FRUMHERJI LTD.,REYKJAVIK: THE VEHICLE INSPECTION AND EMISSIONS-TESTING PROCESS

FRUMHERJI LTD.,REYKJAVIK: THE VEHICLE INSPECTION AND EMISSIONS-TESTING PROCESSGROUP 2VISWESH S (188)GAYATHRI R (228)SRINIVAS NAIK (216)S AKSHAYA (233)SPANDANA A (243)

Designing Services That Deliver -G. Lynn ShostackCHARACTERISTICS OF SERVICESREASONS FOR SERVICE FAILURELack of systematic method for design and control

Translating a subjective description of a need into an operational concept that bears only remote resemblance to the original idea

Work flow design and control methods: time-motion engineering, PERT/GANTT chartingLack customers relationship to and interaction with servicesNo provision for people-rendered services that require less of mechanical approachNo account of the services products that need to be managed simultaneously Dont allow for special problems of market position, advertising, pricing or distributionBetter service designs provide the key to market success and to growthQuality control methods: way to visualize a process and define and manipulate it at arms length

Designing a BlueprintA service blueprint is an operational planning tool that provides guidance on how a service will be provided, specifying the physical evidence, staff actions, and support systems / infrastructure needed to deliver the service across its different channels.ISSUES CONSIDERED IN A BLUEPRINTDesigning a Blueprint Contd.

EXAMPLE OF A SIMPLE BLUEPRINTDelivering the ServiceA blueprint facilitates the analysis of cost benefit trade-offs and can be used to test the appeal of different designs to prospective customers Highlighting Tangible EvidenceConsumers deduce nature of service from tangible evidences such as color schemes, advertising, printed or graphic materials etc. Eg: AirlinesMaking People SpecialAt design stage, the developer must plan and consider every encounter between consumer and providerGood manners, attentiveness must be made part of hiring, training and performance standards Eg: Disney, IBMFor pricing department: provides basis for a thorough cost analysisFor distribution: a map to be duplicatedFor promotion: tangible evidence it can manage and controlModifying a Service, Applying the Principles, Creating Better ServiceModifying a Service: service reminders such as shoeshiners name and address on receipt could lead to premium service and can be charged premium prices

SERVICE BLUEPRINTING:A PRACTICAL APPROACH FOR SERVICE INNOVATIONServices represent appx. 80% of the U.S. GDP and growing percentage of GDPs of countries across the worldServices dominate global economies and economic growthBusiness Weeks 2007 top 25 most innovative list includes a number of service businesses( eg. Google, Wal-Mart, Starbucks, Target, Amazon and E-Bay)

THE NEED FOR SERVICE INNOVATIONServices are fluid, dynamic and frequently co- produced in real time by customers, employees and technology, often with few static physical propertiesThe fundamental premise is that, firms can no longer compete solely on providing superior value through their core products, but rather they must move into the realm of customer experience management, creating long- term emotional bonds with their customersThrough co-creation of memorable experiences potentially involve constellation of goods and servicesThe importance of customer experience management is not only touted in customer markets but also in business-to- business context

Service BlueprintingServices as Customer ExperiencesAlthough the terms customer experience, and service experience are frequently mentioned in the business press without explicit definitions, a Harvard Business Review article defines a customer experience as the internal and subjective response customers have to any direct or indirect contact with a company.According to Lewis Carbone, a pioneer in customer experience engineering, customers cannot help but have experiences and all services create experiencesThe total customer experience as influenced by these clues evokes perceptions of service quality and ultimately value along with perceptions of the overall brand itself, which in turn, influence preferences and loyaltyService Development and DesignOrganizations that are most successful in providing new services keep their service development processes from being ad hocThey prepare and move systematically (and often iteratively) through a set of planned stages from the establishment of clear objectives, to idea generation, to concept development, service design, prototyping, service launch, and customer feedbackService design requires an understanding of the customer outcome and customer process, the way the customer experience unfolds over time through interactions at many different touch pointsA well designed service that is pleasing to experience can provide the firm with a key point of differentiation from competitorsAs the new service development process progresses toward actual design and implementation, the initial service idea must be made more concrete so that it can be presented as a developed concept, or even rough prototype, to customers and employeesAs the new service development process progresses toward actual design and implementation, the initial service idea must be made more concrete so that it can be presented as a developed concept, or even rough prototype, to customers and employeesService blueprinting results in a visual rendering of the service process and underlying organizational structure that everyone can see, it is highly useful in the concept development stage of service developmentDuring the final service design stages, the service concept is likely to be refined over a series of iterations to the point at which a final, comprehensive blueprint can be producedDepartmental sub-processes can be magnified, rendered in fine detail, and blueprinted on their own as sub-documents of the main blueprint

Blueprinting Components

Service Blueprint Example

Designing Innovative New ServicesYellow TransportationThe process started with blueprinting an ideal guaranteed express service from the customers point of view and comparing that to existing as well as competitors service blueprintsThe blueprinting process allowed marketing, operations, and delivery channels to communicate clearly with each otherService ImprovementThrough the core service blueprint it also became very apparent how critical internal customer service, terminal personnel, and sales teams were in directly supporting the companys value proposition and core service deliveryEveryone could see their critical role(s) on the blueprint and logical changes and improvements ensuedIntegrating a Customer Focus Across Sales, Operations and Customer Servicethe company was still operations-driven in many of its decisions and that a stronger customer and service orientation was neededInitially, top management, all the way to senior vice presidents and the CEO were taken through service blueprinting training workshopsThen, in groups of fifty to sixty at a time, company executives and managers participated in workshops to first learn blueprinting and then apply it in small teams to specific, real challenges

To do some initial blueprinting of the service challenge combined with preliminary recommendationsForced to take the customers point of view and to document and visualize the points of contact and underlying support systems, team members came to appreciate the cross-functional cooperation After the training sessions, the teams continued to work together virtually to further develop their blueprints and recommendationsWithin two weeks the blueprints and recommendations were submitted to a senior executive who, with his team, utilized the results in strategic decision-making for the companyYellow executives across functions in the company came to appreciate the customers point of viewsomething many of them had not been directly exposed to previouslyThe service changes that came about following the blueprinting exercises were significant, further reinforcing the value of the methodology throughout the organization

Aramark Parks & ResortsARAMARK is a global leader in professional services, operating as an outsourcer for everything from food, hospitality, facility management, and uniform services, working with businesses, universities, healthcare organizations, parks and resorts, convention centers and other groupsOne of its divisions is ARAMARK Parks and Resorts, a group that provides services for 17 major park destinations within the U.S Blueprinting for Service Improvement and Customer RetentionA number of years ago, Renee Ryan, then Marketing Director for ARAMARK Parks & Resorts saw that repeat business at ARAMARKs parks was declining overall- particularly at Lake Powell Resorts and Marinas in ArizonaResearch revealed that many people were not returning to Lake Powell because their first experience there did not match what they expected or were accustomed to based on visits to other resort destinationsMs. Ryan employed both traditional and visual (photos, videotape) blueprintsPROCESS:developed a blueprint of a typical, quality, hotel/resort experience from a typical customers point of viewblueprinted the Lake Powell resort experiencetwo blueprints was revealing differences in terms of basic services, standards, and processesVisual blueprint: showing all aspects of the service through photos and videotapes, the need for service upgrades became apparentThe run-down resort facilities on land, the arduous work required to get on the water, and the stress of navigation all combined to drive customers away after surviving their first Lake Powell vacationblueprinting exercise made all of this extremely vivid for top management and resulted in a whole suite of new services, renovations of existing facilities, training of staff to perform to new service standards, and new measurement and reward systemsThe result for Lake Powell of all of these service quality improvements and innovative new services was 50 percent fewer complaintsRepeat business increased by 12 percent, and customer satisfaction also increased significantlyInsights for Service Innovation PracticeProviding a Platform for InnovationRecognizing Roles and InterdependenciesFacilitating Both Strategic and Tactical InnovationsTransferring and Storing Innovation KnowledgeDesigning the Moments of TruthClarifying Competitive PositioningUnderstanding the Ideal Service Experience

Uniqueness of the technique when compared to other process techniques is its unrelenting focus on the customer as the center and foundation for innovation, service improvement, and experience design

That doesnt mean that customers are the source of innovation, but rather that value to the customer (broadly construed) is the central purpose of innovation

CASE FACTS(1/3)Frumherji Ltd- Background Leading inspection, testing and legal metrology company in IcelandServices: mandatory vehicle inspections and emission tests, driver testing, carwash, inspection of ships, boats and fish processing plantsVehicle inspections constituted 52% and private vehicle inspections represented 7%In 1997- Iceland govt. decided to outsource inspection functions to private sectorPrivate firms were subjected to strict regulations and monitored regularly- procedures were standardized, testing and inspection divisions had to be accredited according to ISO standards, technical manager to be a certified engineer who passed an examination Inspection stations in 24 locations around IcelandPrimary competitor: Aalskoun Ltd.75% of vehicle inspection market in rural areas, 60% in Reykjavik areaQualified auto workshops were minor competitors: inspection of those vehicles that had been repaired after failing initial inspection a Frumherji or AalskounEmployees(101, 52 for vehicle inspection division) rotated among Frumherji locations Communicated the companys emphasis on service quality to employees through company intranet, staff meetings

CASE FACTS(2/3)Government Inspection RequirementsInspection for emissions before vehicle was soldAgain when they were 3 yrs oldAgain after 5 yrs and regular annual checks thereafterLast digit on license plate indicated the month a vehicle should be inspected(this ensured even demand throughout the year)Hesthls Station FacilityFrumherji remodeled and adapted it to changing situationsIssue of increasing number of large vehicles imported into Iceland which were not easily accommodated by existing narrow lanes and elevators3 lanes for standardized vehicles: 2 for personal vehicle inspection, 1 for high volume customers with special requirements4th lane for large vehicles was separated from the other 3 lanes by a wallEmployees applied 5S principles in alignment with the companys goalsOnly Out sign in the inspection hall Desk at either end of inspection hallRefreshments and reading materials for customers available at reception area

Desk at either end of inspection hall: entry desk held numbered clipboards indicating which vehicle was next in line for service, exit desk was used to sign inspection documentsCASE FACTS(3/3)Operations at Hesthls Station in ReykjavikOperating hours- 8:00 to 17:00 Monday through FridayNo advance booking (to reduce customers who did not keep their appointments)Average vehicles inspected per day-75Variation in demand by month: May was the busiest month, Nov-Dec lowestVariation in demand by day of the week: Thursday and Friday busiestVariation in demand by time of the day: Highest in afternoon near closing timeChallenges in maintaining sufficient staffing levels:Shortage of qualified mechanicsEmployees took vacations during summer when demand was highestAged workforce leading to high employee turnover rate (22-23% per year) Compensation limitations imposed by Icelandic govt

Processes at Hesthls Service Blueprint

Issues Identified Fault PointsMissing their turn when number is called Customers fall asleep while waiting for their turnDelay in reception area due to insufficiency in the number of receptionists Manual errors in paper work which might have to be redoneOnly one sign board (The exit board) - Customers might drive into the wrong lane and not the one designated to themCustomers forgetting to leave keys in the ignitionFaulty inspection in one base leading to unnecessary delays in the subsequent basesMismatch in documents collected at exit (Customer might collect somebody elses document)

RecommendationsIncrease number of receptionists to parallely process multiple customersHave specific counters for driver testing, license plates, buying drinks and sweets and inspectionsHire more inspection officersHave clear signboards giving directions to the designated inspection lanes and basesProvide a manual with details about minor problems and common causes of failed inspection while the customer is waiting so that they might be able to identify and fix minor problems themselvesMaintain electronic record keeping system to avoid paper workTo reduce customer interaction, customer can hand over keys to a person in-charge at the reception for parking and moving their cars to the inspection area when their turn comesThank You!