption
separate from the consumption of the product. happen at the same time.

An item An activity or a process

Value is created in the factory. Value is created through the interaction between
the service firm and the customer.
Customers do not (usually) participate in the Customers participate in the production process.
production process.
Be able to be stored
The transfer of ownership exists.
 DISTINCTIVE CHARACTERISTICS OF SERVICE OPERATIONS
Tangible product Service

Tangible Intangible
Homogenous Heterogenous
The production and distribution processes are The production, distribution and consumption
separate from the consumption of the product. happen at the same time.

An item An activity or a process

Value is created in the factory. Value is created through the interaction between
the service firm and the customer.
Customers do not (usually) participate in the Customers participate in the production process.
production process.
Be able to be stored Not able to be stored
The transfer of ownership exists.
 DISTINCTIVE CHARACTERISTICS OF SERVICE OPERATIONS
Tangible product Service

Tangible Intangible
Homogenous Heterogenous
The production and distribution processes are The production, distribution and consumption
separate from the consumption of the product. happen at the same time.

An item An activity or a process

Value is created in the factory. Value is created through the interaction between
the service firm and the customer.
Customers do not (usually) participate in the Customers participate in the production process.
production process.
Be able to be stored Not able to be stored
The transfer of ownership exists. The transfer of ownership does not exist.
DISTINCTIVE CHARACTERISTICS
OF SERVICE OPERATIONS

Customer
Intangibility Heterogeneity
participation

Nontransferrable
Simultaneity Perishability
Ownership

1. Which challenges does each distinctive characteristic pose to service managers?

2. Propose solutions to limit the effects of each characteristic on service business.
3. Give examples
 Intangibility
Invisible services, not fully exist in a physical form
 Intangibility
Hard to imagine the service and evaluate its
quality accurately (subjective)
Easy to be copied
Reliant on the reputation of the service firm
Likely to seek advice from friends,
acquaintances and salesforce
Make the service tangible
Provide detailed and visual information about
the service to customers
Build and maintain relationships with
customers
Build and maintain brand image
Use registration, licensing and regulation
 Simultaneity
Service is produced and consumed at the same time and in the same space.
 Simultaneity
Implement measures to ensure the quality
of the service
Hard to control service quality
Do marketing of the service continuously, at
the same time and in the same place with
Hard to take advantage of economies of
the consumption of the service
scale
Grasp direct selling opportunities while
delivering the service
 Customer participation
Customers are present and/or perform some tasks in the service process.
 Customer participation
Customers’ knowledge, experience,
motivation and goodwill can directly affect
the performance of the service system.
Customers evaluate the service quality while
participating in the service process.
Design contact space and layout of facilities
and equipment
Control customer participation:
 Limit the presence of customers
 Guide customers when they do self-service
 Perishability
The service cannot be stored for the next servicing if it is not sold.
 Perishability

Capacity planning => address

Loss of unused capacity
Hard to balance supply and demand
disparities between supply and demand
 Spread customers’ needs
 Adjust service capacity
 Keep customers in waiting status
…
 Heterogeneity
Service experiences provided for different customers, in different times
and in different contexts are not identical.
 Heterogeneity
Human resource management: Recruiting and

Difficult to standardize and maintain service training employees; ensuring their rights and

quality benefits
Standardizing service process
Engaging customers in the control of service
quality
Using self-service technology
…
 Nontransferrable Ownership
From a marketing perspective, services, unlike goods, do not involve
transfer of ownership.
Nontransferrable Ownership
 REFLECTION

SEINFELD:
THE SOUP NAZI
How are distinctive characteristics of
services and their effects reflected in the
service business of this soup store?
Thank you!

Does anyone have any questions?

viennk@due.udn.vn
0905539161