service process matrix.docx

7/30/2019 Service Process Matrix.docx

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The Service Process Matrix is a classification

matrix of service industry firms based on the

characteristics of the individual firm's service

processes. The matrix was derived by Roger

Schmenner and first appeared in 1986. Although

considerably different, the Service Process Matrix

can be seen somewhat as a service industry

version of Wheelwright and Hayes' Product-

Process Matrix. The Service Process Matrix can

be useful when investigating the strategic changes

in service operations. In addition, there are unique

managerial challenges associated with each quadrant of the matrix. By paying

close attention to the challenges associated with their related classification,

service firms may improve their performance.

The classification characteristics include the degree of labor intensity and a

jointly measured degree of customer interaction and customization. Labor

intensity can be defined as the ratio of labor cost to plant and equipment. A firm

whose product, or 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 represents the degree to which the customer canintervene in the service process. For example, a high degree of interaction

would imply 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 satisfy the individual customer's particular preferences.

The vertical axis on the matrix, as shown in Figure 1, is a continuum 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 continuum with high degree ofcustomer 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 unique combination of degrees of labor

intensity, customer interaction and customization.

The upper left quadrant contains 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 little or no customer interaction or

customization makes this quadrant similar to the lower right area of the Product-


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Process Matrix where repetitive assembly and continuous flow processes are

located. This allows service firms in this quadrant to operate in a fashion similar

to factories, hence the title "Service Factory." These firms can take advantage of

economies of scale and may employ less expensive unskilled workers as do

most factories. Firms classified as service factories include truck lines,

hotels/motels, and airlines.

The upper right quadrant contains firms with a low degree of labor intensity but

a high degree of interaction and customization. The upper right quadrant is

labeled "Service Shop." Hospitals, auto repair shops and many restaurants are

found in this quadrant.

The lower left quadrant contains firms with a high degree of labor intensity buta low degree of interaction and customization. This quadrant is labeled "Mass

Service." Mass service providers include retail/wholesale firms and schools.

Finally, the lower right quadrant contains firms with a high degree of labor

intensity and a high degree of interaction and customization. The lower right

quadrant is labeled "Professional Service." This quadrant is similar to the upper

left section of the Product-Process Matrix where job shops and batch processes

are found. Doctors, lawyers, accountants, architects, and investment bankers are

typical service providers that tend to be labor intense and have a high degree of

customer interaction and customization.

In 1994, Dotchin and Oakland proposed that in addition to the four categories:

service factory, service shop, mass service and professional service, a fifth

category should be added: personal service. They justify the inclusion by

describing personal services as those directed at people, thereby high contact, as

opposed to professional services which are directed to things, thereby, achieved

with little contact time.

MOVEMENT WITHIN THE MATRIX: On Wheelwright and Hayes'

Product-Process Matrix processes appear on a diagonal running from the upper

left corner to the lower right corner. Firms that position themselves directly on

the diagonal are seen to be the most efficient. Similarly, a notional diagonal can

be said to run from the upper left corner to the lower right corner of the Service

Process Matrix. Schmenner states that many of the segmentation steps taken by

service firms have been toward the diagonal. The attraction seems to be bettercontrol. From the perspective of the matrix, need for control would be greater


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for service shops, which lie completely above the diagonal, and mass services,

which lie below the diagonal. The need for control is not as great for service

factories and professional services, as evidenced by the fact that the diagonal

transverses each of those quadrants.

Schmenner also states that most services that have changed their positions

within the matrix over time have tended to move up the diagonal. This, of

course, implies a decrease in the degree of interaction and customization and a

decrease in labor intensity. Those firms most affected by a move up the

diagonal would be found in the professional services where labor intensity and

interaction/customization was high. Obviously, any move up the diagonal, be it

with professional services, mass service, or service shops, would be a

movement toward the service factory.

The legal field, a Professional Service, is a prime example of "up the diagonal"

movement. Most have surely noticed the increase of television advertising on

the part of some in the legal profession. Other than personal injury, the most

prolific amount of advertising seems to come from lawyers seeking cases

involving bankruptcy and uncontested divorces. Obviously, these are the cases

that require the least amount of customization. By handling this case "in bulk"

the attorney also lowers the labor intensity by handling multiple cases in onetrip to the court house and enjoys economies of scale just like a factory, a

Service Factory.

The traditional restaurant had a considerable degree of customization, customer

interaction putting it into the Service Shop category. The fast food industry has

taken restaurants into the Service Factory area through the dramatic elimination

of customization and lowering of labor intensity. However, the degree of

standardization may vary.

Banking has made movement toward the Service Factory with the universal use

of ATMs. Retailing has also seen changes within the Matrix. Warehouse stores

such as Sam's Club and Internet sales have allowed retailers to move from Mass

Service to Service Factory by drastically cutting labor intensity. However, some

have gone in the opposite direction by becoming full-service boutiques and

specialty stores stressing customer interaction, customization and labor

intensity.

service process matrix.docx

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