Blueprinting the Service Company Managin

February 10, 2018 | Author: cosmin | Category: Risk, Business, Business Economics, Cognition, Psychology & Cognitive Science
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Journal of Business Research 57 (2004) 392 – 404

Blueprinting the service company Managing service processes efficiently Sabine Fließa,*, Michael Kleinaltenkampb,1 a

b

Lehrstuhl fu¨r Dienstleistungsmanagement, Fern Universita¨t Hagen, Profilstr. 8, D-58084 Hagen, Germany Institut fu¨r Marketing/Weiterbildendes Studium Technischer Vertrieb, Freie Universita¨t Berlin, Otto-von-Simson-Str. 13/15, D-14195 Berlin, Germany

Abstract Service processes require the participation of the customer: Without the customer, service processes cannot take place. The fact that the service provider is dependent on customer participation causes difficulties in managing service processes efficiently and effectively because customer’s contributions can only be influenced by the provider up to a certain extent. The article will stress the management of service process efficiency. Therefore, a production-theoretic view will be used to identify the sources of efficiency problems. Based on this approach, we will differentiate between customer-induced and customer-independent activities for a better efficiency management. The well-known blueprinting technique will be used in a revised version based on the production-theoretic approach to identify starting points for improving process efficiency. Differentiating between three areas of process management, we will suggest measures of factor combination management, information management and property rights management. D 2002 Elsevier Inc. All rights reserved. Keywords: Customer integration; Integrative value chain; Service management; Service efficiency; Production theory; Blueprinting

1. Customer participation and its impact on service process efficiency The most remarkable thing about service processes is that they do not take place without the customer (Chase, 1978; Corsten, 1988; Cowell, 1984; Gro¨nroos, 1990; Hilke, 1989; Hoffman and Bateson, 1997; Kurtz and Clow, 1998; Larsson and Bowen, 1989; Lovelock and Young, 1979; Meffert, 1995; Meyer, 1993; Mills, 1985; Schneider and Bowen, 1983; Zeithaml and Bitner, 2000, p. 319). Before the supplier can really start with the production and delivery of a service, the customer’s requirements, above all, need to be specified. For this aim, the service provider is dependent on the customer’s information about the requirements the service has to fulfill, where and how the service should take place or should be used, etc. (Mengen, 1993; Krimm, 1995). Moreover, some service processes require the participation of the customer during all or some service operations. As a coproducer (Cowell, 1984; Edvardsson et al., 1994; Meyer and * Corresponding author. Tel.: +49-2331-987-2534; fax: +49-2331-9874494. E-mail addresses: [email protected] (S. Fließ), [email protected] (M. Kleinaltenkamp). 1 Tel.: + 49-30-8385-2493/2494; fax: + 49-30-832-57-46. 0148-2963/$ – see front matter D 2002 Elsevier Inc. All rights reserved. doi:10.1016/S0148-2963(02)00273-4

Blu¨melhuber, 1994; Schade, 1995) or ‘‘partial’’ employee (Bateson, 1985; Schneider and Bowen, 1983; Kelley et al., 1992), the customer may take an active part in the service operation, such as in self-service restaurants. Participation can also be limited to a more passive form of involvement (Eiglier and Langeard, 1999; Maleri, 1997), a requirement of physical presence such as in surgery, a need for the customer to be merely mentally present such as in education or the need to start and stop a process such as in car repairs (Langeard, 1981; Hoffman and Bateson, 1997; Meyer, 1994). From the service provider’s point of view, increasing customer participation may lead to more efficiency, as the customer carries out tasks that otherwise have to be carried out by the supplier’s employees (Hoffman and Bateson, 1997). However, increasing customer participation also causes high demands on the provider’s service process management: Missing, delayed or unqualified customer contributions influence costs, time and tasks carried out by the supplier’s employees (Zeithaml and Bitner, 2000). Important influences of customer contributions can be identified in the following areas: 

Meeting customer’s requirements is dependent on customer’s contributions, particularly on information given

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by the customer but also on the quality of customer participation (Brentani and Ragot, 1996; Kelley et al., 1992; Kurtz and Clow, 1998; Zeithaml and Bitner, 2000).  Delayed customer contributions can cause bottlenecks and capacity problems and lead to an overall delay of service delivering (Corsten and Stuhlmann, 1997; Hoffman and Bateson, 1997; Kleinaltenkamp and Marra, 1997; Kurtz and Clow, 1998; Mudie and Cottam, 1999).  Delayed and unqualified customer contributions, furthermore, can cause additional costs, e.g. when new or changed contributions are required (Maleri, 1997; Mudie and Cottam, 1999).  Changing or uncertain customer requirements can affect service effectiveness as well as service efficiency (Mills and Moberg, 1990, p. 105; Zeithaml and Bitner, 2000, p. 323). To solve these problems, we can find a bunch of different suggestions. From an operations management perspective, naturally prevailing in efficiency management, it is suggested to standardize, automate or mechanize service processes (Northcraft and Chase, 1985), keep customer involvement within limits (Chase, 1978), delegate activities to the customer (Maister, 1982), or switch from a professional service production approach to a job shop, a batch process or an assembly approach (Bateson, 1990; Levitt, 1972). The operations management perspective can conflict with the marketing perspective: Sometimes the customer wants to participate to a larger extent in order to receive customized or individualized services according to his specific needs (Engelhardt et al., 1993; Lovelock, 1990) and sometimes he/she likes to play an active part in service processing (Zeithaml and Bitner, 2000). On the other hand, the customer might not want to participate at all because s/he has delegated the tasks to the provider or because s/he does not have the time, necessary skills or knowledge to take over these functions (Collier, 1987; Corsten and Stuhlmann, 1997). Therefore, one of the most important goals in service process management is to make sure that customer participation takes place when, where and in the way it is needed to operate efficiently without neglecting customer satisfaction (Palmer and Cole, 1995). In order to achieve this aim, we will introduce a production-theoretic approach of service processes. This approach will be used to identify three areas of potential inefficiencies in service processes: (1) information management insufficiencies, (2) failures in factor combination, e.g. the operation process itself, and (3) incompletely defined property rights. The approach will further be used to distinguish between two different kinds of activities within a service process: customer-induced activities and customer-independent activities. It will be shown that these different activities are connected to different management tasks and, therefore, give new insights in efficiency management.

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In the second part of the article, we will combine the production-theoretic approach with the well-known technique of blueprinting. Blueprinting is normally seen as a heuristic method for analyzing and designing service processes. Basing the blueprinting on a production-theoretic approach, we will show that the introduction of a new ‘‘line’’ will clarify points of departure for efficiency management. In Section 3, we will suggest different actions in information management, factor combination management and property rights management for improving service process efficiency by using the production-theoretic approach and the blueprinting technique as well.

2. A production-theoretic approach of service processes As the customer is often viewed as a coproducer (Cowell, 1984; Edvardsson et al., 1994; Meyer and Blu¨melhuber, 1994; Schade, 1995; Mills and Moberg, 1982) or as a ‘‘partial’’ employee (Bateson, 1985; Schneider and Bowen, 1983; Kelley et al., 1992), the vision of the customer as a productive resource (Zeithaml and Bitner, 2000) is not totally new. Some authors actually suggest that if customers contribute effort, time or other resources to the service production process, they should be considered as part of the organization (Mills et al., 1983; Mills and Morris, 1986). From a production-theoretic approach, these suggestions go too far. Based on this view and with reference to the three dimensions of services (potential, process and outcome) (Donabedian, 1980; Corsten and Hilke, 1994; Hilke, 1989), we can distinguish between two main stages of service production (Corsten, 1985; Altenburger, 1980; Gerhardt, 1987). The first stage refers to the service provider’s potential. A provider’s potential comprises capacity factors (assets) as well as commodity factors and provides the foundation on which all value creation is based (Gutenberg, 1983). For a bank, capacity factors consist of the buildings, computers, software and employees, whereas commodity factors are paper, pencils or energy. It may be that from time to time finished and/or semifinished goods are produced in terms of a speculative precombination (Schneider, 1993) of internal production factors, i.e. production processes taking place without specific customer orders having triggered them. The goods resulting from such anticipative production runs, and, as mentioned, varying in their degree of completion, together with capacity and commodity factors will then become part of a supplier firm’s internal factors. Examples for such precombinations in a bank may be the preparation of information folders containing different kinds of leaflets or the preparation of service product bundles for different customer groups. So, the service provider’s potential typically consists of the service provider’s resources and capacity ready to serve the customer. The second stage of the service production activities involves the customer in the service operation. From a

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Fig. 1. Integrative value chain.

production-theoretic view, customer contributions can be regarded as additional external production factors, which need to be integrated in the service operations (Corsten, 1997; Maleri, 1997).2 In producing and delivering services, external and internal production factors are combined and form an integrative value chain (see Fig. 1) (Kleinaltenkamp, 1997). The outcome of these activities, which is finally passed on to the customer, in any case, will show itself to be a bundle of goods and services. The main difference between the first and second stages of production is founded on the integration of external production factors into the service operation. External production factors can be grouped as follows (Engelhardt et al., 1993; Kleinaltenkamp and Jacob, 1997):  

  

physical objects like a machine in need of repair, a piece of land to be built on or a building to be cleaned human resources like employees of the customer who, in systems selling, are regularly delegated to the project management teams of the supplier, or like a customer in need of a hair cut the utilisation of rights by a lawyer or a licensee within a legal action nominal goods, which are placed at a bank’s or enterprise’s disposal with the aim of getting interest information used for production of services by an advertising agency or a consultant

As can easily be seen, the customer is not a member of the service provider’s organization but a contributor of addi2 Note that service production comprises all operations necessary to deliver a service, including customer interaction, management activities and service production operations in a narrower sense.

tional and necessary resources. Only in special cases, e.g. hairdresser or medical diagnosis, the customer himself is regarded as a resource. External production factors contributed by the customer differ from internal production factors by the following characteristics (Kleinaltenkamp and Haase, 1999; Maleri, 1997): . External production factors are put at the service provider’s disposal by the customer, i.e. they cannot be bought on the market. . The service provider’s disposal of external production factors is limited in time to the duration of the service process, i.e. after finishing the service process, they have to be returned to the customers. . The service provider’s disposal is limited in scope to certain property rights (Kleinaltenkamp and Haase, 1999), i.e. normally, the service provider is not allowed to sell the customer’s external factors to somebody else, as an individual customer’s external factors will be integrated either as objects of the transformation activities themselves (Carp, 1974; Gerhardt, 1987) or as means of production that will at least facilitate these activities (Mengen, 1993).In contrast to internal production factors, which can be fully disposed by the service provider, the service provider’s disposal on external production factors is limited. Therefore, the first and second stages of production differ not only by different kinds of production factors (external and internal) but also call for different management activities. Activities within the first stage of production only require internal production factors. They can be autonomously disposed by the service provider, which means that they are independent of a specific customer. These activities can be characterized as customer-independent activities (Kleinaltenkamp, 1997; Fließ, 2001).

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By integrating additional external factors, which are delivered by the customer, the second stage of service production, the service process, starts. These activities are customer-induced, that is, they can only be carried out if they are started by a customer; if they are started by some external production factors, the customer is introduced into the service process. The integration of external production factors, e.g. the contact between the customer and the service provider, constitutes the service process and differentiates between service potential and service process activities (Kleinaltenkamp and Haase, 1999; Fließ, 2001). Customer-induced and customer-independent activities have a different impact on service process efficiency because they are connected to different kinds of risk.

3. Efficiency management: balancing production and market risk 3.1. Types of risks connected with customer-induced and customer-independent activities Basically, two types of risks can be distinguished: production risk and market risk (Riebel, 1965). In its extreme form, market risk arises in a situation where a preproduced product cannot be sold because no customer is interested in it. On the contrary, production risk refers to a situation where a contract is made but the supplier is not able to produce or to deliver the required good or service. Considering service companies, production risk and market risk have to be taken into account in various degrees (Engelhardt and Freiling, 1995). Production risk is mainly connected to customer-induced activities, whereas market risk is mainly connected to customer-independent activities. Customer-induced activities are dependent on customer participation, i.e. on the contribution of external production factors. Production risk arises because customer contributions, i.e. external factors, not always fully meet the provider’s requirements. While production risk is higher with customer-induced activities, it is lower with customer-independent activities. The reason can be seen in the kind of disposal the different activities allow for: customer-independent activities are based on production factors whose property rights fully belong to the supplier’s company. Customer-induced activities combine internal and external production factors. For external production factors, the property rights belong to the customer’s companies and are transferred only partly and timely limited to the service provider. As Swartz et al. (1992) state, ‘‘managing customer behavior is problematic because organizations typically have no formal authority over them (unlike with employees).’’ Whereas production risk is mainly connected to customer-induced activities, market risk is mainly linked to

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customer-independent activities. Market risk arises when a service provider does not know if he will find enough customers for the services he offers. Market risk, therefore, is particularly entailed to autonomously made decisions like decisions on capacity, personnel qualifications or furnishings of the premises. Customer-induced activities do not cause market risks because the fact that the customer starts the service process and participates in the service operations by contributing his/her external factors normally means that s/he has agreed to accept the service and pay for it: The contract is made before production starts (Jacob, 1995). Therefore, market risk is minimal.

3.2. Impact of production and market risk on efficiency Production risk increases with the number of contact points between customer and supplier because each contact point means that additional external factors are introduced into the service process (Fließ, 2001). A special case among the external factors is information. We can distinguish between two kinds of information as external factors (Kleinaltenkamp, 1997): active or process information and passive information or data. While passive information has no special impact on the activities and is just passed and transformed throughout the service process, active information steers the flow of activities. It comprises all information about the customer’s wishes, special needs, deadlines, preferred suppliers and material and the like. Active information determines the degree of customer integration, which means that it decreases the part of autonomously disposed activities. As the supplier cannot dispose external factors like internal production factors, especially the integration of active information, makes it more difficult for the supplier to plan capacity and to direct resources to their most efficient use (Corsten, 1997; Schnittka, 1998), thus increasing the costs of service operations (Paul, 1998). In order to manage service processes efficiency, it is typically suggested to standardize or automate service procedures or to reduce the number of customer contact points by delegating activities to the customer. However, and this is already well known, these measures increase market risk, cause inflexibility of service processes and — if the company does not manage to find enough customers for these unindividualized, and therefore substitutable, service offers— also increase costs per process. As production risk as well as market risk influence costs and productivity, efficiency management obviously should consist in balancing production and market risk by balancing customer-induced and customer-independent activities. As a first step, efficiency management, therefore, requires to identify customer-induced and customer-independent activities, as these activities are linked to production and market risk. A method, which can serve this purpose, is a revised version of the blueprint.

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4. Identifying customer-induced and customer-independent activities— blueprinting the service process 4.1. Blueprinting—stages of development Blueprinting is a method invented by Shostack (1982, 1984a,b, 1987) and developed further by Kingman-Brundage (Kingman-Brundage, 1989, 1993, 1995; KingmanBrundage et al., 1995) to visualize service processes.3 As Zeithaml and Bitner (2000) put it, ‘‘a service blueprint is a picture or map that accurately portrays the service system so that the different people involved in providing it can understand and deal with it objectively regardless of their roles or their individual point of view.’’ A blueprint can be regarded as a two-dimensional picture of a service process: The horizontal axis represents the chronology of actions conducted by the service customer and the service provider. The vertical axis distinguishes between different areas of actions. These areas of actions are separated by different ‘‘lines.’’ Blueprinting has so far been applied to a wide range of different service processes and has been used for different purposes. Considering the application of blueprinting during the last 15 years, three stages of development can be identified, each stage adding new elements to the blueprint (see Fig. 2 based on Heskett et al., 1997; Kingman-Brundage, 1995; Kingman-Brundage et al., 1995; Noch, 1995; Zeithaml and Bitner, 2000). Although blueprints of the third stage are not homogenously structured (Zeithaml and Bitner, 1996), five key action areas can be identified which are separated by four horizontal lines (Kingman-Brundage and George, 1996; Kingman-Brundage et al., 1995): . The ‘‘line of interaction’’ separates the customer action area from the supplier action area, representing the direct interactions between customer and supplier. Above the ‘‘line of interaction,’’ we find activities, choices and interactions performed by the customer. . The ‘‘line of visibility’’ differentiates between actions visible and invisible to the customer. Above the ‘‘line of visibility,’’ actions and decisions carried out by front office employees are shown. . The ‘‘line of internal interaction’’ distinguishes between front office and back office activities. Support processes, which are necessary to provide front office employees in delivering the service, are carried out beneath the ‘‘line of internal interaction.’’

3 Lovelock differentiates between the terms ‘‘service blueprinting’’ and ‘‘service mapping.’’ According to him, service mapping refers to the portraying of an existing service process, whereas service blueprinting is the technical term for the purpose of planning a new or revised service process (Lovelock, 1996). In this paper, blueprinting will be used to describe both purposes.

. The ‘‘line of implementation’’ separates between planning, managing and controlling (management zone) and support activities (support zone). Support activities are directly related to the service process performed by the contact personnel for a specific customer. Management activities are also related to this specific service process but can also be used to direct numerous service processes. In the management area, activities like the allocation of resources, the conduct of employee surveys or the preparation of revenue reports can be found. These activities also take place while the service operations are conducted. Kingman-Brundage et al. suggest to connect the customer’s, the employee’s and the technical logic of services in order to form an integrated system of ‘‘service logic.’’ Customer logic refers to the customer’s role as consumer and coproducer as well. Technical logic comprises the basic principles that govern service production. Employee logic contains the underlying rationale that drives employee behavior (Kingman-Brundage et al., 1995). ‘‘In the distinctive service mapping format [. . .], the customer occupies the top zone, management occupies the bottom zone and service operations are sandwiched between them. Thus, service maps literally show how service personnel manipulate service components to bridge the gap between management intent and customer demand. The service logic model interprets the dynamics of this bridging activity’’ (Kingman-Brundage et al., 1995). To understand customer’s logic, the service blueprint is to be read from the top to the bottom to understand management’s logic and reading of the service blueprint starts from the bottom and ends at the top zone (Zeithaml and Bitner, 2000). This last version of the service blueprint will be used to be linked to the production theoretic approach of services.

4.2. The revised service blueprint: separating customer-induced and customer-independent activities The line of interaction, the line of visibility and the line of internal interaction are adopted from Kingman-Brundage’s service blueprint. The areas between the lines comprise the activities carried out by integrating the customer’s external factors. Here, we find the customer-induced activities, i.e. activities that only can be carried out after having been started by the customer or his/her external factors. Beneath the line of internal interaction, a new line is introduced: the line of order penetration (Kleinaltenkamp, 1999; Fließ, 2001). In logistics, the point marking the meeting of production and market risk is called the point of order penetration (Jacob, 1995; Schna¨bele, 1997). This idea can be transferred to the blueprint, calling the line separating customer-induced from customer-independent activities the line of order penetration. Since customerinduced activities belong to the service process, whereas customer-independent activities form the service potential of the service company, the line of order penetration can also be considered as separating the service company’s potential

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Fig. 2. Stages of blueprint development.

from the service process. Activities above the line of order penetration are customer-induced and are, therefore, dependent on external production factors. Activities beneath the line of order penetration are independent from a specific customer and only rely on the service company’s internal production factors. Activities, which take place within the customer-independent area of service activities, can be further structured in preparation activities and facility activities. Facility activities provide the supplier with resources necessary to

produce the service. They refer to the assets or capacity factors and the commodity factors of the first stage of the production process (see Fig. 1). Storage of components and material, purchase of equipment and other fixed assets and employment are activities that belong to the facility area. Preparation activities are those which are necessary to put facilities into operation. They refer to the combination of different internal production factors within the first stage of service production (see Fig. 1). Maintenance of machines, cleaning of premises and training of employees are typical

Fig. 3. Blueprint of a simplified acquisition process.

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preparation activities. The line of implementation separates the two areas. Fig. 3 contains a simplified version of a sales process using the revised blueprint. The main differences between the ‘‘traditional’’ blueprint of Kingman-Brundage et al. and the revised blueprint can be found in the following aspects: . In the traditional blueprint, a service process can start with management activities (Kingman-Brundage, 1995). In the revised blueprint, a service process ex definitione starts by integrating the customer’s external factors, i.e. a service process is always set in motion by the customer and never by the management. . In the traditional blueprint, we find customer-induced activities as well as customer-independent activities. In the traditional blueprint, for example, the activity of developing advertising and sales promotion is considered to be a support activity and, therefore, is placed between the line of internal interaction and the line of implementation (Kingman-Brundage, 1995). Referring to the production-theoretic approach, the development of advertising and sales promotion is customer-independent, i.e. it is not induced by the customer. Therefore, in the revised blueprint, this activity has to be placed below the line of order penetration. As it requires the combination of different internal production factors, it is considered a preparation activity. So, the traditional blueprint does not differentiate between customer-induced and customer-independent activities. It rather shows different activities, carried out by different persons or departments. Therefore, the traditional blueprint refers to different responsibilities and to the organizational structure of the service process. The revised blueprint shows activities concerning the production structure of service operations and refers rather to the value chain of services than to the organizational structure of service operations. Section 5 will show the three areas of efficiency management, combining them with the production-theoretic approach and the revised blueprint.

5. Areas of efficiency management Failures in service process management are due either to the service provider or the customer. Maybe, the service provider did not procure or did not use the resources that serve best (personnel, machines, software or orders) or did not dispose it in the right way (e.g. capacity). These are failures anchored in autonomously disposed activities. Failures can also be due to mismanagement in integratively disposed activities, i.e. an employee does not serve the customer properly, and finally, they can also be caused by the customer who did not contribute the right quality or quantity of external production factors at the right place or in time, e.g. a customer missing his appointment with a consultant engineer or a customer bringing the wrong documents to the lawyer. These failures are mainly due to mismanagement in combining internal and/or external fac-

tors. The first area of efficiency management can, therefore, be regarded as factor combination management. Failures because of insufficient customer contributions are often caused by misinformation. The customer does not know where, when and how to participate in the service process. Information insufficiencies arise if the service provider does not manage to communicate appropriately to the customer. They also can be caused by customerindependent activities, e.g. advertisements rising inappropriate expectations, or by customer-induced activities, e.g. inappropriate or inadequate guidance of the customer during the service process. The second area of efficiency management can, therefore, be regarded as the information management of service processes. Inefficiencies in service processes in general and in factor combination especially can also be based on insufficiently specified property rights concerning either the external factors or the outcome of the service operation. Property rights are especially crucial for knowledge-based services. Is a consultancy company allowed to use the information gathered from the customer during a service operation for other service operations with different customers, and if not, how can the customer prevent him to do so? How can the service provider protect himself against the new competition of experienced customers? As the third area of efficiency management, the property rights management of service processes can be identified. Factor combination management, information management and property rights management are not independent from one another (Kleinaltenkamp, 1997). As the customer’s information is normally needed to combine internal and external factors according to the customer’s needs and wants, information management can be seen as an antecedent of factor combination management, while the management of property rights is a process accompanying the combination of internal and external factors. Each of the areas stresses different aspects of efficiency management a service provider can use to improve the service process. In Section 5.1, we will show how some measures of efficiency management relate to these three areas. We, therefore, will continue to differentiate between customer-induced and customer-independent activities and connect our suggestions to the blueprint technique. 5.1. Increasing efficiency by information management Services delivered can only meet the customers requirement at lowest costs if the customer and the service provider know which resources and contributions are required. Sometimes, the customer even does not know which problem has to be solved — s/he is lacking problem evidence (Engelhardt and Schwab, 1982). Sometimes, the customer does not know why, where, when and how to participate in the service process. S/He only has limited process evidence, which consists of process awareness and process transparency (Fließ, 1996b). Process awareness means that the customer knows

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that his participation is required during the service process and that service production and delivery is dependent on his external production factors. Process transparency means that the customer has an idea how the service activities are carried out and which part s/he plays. Process transparency, therefore, refers to the customer’s script of the service process (Bateson, 1985; Corsten and Stuhlmann, 1997). Process evidence refers to two dimensions: integration evidence and factor evidence (Fließ, 2001). Integration evidence means that the customer does not know when and where to participate in the service process, while factor evidence refers to the situation that the customer does not know how to participate, i.e. which external factors are required. For example, the production risk of a management consultant can be lowered if the customer delivers exactly the information the consultant needs to analyze the company’s situation, to reveal the competitive advantage and to develop a suitable marketing strategy. Service process evidence may not always be similarly distributed between customer and supplier. We suppose that depending on the degree of process and factor evidence customer and supplier possess, four types of service processes can be distinguished (Fließ, 1996b). Service processes of the first type are supposed to be characteristic for innovative services where neither the customer nor the supplier has the knowledge to direct the service process without trial and error. Lead User projects may be typical for this kind of service process (Kleinaltenkamp and Staudt, 1991). In service processes of the second type, the customer has a knowledge advantage. S/He knows more exactly how the service company should operate. In a situation like this, the customer is likely to direct the service process and therefore the service outcome. Service processes of this type can be called customer directed. They are typically linked to a strong supply management as we find in the automotive industry. Service processes of the third type are opposite to service processes of the second type. Here, the supplier knows more exactly than the customer how, where and when the customer will participate into the service operating system. This is typical for a situation where the customer has never bought the service before, whereas the supplier already has a great deal of experience. They are called supplier-dominated service processes. The last type is the service process where customer and service provider exactly know how to deliver the service. This is true especially for mature service industries where customer’s and supplier’s scripts of the service process already match. These service processes are well coordinated. Changing the degree of customer participation can increase efficiency with the third type of service and enlarge effectiveness with the first type. It probably will not work with service processes of the second type because the customer will refuse to participate. Standardization always has to take into account the expectations of the customer, the importance of personal interaction for customer satisfaction,

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customer involvement, the customer’s risk attitude and situational influences (Gersch, 1995). To increase process evidence, the service blueprint can be used. The information flow between customer and supplier can be improved by designing a service blueprint together with the customer—even in trial and error situations. So, both parties get an idea of the expectations and concepts of the other party. The application of the service blueprint will help to identify possible pitfalls, to agree on milestones and to coordinate activities. In customer- or supplier-dominated service processes, the blueprint may help to integrate the other party, to show the kind and time of customer’s contributions, to fix milestones and to anticipate failures because of delayed customer contributions. Another possibility is to use the service blueprint for redesigning the service process. Here, the service blueprint serves as a planning tool. Especially, moving the line of visibility may help to increase process evidence. Moving the line of visibility means to inform the customer about the different steps of the service process and to give him/her insight in the service operation. However, note that increasing the degree of visibility may not always be appropriate to decrease production risk: If the customer gets more insight into the service process, s/he may want to participate more intensively as s/he now has a better impression of how his/her contributions affect the service outcome. In this case, service effectiveness is to weigh against service efficiency, as increasing customer participation makes it more difficult for the supplier to direct the service operation. So, moving the line of visibility is only appropriate for those service operations, which meet the customer’s service script and in which customer contributions are easy to handle for the supplier. However, information management does not only mean to improve the flow of information between the customer and the customer contact personnel but also inside the service provider’s company. Therefore, the line of internal interaction shows potential frictions in the internal flow of information. The line of internal interaction can be used to identify, specify and define the amount, kind and quality of information needed while work is passing from one person or department to another. Finally, the blueprint as a picture of the service process operations can be used to formulate specifications for software programs supporting the information and work flow. The different examples show that the blueprinting technique can be used as either a coordination instrument or a planning instrument. 5.2. Increasing efficiency by factor combination management Efficient factor combinations are those which serve the customer’s needs and wants at the lowest costs. Choosing appropriate internal and external factors and combining and directing them to their most efficient use are the main tasks

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in factor combination management. To fulfil these tasks, the service blueprint can be used in different ways. It can help to choose suitable external factors and integrate them into the service process. Every service process requires certain external factors. The analysis of the customer contact points at the line of interaction facilitates to specify the external factor’s requirements. Market segmentation according to the characteristics of the required external factors (Corsten, 1997; Schnittka, 1998) allows for efficient factor combination management. Of course, this is a supplier-dominated point of view. More customer-oriented measures refer to qualifying and training customers (Gouthier, 2000) or designing different service processes according to the different characteristics of external factors and customers, e.g. automated quick check-in procedure and checkin at the counter in the usual way at the airport. As these examples show, factor combination management and information management go close together. The service blueprint can also help to improve factor allocation by choosing and directing the appropriate internal factors. In combination with complaint and satisfaction analysis, it helps to identify bottlenecks and to highlight the critical path in the service operations. For the most important activities on the critical path, standards can be set. These standards can refer to the time needed for different actions (Zeithaml and Bitner, 2000) or to the quality of certain activities. In addition, input – output ratios can be included to evaluate the process and direct resources. Customer contact points along the line of interaction are the most appropriate starting points for such efficiency standards. For acquisition processes, these measures already exist: The number of inquiries, offers and orders are measures for customer contact points. To evaluate productivity, ratios can be formulated, e.g. the number of inquiries per service, person or department. To find out if the process itself works efficiently, the number of offers in relation to the number of inquiries and the number of orders in relation to the number of offers are taken as benchmarks. In order to plan capacity more efficiently, we also can think about ratios of activities above and beneath the line of order penetration. Of course, the blueprint can help to redesign service processes. As the improvement of efficiency in factor combination management is also a matter of technology, the blueprint can show where to substitute people by machines and though how to standardize the service process. In the blueprint terminology, standardization means to move activities from the customer-induced area into the customer-independent area, that is, from above the line of order penetration beneath the line of order penetration. Standardization can be applied to different objects. First, customer contributions can be standardized (Gersch, 1995). Of course, this is only possible if the external factors are highly homogenous. An example are cash dispensers where the external factors are information (name, account number, etc.), which are stored on the bank card. The information

content differs from customer to customer (each customer has a different account number), but the form of the information (digits of the account number) is the same for all customers. If external factors differ highly, standardization can only be reached by establishing homogenous customer – supplier interfaces (Fließ, 2001). Toshiba, for example, uses a software program where the customer himself can design an ASIC by following certain steps within a menu, filling in the necessary information and testing the developed design (Kleinaltenkamp, 1996). Using software programs or implementing service procedures on the internet goes a step further than just standardizing external factors or interfaces: it standardizes parts of the service process itself. It, therefore, has an impact on service process design, which can be located in the blueprint in the following way. Standardization of external factors and interfaces mainly affects the customer-induced activities but has a minor impact on customer-independent activities as well. In order to standardize interfaces, the design and implementation of integration tools has to be completed before customer-induced activities take place. Standardization of parts of the service process means that most of the activities are not started and influenced by the customer any more but that the sequence and kind of activities are determined by the supplier before a customer enters the service operations. Decreasing production risk by standardization, therefore, means that more and more activities are moved from the customer-induced area of the blueprint beneath the line of order penetration into the customer-independent area of the service company. As customer-independent activities are autonomously disposed, it is easier to reduce costs in this area because customer-independent activities mostly are supposed to consist of repeated actions. Repeated actions offer possibilities for using economies of scale and for profiting from the experience curve, thus lowering the costs per activity. On the contrary, activities above the line of order penetration should be evaluated according to the use of economies of scope (Jacob, 1995). An empirical study undertaken by the Weiterbildendes Studium Technischer Vertrieb of the Freie Universita¨t Berlin comes to the conclusion that as far as revenues and costs are concerned, a market offering ideally should show a 20– 30% degree of individualization, i.e. services consisting of integratively disposed activities, while 70 – 80% of the offering, instead, may be made up of standardized components based on autonomously disposed activities (Jacob and Kleinaltenkamp, 1994). It is evident that the service company loses flexibility by standardizing its operations. Therefore, it has to weigh flexibility against certainty in operation planning. The line of order penetration can show the orientation of service companies: towards flexibility and higher production risk (more activities above the line of order penetration) or towards certainty and lower production risk (more activities beneath the line of order penetration).

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Another way to improve efficiency is to shift activities from the service provider towards other participants in the service process. Outsourcing can take place either in the customer-induced areas, i.e. activities are shifted towards the customer, or in the customer-independent area, i.e. activities are shifted to subcontractors (Kleinaltenkamp et al., 1997). Competitive advantages of a company can either be based on customers’ benefits or on cost leadership (Porter, 1980). If the competitive advantage is based on a cost advantage, this advantage is supposed to be more likely situated in the area of customer-independent activities, whereas a benefit advantage would be expected in the area of customer-induced activities. Customer-induced activities are characterized by close customer contact so that the supplier can win new insights into the customers’ processes. His increased knowledge may use to develop new services jointly with the customer as a lead user. Later on, these services may be offered to additional customers as well. Customer-induced activities may strengthen the service supplier’s core competence concerning the knowledge of the customers’ processes and business. On the other side, offering highly customized services require the core competence of knowing customer’s needs, wants and processes. Otherwise, the supplier may not be able to fully meet the customer’s requirements. Cost advantages, therefore, are supposed to lie in the area of customer-independent activities. To increase cost leadership, service suppliers can think about rationalisation, automation and outsourcing customer-independent activities. Considering outsourcing potentials of customer-independent activities, the service blueprint can also be used to link the actions of the service provider and its subcontractors. Shifting activities towards the customers can be combined with the standardization of external factors and/or interfaces. If the customer takes over actions that have been carried out by the supplier before, the interface must be clear and the supplier must be sure that the customer’s contributions do not affect the service outcome in a negative way. Besides, the supplier has to take into account that customers can differ in their desire to participate in service operations (Hilke, 1989; Lovelock and Young, 1979; Marion, 1996; Schade, 1996). Increasing the degree of activities taken over by the customer, on the contrary, can lead to higher costs for the service company. Customers must be willing to pay for more performance. Otherwise, a changing degree of customer integration has a negative impact not only on cost structure but also on competitive advantage and service positioning. A prerequisite for changing the division of labor between customer and supplier is that customer and supplier possess similar knowledge about how to perform the necessary activities. Otherwise, taking over activities from the customer may increase production risk instead of decreasing it. Considering production risk and cost management of service activities, we also can derive conclusions for the organization of service companies (Kleinaltenkamp and

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Jacob, 1997). Contemporary concepts of organizational design demand a departure from traditional types of organization that rely on vertical structures comprising strong hierarchical elements (Hammer and Champy, 1994). The decision on how much of a horizontal organization a firm should implement or on how much of its vertical structures it should retain is a direct function of the decision on the extent of customer-induced activities. This is because horizontal structures provide the most appropriate form of organization for processes underlying customer integration. Processes that relate to a firm’s potential for value creation provide opportunities to benefit from specialization and hierarchical structures. As a general suggestion, activities beneath the line of order penetration are to be organized within vertical hierarchical structures to benefit from specialization, whereas activities above the line of order penetration are to be organized in horizontal structures to benefit from individualized solutions and to strengthen the knowledge potential of the company (Kleinaltenkamp and Jacob, 1997). 5.3. Increasing efficiency by property rights management Property rights (Alchian and Demsetz, 1972) are crucial in two ways: First, as mentioned above, the supplier’s property rights of external factors are limited. The extension and content of these property rights have to be specified, at best at the beginning of the service process. Second, as production and consumption of services take place at the same time, property rights of the outcome are shaped and transferred during the service process, mainly by transferring information. If this ongoing process is not watched properly, neither the customer nor the supplier will get what they expected. Normally, property rights are fixed within a contract. However, as Macneil (1978) made clear, contracts are normally incomplete. This is especially true for services, as, in many cases, the object of the contract is created during the service process. For this reason, additional integration and coordination tools are needed to shape and fix property rights in order to make sure that the service process still meets the parties’ requirements. An exploratory study of 14 case studies from different fields of business-to-business-marketing (e.g. customized software programs, development and implementation of telecommunication networks and customized X-ray unit) revealed that integration tools like design check sheets, letters of intent, tenders, inspection and release of designs can serve this purpose (Fließ, 1996a). The characteristic of these tools is that they confirm the outcome of the actions taken so far and, therefore, build the base for the next steps of the process. A very good example is the work of an advertising agency, where during the production process of an image brochure, the customer has to release the layout, the text, the graphics, the prints, etc., so that the advertising agency can always be sure that for each task the external factors have accurately been combined with their internal factors.

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6. Conclusion Efficiency in service processes can not only be reached by standardizing or automating service activities but also by directing internal and external production factors in a better way. Therefore, three areas of efficiency management can be identified: information management, factor combination management and property rights management. As has been shown above, the revised blueprint, based on a production-theoretic view, can be used as an analytical tool and as a coordination and planning instrument as well. Especially, the distinction between customer-induced and autonomously disposed activities does not only help to design new service processes and to improve efficiency of actual service processes. Furthermore, it enables the service provider to make decisions that are strategically important. It helps to locate possibilities for attaining and maintaining competitive advantages, to design the organizational structure and to plan the cost structure of the company. In connection with instruments of modern accounting as activity-based costing, it enables the service management to improve the company’s efficiency. The blueprint approach can be applied not only to the service provider’s company but also, in case of business-tobusiness services, to the customer company’s as well. A similar blueprint containing the customer’s activities during the service process can be drawn in order to facilitate and improve the supplier – customer interface.

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