An important theoretical and practical problem in the analysis of service activities is the issue of structuring the service sector, as well as the classification of services and service activities. Below we will touch on some aspects of their classification division.
The development of classification criteria is aimed at identifying and selecting the most important typological characteristics of services and service activities, which can help in dividing them into component units (directions, varieties, groups). It is important that these qualities are not random or insignificant, but reflect the essential properties of the service, allowing the formation of the most important typological units based on a variety of real services. For example, a criterion such as “degree of mass” allows us to divide all services into two types: mass and non-mass. In turn, among non-mass services, based on various criteria, a number of additional group-forming units can be distinguished (elite, exclusive services, etc.).
The development of classification criteria is of no small importance, because in different countries there are now many, sometimes difficult to compare, approaches to creating classification schemes, which makes it extremely difficult to analyze service activities even in one country. The criteria for classification in scientific analysis can be especially numerous. After all, researchers often develop classification criteria to solve purely theoretical problems, not always taking into account practical requirements that facilitate the grouping of service activities.
The practice of intra-industry relations in the service sector, as well as state and interstate relations, require the use of generally accepted classification approaches and schemes that could be relatively easily operated in the process of economic relations.
It is especially important to agree on the division of services according to content and functional criteria, i.e. according to the most significant characteristics of service activities related to the nature of work, the area of application of services, their purpose, etc. This is not an easy task, since in the modern world new types of services are constantly multiplying; services are becoming increasingly complex in nature and functional purpose.
There are two aspects to be seen in the fact that different countries around the world use different national classification models. On the one hand, these models make it possible to display various, sometimes hidden, non-obvious characteristics of service activities, thereby demonstrating a wide range of adaptive capabilities of a modern service in relation to a changing world. On the other hand, incomparable models make it difficult to benchmark services internationally.
The task of developing uniform criteria and classification schemes for services still remains an unresolved problem in the world. Most often, classification work is carried out in certain countries on the basis of established traditions of collecting government statistics or solving problems facing society in a specific situation. As an example, we give a service classification model adopted at North American continent, which, of course, reflects the historical practice of developing service activities in the USA and Canada. This model is based on content-functional criteria and includes the following large areas of service activity, which can be considered its most important areas*:
♦ transport (railway, aviation, freight, motor transport, etc.);
♦ communications (telephone, telegraph, radio, etc.);
♦ public services (electricity, water and gas supply, etc.);
♦ mass activities (wholesale and retail trade);
♦ financing, insurance, including work with real estate;
♦ direct service (hotels, services of a personal nature, consultations on organizing mass entrepreneurship, car repairs, repairs of various items, movie rentals, entertainment and recreation, etc.);
♦ other types of services.
In world practice, ways are being sought to overcome the difficulties associated with discrepancies and incomparability of classification schemes of analysis adopted in different regions and countries of the world. Thus, there is an appeal to the analysis of services that in developed countries taken into account by statistical authorities, which allows the use of comparable statistical data regarding these services for comparative study. These are the services:
♦ business services;
♦ communication services;
♦ construction and engineering services;
♦ distribution services;
♦ general educational services;
♦ financial services, including insurance;
♦ health and social services;
♦ tourism and travel; leisure services;
♦ transport services;
♦ other services.
Let us point out the use in interstate practice of a number of developed countries of a classification based on two interrelated criteria: the type of services and the scope of their application.
table 2Types of services in different areas of application
Generally recognized differences between the process of providing services and the production process:
a) client participation in the process of providing the service;
b) combining the stages of satisfying the customer’s need for a product;
c) services cannot be stored;
d) demand for services is variable;
e) intangibility of the service process for the client;
f) it is difficult to assess the quality of the service;
g) it is difficult to assess the effectiveness of service provision.
A. Client participation in the service provision process
In accordance with the definition of a business process79, any activity within its boundaries is aimed at the client or consumer of the process. In industrial production, the product passes into the hands of the client. A service, by definition, is a process. When providing a service aimed at satisfying the client, the client is forced to be involved in the process. This is the most important difference between processes related to services and production processes (Fig. 40).
Thus, when providing services, staff are in closer contact with the client than in production, which requires them to have not only professional technological competencies, but also communication skills. As a result, the service is designed taking into account the impact of the process of its provision on the client.
Many companies can achieve success by manipulating the degree of involvement of the customer in the business process and his role in it. Thus, at one time, self-service retail stores entered the markets. In them, compared to the traditional technology of the salesperson behind the counter, the service provision area is narrowed and the production area is expanded, in which the client acts as a sales floor employee, selecting, sorting, packaging and transporting goods.
Excluding the client from the service process makes the production part of the process more efficient. Therefore, in modern business there is a tendency to distance the client from the service process through the introduction of correspondence or remote service using telecommunications (for example, accepting orders via the Internet and by e-mail, remote monitoring of the patient’s condition, etc.), using automatic machines (for example, exchange currency, accepting payments, etc.).
b. Combining the stages of satisfying the need for a product
Another important difference between services and the production process can be noted. Any business can be considered at the stages of producing a result, its implementation and consumption. For production processes, these stages are separated from each other, since the client as such, carrying out the consumption process, is not a participant in the process of producing the result. When providing services, these stages may coincide in time and space, or alternate1. Examples of this are given in table. 9.
Table 9
Examples of a combination of various stages of service production An example of an organization Stage of service provision production sales consumption Restaurant + + + Atelier + + Store + + 1 Fel A.V. Decree. op. 128 In the process of consuming most services, in contrast to the consumption of material products, clients are located directly at the place where they are provided: in an office, a restaurant hall, a surgical operating room, a train compartment, etc. (depending on the industry). In the production sector, work with goods is concentrated in the divisions of the processing subsystem of the operating system. In the service sector, activities to provide them are present in all divisions of the organizational structure, including the supporting and managing subsystems.
V. Services cannot be stored
Services, being a process of satisfying a client's needs, cannot be warehoused or pre-stocked. This limits the flexibility of the service delivery process itself and places special emphasis on capacity planning. In production, during periods of decline in demand, it is possible to accumulate stocks of finished goods for their sale during periods of increased demand and thus maintain a relatively stable level of capacity utilization and personnel employment. This is implemented using the strategy of fixing production capacity, which was discussed in paragraph 2.3.7 (see Fig. 22).
In the service sector, with rare exceptions, it is necessary to satisfy demand as it arises. Strategies of fixing production capacity and following production with demand (see Fig. 21 and Fig. 22) can be applied, but operating systems operating models that are different from the models discussed in paragraph 2.2.1 when describing production processes should be used. In all these models (see Fig. 13 - Fig. 16), goods inventories play a key role, as indicated by the names of the models: with input and output stocks, with output stocks, with input stocks, without stocks.
In the absence of the possibility of creating a stock of services, operating system organization models become 1: 1.
First-class service model. 2.
"Cheap" service model. 3.
The "ineffective service" model. 1)
The premium service model creates excess capacity so that every customer can receive service at the point of contact (Figure 41). Resource redundancy causes periodic downtime of equipment, waste of materials, and unemployed personnel. As a result, the cost and price of the service increases. The name "first-class" service is associated not with the client's assessment of the quality of the service, but with the segment of the high-end market in which this model is most often used.
rice. 41. “First-class” service model 2)
The low-cost service model deliberately limits the amount of available production capacity. Clients are forced to stand in line waiting for service (Fig. 42). This model is successfully used in the market of exclusive services, as well as in the economy-minus segment market. Insufficient capacity allows you to reduce the cost base and freely manipulate the price level.
rice. 42. “Cheap” service model
The model creates the opportunity to “store” not the service, but customers in a queue (including a pre-registration system). The idea of influencing demand is used in order to balance it with available production capacity (see paragraph 2.3.7). This influence can be carried out by manipulating the length of the queue 130 or using a system of discounts or markups during periods of recession or increase in demand.
3) The “ineffective” service model is the most common in business. When using it, in some periods of time there is excess production capacity, in some periods there are customers in line (Fig. 43). The apparent inefficiency of the model is associated with seasonal fluctuations in demand for services (by day, week, month, season), leading to periodic downtime of production facilities or customers standing idle in line.
queue
rice. 43. Model of “ineffective” service
d. Demand for services is variable
All demand is variable, but demand for services is characterized by large, complex and rapid fluctuations. The impact of fluctuations in demand for services and therefore on capacity requirements in service operating systems is much greater than in a manufacturing system. This is explained by three reasons1: 1)
services are not subject to storage; 2)
clients are involved in the process of providing services; each has different needs, different levels of personal experience and may require different amounts of contact; 3)
The length of the service cycle depends on customer behavior. 1)
Due to the fact that services cannot be stored, the quality of service largely depends on fluctuations in demand. When using all models of operation of service operating systems (see Fig. 41 - Fig. 43), attention should be paid to the ability to respond to short-term changes in demand. For example, when operating retail floors, turning on or off the cash register in the service system allows you to regulate the length of customer queues. Current adjustments to the service delivery process require special staff training. 2)
Client participation in the service provision process leads to the possibility of deviation of the service time for each client from the recommended one, which causes fluctuations in production capacity utilization and staff employment. 3)
The client’s behavior during the service process can be influenced by a variety of organizational, technical, climatic, demographic, economic, political and other factors. This affects both short-term and long-term demand changes, including seasonal variations. All these fluctuations are, in principle, predictable.
When providing services, to achieve maximum process efficiency, 70% of production capacity should be ensured.
Such capacity “is sufficient to ensure that service channels are constantly busy and have sufficient time for individual customer service, and at the same time allows for a certain reserve of capacity so that managing the process of providing services does not pose any special problems for management personnel”80. The specified capacity utilization rate depends on the service sector. Where the degree of uncertainty and the significance of service provision are high, capacity utilization below 70% is recommended. Providing services with good predictability of workload or without direct contact with clients makes it possible to plan activities so that production capacity is used closer to the 100% mark. These recommendations correspond to the operation of single-type production operating systems (see section 3.1.3).
d. Intangibility of the service process for the client
The material results of any activity are tangible. The process of providing a service is characterized by intangibility for the client.
To make the service more tangible for the client, when designing a service, you should pay attention to the material, tangible environment of the service: the location of the office, its design, clothing, speech, appearance of the staff, smells, etc., which should enable the client to correctly understand what kind of service he needs render.
The intangibility of a service can cause the following problems1: 1.
It is difficult to develop a service specification because clients may have different understandings of the “correct” delivery of a service. 2.
Gaining a thorough understanding of customer needs is important but very difficult. 3.
It is difficult to assess the quality and efficiency of service delivery.
e. It is difficult to assess the quality of the service
Due to the intangibility and involvement of the client in the process of providing the service, it is quite difficult to evaluate it by the management of the organization providing it. The quality of the service is determined by the client, but its perception depends not only on the quality of the developed service process and the quality of the staff. The quality of the client’s needs, as well as his ability to perceive the service, are also significant.
The most common methods for assessing the quality of a service are questionnaires and interviews with clients. During the survey, clients rate each service according to the proposed scales. The purpose of the survey is to obtain information from the company about what factors are most important to consumers of its services.
Since the production and consumption processes coincide when providing a service, the quality of the service cannot be checked in advance, as well as guaranteeing that errors made during the service process will be recorded and corrected before the client discovers them. To achieve the required service quality, the service must be carefully designed, staff trained, and positive relationships developed with customers. The situation is complicated by the inherent intangibility of the service and the associated lack of service specification.
and. It is difficult to evaluate the effectiveness of service provision
The client’s participation in the process of providing the service, the combination of the stages of production and consumption of the service, fluctuations in demand for the service and the inability to use inventories when performing the service lead to frequent deviations of the costs of providing the service from the planned size. It is difficult to objectively evaluate the results of a service based on data obtained from customer surveys. As a result, it is difficult to clearly assess the effectiveness of the service.
To ensure the efficiency of activities when providing a service, it is often necessary to overestimate its labor intensity. Indeed, the higher the degree of interaction with the consumer, the higher the degree of individualization of the service and the higher the labor intensity of the process of its provision. At the same time, ensuring high economic efficiency is quite problematic.
TEST QUESTIONS 1.
Which of the differences between the process of providing a service and the production process are of a strategic nature? 2.
What staff skills do you think are most important when delivering a service? 3.
What is the difference between the production and service business process diagrams? 4.
Express your opinion about the possibility, feasibility or necessity of manipulating the degree of contact with the client in the process of providing the service. 5.
Although a service as a process cannot be stored, it is possible to stock up in advance on the resources or products needed to provide the service. Is there a contradiction here? What exactly cannot be stored in the service? 6.
Why are some words in quotation marks in the names of models for organizing an operating system when providing services? What is the convention here? 7.
Which segments of external clients are targeted by each operating system organization model when providing services? 8.
Is it possible to jointly use different operating system organization models when providing services? If yes, which ones exactly? 9.
Explain how you understood that a service is an intangible object?
10. What quality assessment methods can you offer when working with services? 5.3.
types of SERVICES in BUSINESS
As noted in paragraph 2.1, from the point of view of the operating system of a business, the difference between the economic division of industries into industry and services can be leveled out. At the same time, it is customary to talk about services in a different, non-operational sense. For example, they identify the main (basic) services that consumers receive along with products (compliance with technology rules, taking into account specific consumer requirements, timely delivery and competitive price)81.
Value-added services are additional services that the consumer agrees to pay for. They are included in the price of the product. Services of this type are divided into four groups82: 1)
informational services; 2)
escort services; 3)
pre-sales services; 4)
after-sales service. 1)
Information support ensures the provision of comprehensive information regarding the technical characteristics of the product, its parameters and cost to both internal (for example, employees involved in scientific, technical and design development) and external clients. 2)
Support services are provided by the manufacturing company and include consultations with specialists during installation and commissioning of the purchased product. 3)
Pre-sales service includes a set of activities that help improve the effectiveness of marketing activities and increase sales volumes (for example, conducting demonstrations of equipment operation, ironing clothes, etc.). 4)
After-sales service allows you to exchange, replace, repair sold goods, replenish their availability in retail spaces, etc.
Providing value-adding services gives a company two main advantages: a strong competitive position in the market and a positive connection with the customer83.
Some industries require mandatory communication with external clients. They belong to the service sector. These are, for example, banking, transport, medical and legal services, trading enterprises, and catering enterprises.
All business organizations have services provided to internal clients. In the company's operating system, divisions of the processing subsystem are internal clients of divisions of the supporting subsystem. The clients of the management subsystem are employees of the entire organization.
In any organization, contacts with internal or external customers can be viewed from an operational perspective as services. At the same time, there is a certain connection between them. Representatives of the processing subsystem of the operating system, being internal clients of the supporting subsystem, provide services to external clients (Fig. 44). External
Divisions
providing
subsystems
Internal client - divisions of the processing subsystem Fig. 44. Communication between internal and external clients of the organization
CHECK QUESTIONS 1.
What criteria for classifying services can you offer in addition to those discussed in the manual? 2.
How do pre-sales and after-sales services contribute to the development of a company's strategic advantages? 3.
Give examples of the strategic importance of information services. 4.
Why does strengthening relationships with customers enhance a company's competitive position in the market? 5.
Explain the relationship between internal and external customers of the organization.
Modern man is a consumer of not only goods, but also services. The development of the non-production sphere is the most important indicator in the economy of any state.
What is the non-productive sector?
This concept refers to all economic sectors that satisfy the non-material needs of people in society. Such needs include organization, redistribution and use of material assets, spiritual benefits, development of various aspects of personality, as well as health care. The non-productive sphere meets the social needs of society and each individual in it.
This also includes the concept of “spiritual production”. This term was introduced by Karl Marx, who understood it as the production of skills, habits, ideas, artistic images and values. The non-manufacturing sector also includes industries that produce services.
The difference between a service and a product
A person is an object of labor for employees of an enterprise that provides services. A product is an object or thing endowed with certain properties. It was obtained as a result of work done in the past. A service has only useful properties that are not attached to a material carrier, and is the result of labor in the present. A service is sold by the employee of the company who provides it; it cannot change its owner, unlike a product. Services have no cost. However, they have a price that is determined by the cost of the worker’s ability to work and the costs spent
The non-production sphere is based on the material base. Without material production it could not exist. After all, services are ultimately exchanged for goods. Workers involved in material production also provide support for those who work in the service sector.
Non-production sectors
Sociologists identify 15 industries:
- sales (commerce);
- public catering;
- household services: home care, repairs and custom production of various groups of goods, personal hygiene;
- school and preschool education;
- medicine;
- social services;
- recreational services;
- servicing cultural institutions;
- Information Support;
- finance and insurance;
- legal support for citizens;
- services of legal and notary offices;
- connection;
- transport support.
Often, enterprises are engaged in providing several different industries at once.
The non-productive sphere, together with all its institutions and enterprises providing material services, collectively constitutes social infrastructure.
There are also industries related to the service sector that serve large social strata:
- management of government organizations;
- secondary, primary, higher education;
- the science;
- state security agencies;
- public associations.
Connection with productive work
The non-productive sphere does not create new value. However, this does not mean that such work is useless for society. Material production is the basis. Non-productive industries are a superstructure to material ones and cannot exist without them.
It is not created by the non-productive sphere, since it focuses on the comprehensive spiritual development of a person, his state of health, etc. Nevertheless, it can affect productivity, improve the qualifications of personnel, that is, it indirectly affects the national income of the state.
The situation in modern Russia
The non-productive sphere of the economy is a reflection of the needs of society and changes in their structure depending on the standard of living of citizens. In modern Russia, more than 30% of the population works in this area.
The non-production sphere in our country is characterized by territorial differentiation in terms of its level of development. Such differences are inherent when comparing both individual regions and federal districts. Territorial differentiation is one of the reasons. It arose in the 60s of the last century.
Non-production centers have a hierarchy:
- Moscow.
- Central cities of the federal subjects.
- Regional centers.
- Rural settlement centers.
- Rural settlements.
Organizations engaged in recreational and health resort services have their own specific territorial distribution. They depend on the location of the natural and socio-economic base. Therefore, two largest centers were formed in Russia - the North Caucasus and the Black Sea.
The non-productive sphere is represented in the economy by industries that satisfy the cultural and spiritual needs of people. It is closely connected with material production and strongly depends on it. In our country, non-material production sectors are characterized by territorial differentiation.
In a number of countries, the classification of services is based on a sectoral approach and is associated with historically established business practices and issues of state regulation of the service sector. In this case, as in the North American model, based on a number of criteria, there is a list of single-order or similar types of service activities. Each service is presented in one typological grouping. This list, as a rule, ends with the “other services” grouping, which includes services that are not included in any of the previous units. At the same time, the list of services remains incomplete and is open for further addition.
A similar scheme for classifying services operates in Russian business practice, where, on its basis, an all-Russian classifier of services to the population has been developed, and indicators of state statistics are also presented*. In this case, the following areas of service activity, which represent its most important typological directions, are included in the service sector:
* See: All-Russian Classifier of Services to the Population OK002-93. Official publication. M.: Standards Publishing House, 1994.
♦ trade (wholesale and retail);
♦ food and accommodation services (hotels, catering structures);
♦ transport;
♦ communication and information services;
♦ services for supply, procurement and storage of material and technical resources;
♦ credit, finance and insurance, real estate transactions;
♦ education, culture and art;
♦ science and scientific services;
♦ healthcare, including physical education and sports;
♦ household services (housing repairs, industrial and household services and utilities);
♦ personal services (non-production, household, etc.);
♦ public administration services;
♦ other services.
A comparison of the Russian and North American service classification models shows that the domestic model is more detailed regarding some types of services and reflects other types of services more poorly. In particular, it does not present market-commercial services, which in this case must be included in the “other services” group.
This uniqueness of it was reflected in the statistical collection “The Service Sector in Russia” (M., 2000). It contains data on all areas of service activities in the Russian economy indicated in the all-Russian classifier for 1998-1999. Along with this, the additional section “Indicators of the development of certain types of market services” presents detailed statistical data on new services that have not yet been identified in separate areas, but for the most part appear generally in the “other services” group. In this case, the collection contains information about:
♦ intermediary services in real estate transactions;
♦ services for assessing the value of property;
♦ information and computer services;
♦ activities of gambling establishments*.
* Service sector in Russia: Stat. Sat. / Prev. redol. M. N. Sidorov. M.: Goskomstat of Russia, 2000.
In different countries there are similar groups of services, but developed in their own practice, which are specified and supplemented in different ways. For example, in some countries the list of such groups includes construction, gasification networks, energy systems, etc., while in other countries these infrastructure elements are classified in statistical reporting as non-service industries.
Along with the generally significant groupings that operate in the practice of government accounting and statistics, other classification areas and groups of services that are convenient for economic analysis are being developed. In domestic science and service activities, enlarged units of division of services and service activities are often distinguished in the following areas related to their functional entity:
♦ production services - provided to economic structures in connection with their production needs (including security, repair, banking, business, etc.);
♦ trade services (wholesale and retail);
♦ life support services - related to serving citizens within the framework of family and household ties, i.e. with home improvement, housekeeping, meeting family needs, home recreation;
♦ social services - aimed at meeting people’s needs for those goods, qualities and functions that they need as subjects of social relations: transport, financial, postal, recreational (maintaining health, organizing recreation in public forms), educational, information, etc. .;
♦ cultural services - related to the provision of educational, scientific, artistic, aesthetic, and entertainment services.
The presented version of the typological areas of service activity is one of the most common in domestic practice of analyzing the service sector. Social and cultural services are especially often discussed. In this regard, the last two units of division are often combined to form a large segment sociocultural services. Sociocultural service is aimed at meeting the needs related to the social, cultural and spiritual needs of people.
In turn, each in the presented version of the classification of services (typological direction) can be divided into more detailed varieties and groups. Thus, services focused on households are divided into utility services related to maintaining cleanliness in the house, repairing household appliances, technical maintenance, etc. In turn, home maintenance services can be divided into services of electricians, plumbers , gas workers, etc.
The considered version of the classification is quite simple in its obviousness and suitable for use in the practice of service activities. However, it has disadvantages. In this case, we point out that it remains unclear to which direction some services can be classified if they are provided to different typological groups of consumers or implemented in dissimilar functional circumstances. For example, business and banking services may be applicable not only to industrial teams, but also to individuals; recreational services can acquire a mass character or a purely family-home scale, etc.
In Russian practice of classifying services, their division into material and intangible. Material services include services that require material resources (raw materials, spare parts, semi-finished products, everyday products, etc.), which people later use, consume, and wear out. Intangible services involve intangible, spiritual components of human activity - knowledge, mathematics and statistics, artistic images, spiritual values. However, this division remains very conditional, since one and the other type of service cannot be implemented without the use of both material and spiritual elements of service.
As one of the options for classifying service activities, we will present a model developed in domestic science, based on mutually agreed upon criteria, which are very important in the production and economic practice of service. These criteria make it possible to break down all services based on interconnected content and functional qualities and classify them into different classes (groups). It is fundamentally important that in this case the same service can be included in different groups for different qualities. In each of the groups it is adjacent to different services (Table 3).
Table 3
Classification of services by interrelated qualities
| Service | Quality | |
| according to the objects of labor used | - production - information | |
| by degree of capital investment | - high capital-intensive - low capital-intensive | |
| by level of material costs | - material-intensive - low-material-intensive | |
| according to the complexity of service delivery technology | - complex technology - simple technology | |
| according to personnel qualifications | - highly professional - sufficient qualifications | |
| by place in the economic infrastructure | - production - institutional - social (service sector to the population) | |
| by degree of tangibility | - tangible - intangible | |
| if the client is required to be present | - the presence of the client is necessary - performed in the absence of the client | |
| by levels of legal regulation | - bilateral - multilateral | |
| by the degree of legal and regulatory regulation | - high regulation - sufficient regulation | |
| by social status of the client (individuals and legal entities) | - elite - exclusive - high status (according to European standards) - mass | |
| by place in society | - production - distribution - professional - consumer - public | |
| for business purposes | - business - organizational - personal | |
| in place in the sphere of social production | - in the sphere of production - in the sphere of circulation, including | |
| - in retail trade - in wholesale trade | ||
| according to organizational forms of implementation | - independent specialized companies - structures within parent companies - specialized network of companies - individual performers | |
| on the complexity of the services provided | - full complex (cycle) - individual types of services | |
| by degree of commercialization | - fully commercial - partially commercial - non-commercial | |
| according to the degree of organizational and technological regulation | - mandatory according to regulations (planned preventive or planned compulsory) - warranty - additional | |
| in connection with the process of sales (marketing, sales) of products | - related sales - after-sales | |
| in the form of reimbursement of costs for the provision of services | - paid (paid by the client, buyer) - free (paid by the manufacturer or included in the price of the product) | |
| at the place of business activity | - organizational (managerial) - logistics - marketing |
II. The essential nature of service activities...
TOPIC 4. Peculiarities of production in the service sector.
Characteristics of services.
As stated above, manufacturing activity can be considered as the process of converting materials into a finished product and the ability to deliver that product to the customer. An important feature of this process is that the buyer does not participate in the manufacturing process of the product and the finished product can be kept in stock until consumption (dispatch).
Service An activity, benefit, or satisfaction that is sold separately or offered concurrently with the sale of goods.
The service sector, from the point of view of production management, has a number of important characteristics.
Firstly, the consumer is usually present in the production process, i.e. There is more intense contact or interaction with the consumer than in industrial production.
Secondly, in the service sector, a higher degree of product customization is required in accordance with consumer requirements.
Thirdly, work in the service sector is much more labor-intensive than in industry.
These three features make the process of managing service operations more challenging from an efficiency standpoint.
The higher the degree of interaction with the consumer, the higher the degree of individualization of products, the more labor-intensive the process, the more difficult it is to ensure its high economic efficiency.
It is these characteristics that distinguish the service sector from industrial production in terms of operational activities.
Let's consider the specific features of services that allow you to maneuver the quality of reducing or increasing it for various categories of consumers.
Buyer participation.
In any service activity, the buyer is, to one degree or another, participants in this process (for example, transport services, supermarket, etc.)
When organizing activities, it is necessary to take into account the needs and abilities of clients. If this is not done, they immediately get the impression of poor quality of service. A customer who can't find sugar in a supermarket or can't make out the notices at a train station may, of course, be to blame, but will nevertheless turn into a dissatisfied customer and will not hesitate to tell a dozen others about his dissatisfaction. Since the cost of acquiring a new customer can be more than 5 times higher than the cost of retaining an old one, the importance of customer satisfaction becomes self-evident.
In the personal service industry, such as a retail store, hair salon, restaurant, hospital, personal interaction and environment play a major role in customer satisfaction. Again, what is most important is not the actual condition, but the buyer's perception of them.
The main differences brought about by the presence of a buyer are: firstly, the quality of the service cannot be verified in advance, since its production and consumption occur simultaneously; secondly, it is very likely that the buyer may be unprepared and unpredictable.
Services cannot be stored.
Since production and consumption occurred simultaneously, it was impossible to store services. If a bank employee who can serve 20 customers per hour has no customers between 10 and 11 a.m., he will not be able to serve 40 people between 11 and 12 a.m. The “productive capacity” of a service is something that is not constant, volatile, because if the service does not work, it is lost.
Demand for services is variable.
Any demand is variable; however, demand for services is subject to large, complex and rapid fluctuations. The demand for all services is seasonal (changes more or less equally throughout the year), in addition, there are also shorter-term cycles (public transport, restaurants, entertainment).
All these fluctuations are predictable. However, the challenge is to meet demand during peak hours or days while avoiding ineffective idle capacity at other times. It is impossible to create a stock.
Intangibility of the service component.
The intangibility of the service component of any transaction is characterized by the following problems:
1. It is usually difficult to create a clear specification, and with it an agreement on the exact nature of the service. People have different understandings of the “correctness” of providing services. Some customers want the salesperson to approach them immediately in a self-service store, while others find this annoying (intrusiveness). Maximum waiting time is usually used as an indicator when designing services. However, it is impossible to fully take into account this problem (for example, waiting in a hospital).
2. Some people like to be greeted by service personnel, while others do not accept it, considering such a greeting artificial and overly obsequious. In general, achieving a complete understanding of the customer's needs is important, but very difficult.
3. Customers tend to emphasize the tangible elements of the transaction in their feedback, which can lead to unbalanced perceptions of service quality.
4. It is quite difficult to evaluate service activities. There is a tendency to value what can be valued instead of what actually matters.
Measuring customer waiting time is relatively simple, but it is difficult to ensure that this indicator really plays an important role.
These issues give rise to two major challenges in service design that are not obvious, or at least much less significant, in the design of tangible products (efficiency and quality)
Service efficiency.
Because the buyer is involved in production, the design of the service activity and the design of the service itself become inseparable. The critical moment of any activity is the optimal utilization of capacity, and therefore production costs. Wide and rapid fluctuations in demand, as well as the use of finished goods inventories as shock absorbers, make the task of developing an effective service very, very difficult.
Quality of service.
It is difficult to determine quality without clear specification (standardization) of a product or service. The inherent high degree of intangibility of services makes clear standardization almost impossible. Moreover, the perception of the same service by the supplier and the buyer may differ significantly. Adding to the complexity is the tendency of customers to criticize only the material elements of the service, regardless of whether it is the essence or something else.
Since the customer is part of the process, traditional quality control methods are not acceptable. It is impossible to guarantee the quality of a service before it is provided. The presence of a quality inspector affects quality and is a nuisance for both the employee and the customer.
Today, service issues are viewed from the same perspective as quality issues: the customer is the central element of all decisions and actions of every service organization.
The service philosophy can be represented as a service triangle:
Figure 4.1. Customer Service Philosophy
The customer is at the center of the service system. Viewing service in this way reinforces the general truth that the service organization exists to serve the customer, and the system and personnel exist to enable the process of service delivery.
The role of operations in the service triangle is paramount. Operations determine the structure of service systems (procedures, equipment, premises) and management of the work of service personnel.
Types of service systems
In the industrial sector, in contrast to the service sector, there are certain terms for classifying production operations (for example, serial production, continuous, etc.), when used in the production process, they immediately reveal the essence of the process. These definitions are also used to describe the service process, however, in order to distinguish between those in the service, the consumer (client) of the service is included in the production system, additional information is needed. Such information, which distinguishes the production function of one service system from another, is the establishment of a degree of control with the customer during the service delivery process. The definition of “contact with a service consumer” reflects the physical presence of the client in the system. Service Delivery displays the workflow used to provide a particular service.
“Degree of contact” can be generally represented as the percentage of time that a client must be in the service system to the total time that the entire process of servicing him takes. The longer the duration of contact between the service system and the service consumer, the higher the degree of interaction between them during the provision of this service.
Based on this concept, it can be concluded that service systems with a high degree of customer contact are much more difficult to manage than systems with a low level of customer contact.
In the first type of system, the client has a strong influence on the duration of service, the composition of the service and its actual or expected quality.
Table 4.1.
The influence of the client's presence during the provision of services
|
Characteristics of the service enterprise |
System with a high degree of contact with clients (bank branch) |
Low customer contact system (check processing center) |
|
Service point placement |
The service must be located in close proximity to the service consumer. |
Service is predominantly carried out closer to transport hubs and sources of labor. |
|
Space planning |
Must take into account clients' psychological and physical requirements and perceptions. |
The main criterion is to ensure maximum labor productivity. |
|
Determined by the environment and the physical presence of the client. |
The client is absent. A service can be defined by fewer elements. |
|
|
Staff skills |
In addition to professional skills, the main element of service is direct work with the client, so the staff must undergo special training. |
Only professional skills. |
|
Service quality control |
The client's presence is controlled and subject to change. |
The quality standard can be precisely set. |
As can be seen from the table, the presence of a client during the provision of a service affects absolutely all the characteristics that must be taken into account during the presence of a service company.
Technologies in the service sector
There are three main technologies for providing services:
1. Production lines (for example, post office, McDonalds);
2. Self-service (this technology is widely known when using vending machines, self-service gas stations);
3. Individual approach technology.
Service development.
When designing service organizations, it is necessary to remember: it is impossible to create a stock of services.
In the service sector, with rare exceptions, it is necessary to satisfy demand as it arises. In this regard, the criterion of throughput in customer service is a matter of paramount importance (hotel, restaurant). Thus, one of the most important questions when designing a service enterprise is: what should the throughput (power) be? Excessive capacity leads to increased costs, and insufficient capacity leads to loss of customers.
You can “keep” customers by lining them up or using a pre-booking system. Queuing models are used. These models allow us to more accurately answer questions such as how many employees should work on the bank floor.
The service strategy begins with the choice of operational focus, i.e. with the establishment of priorities that are achieved, on the basis of which the company will compete in the market. These priorities include:
1. respectful treatment of clients;
2. high speed and ease of service provision;
3. price of the service;
4. variety of services (“buy everything at once”);
5. quality of materials used in the provision of services;
6. unique skills that shape the level of service offering, such as developing hairstyles, performing brain surgery, etc.
Achieving a competitive advantage in the service industry requires integration of service marketing with the service delivery process.
The main directions for solving problems of service activities.
The first direction is the industrialization of the service, when the emphasis is on efficiency and contact with customers is reduced, and the maximum possible part of the work is transferred to the “workshop”.
The second direction is based on identifying those characteristics of service that constitute its quality.
Industrialization in service development.
Industrialization in service development involves three approaches:
1. Remove the buyer from the process as long as possible and apply industrial process design strategies to the part of the process in which the buyer does not participate.
2. If the presence of the buyer is unavoidable, use him as labor.
3. Increase staffing flexibility to match capacity to demand.
Office/workshop approach. This approach attempts to identify the minimum acceptable degree of buyer involvement and assign the appropriate activity to the “office.” All other activities are hidden from the eyes of the client in the “workshop”, where traditional (industrial) principles of production organization can be applied (for example, the meat section in a supermarket and, for comparison, a regular butcher shop). The separation between office and workshop improves efficiency, but the costs in terms of maintaining the service, deteriorating staff skills and reduced job satisfaction can be high.
The "customer as labor" approach. The entire concept of self-service is based on using customers as labor. In this case, “production capacity” exactly follows demand. Often, a strict division into an office and a workshop is used. Disadvantages: It is often impossible to get advice and assistance to an inexperienced client.
The flexible workforce approach involves widespread use of part-time work. This allows companies to vary their capacity based on demand, rather than maintaining an excess workforce at off-peak times. This type of work organization creates problems.
Quality of service
Quality, measured by customer satisfaction in terms of customer retention, is generally highly dependent on the intangible elements of the service. From this point of view, most actions taken to increase productivity through “industrialization” come at the expense of service quality.
In the service industry, the biggest cost is quality assurance, both the cost of service itself and the cost of error.
An important aspect in determining customer perceived service quality is the degree of customer trust. Service will be considered poor when the customer finds himself in a state of uncertainty, either because he does not know how to behave or because he perceives uncertainty and a lack of coordination from the service provider himself. The internal consistency of the service delivery system is important in achieving high quality by maximizing customer trust and confidence.
Figure 4.2. Service provision system.
The figure shows 4 interconnected elements; service personnel, service management, the service itself and the duration of the process of providing it.
Consistency is achieved by matching each of these elements to customer needs, and by agreement between service personnel and management regarding the nature of the needs and how to achieve them.
In order to ensure that the service is provided in the required quality and with sufficient efficiency, the following steps must be followed:
1. Make sure that the service concept is clearly stated with all the details.
2. Imagine the image that the service concept will project onto the market. This is necessary to understand consumer expectations from the service. No matter how good a service is, it will be considered bad if it does not meet these expectations.