Service-Process Matrix

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Service-process Matrix

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 can intervene 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 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 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-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 but a 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...
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