Page 54 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 3: Services and their Characteristics

Schmenner and primary appeared in 1986. Although considerably different, the Service Process Notes
Matrix can be seen somewhat as a service industry version of Wheelwright and Hayes’ Product-
Process Matrix. The Service Process Matrix can be helpful when investigating the strategic
changes in service operations. In addition, there are unique managerial challenges connected
with each quadrant of the matrix. By paying close attention to the challenges associated with
their related classification, service firms may perk up their performance.
The classification characteristics take in the degree of labor intensity and a jointly measured
degree of customer interaction and customization. Labor intensity can be described as the ratio
of labor cost to plant and equipment. A firm whose product, or else in this case service, requires
a high content of time and effort with comparatively little plant and equipment cost would be
said to be labor intense. Customer interaction symbolizes the degree to which the customer can
intervene in the service process.

Example: A high degree of interaction would mean that the customer can demand more
or less of some aspects of the service.
Customization refers to the need and ability to alter the service in order to please the individual
customer’s particular preferences.
Figure 3.1: Service Process Matrix

Low
Service
Factory

Labor Intensity Service
Mass

Service
Shop

Professional
High Service
High Low
Customization

Source: http://www.slideshare.net/taquilla/operations-management-919-slides-presentation
The vertical axis on the matrix, as shown in Figure 3.1, is a range with high degree of labor
intensity on one end (bottom) and low degree of labor intensity on the other end (top). The
horizontal axis is a range with high degree of customer interaction and customization on one
ends (right) and low degree of customer interaction and customization on the other end (left).
This results in a matrix with four quadrants, each with a exclusive combination of degrees of
labor intensity, customer interaction and customization.
The upper left quadrant includes firms with a low degree of labor intensity and a low degree of
interaction and customization. This quadrant is labeled “Service Factory.” Low labor intensity
and slight or no customer interaction or customization makes this quadrant similar to the lower
right area of the Product-Process Matrix where recurring assembly and continuous flow processes
are located. This allows service firms in this quadrant to operate in a fashion alike to factories,
hence the title “Service Factory.” These firms can take advantage of economies of scale and may

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