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From Dr. Scott Sampson's Understanding Services Businesses Book (click for table of contents)
SBP 3b: Intangibility Myth⇐Prior —[in Unit 3: Services Fundamentals: Execution]— Next⇒SBP 3d: Difficulty in Measuring Output

SBP 3c: Heterogeneous Production

With services, the output (or service-product or service-result) is often heterogeneous, meaning each unit of production is somewhat unique.

Why it occurs

This principle occurs because there is often wide variance in customer inputs and their service-production specifications.


Previously we considered the “output” of a service process-that it appears to be perishable when often it is not. Service “output” has also been characterized as being variable and nonstandard. This implies that every unit of production is potentially unique, even from the same production process. Think of a movie theater. The output is a customer with a manipulated emotional state. Two hundred customers can sit through the same movie and have completely different responses from one another.

More often than not the output of a service process is simply the transformed customer-input to that process. Since customer inputs are usually heterogeneous, it makes perfect sense that the output will be heterogeneous as well.

Not only is the output of the service production process nonstandard (i.e. heterogeneous) but often the process itself is nonstandard. A consultant with twenty clients in a year is likely to have twenty unique experiences with the clients. A doctor may see twenty patients in a day and utilize twenty different diagnostic procedures. An auto shop may repair twenty cars in a week with no two requiring the same repair procedure. Sure, elements of the repair, medical diagnosis, or consulting procedures may be relatively standard. But the overall procedure changes depending on the needs of the customer inputs.

How it effects decisions

Be cautious about defining output in homogeneous terms, since each output may be unique. Avoid the temptation to make rigid production process decisions based on the “average customer,” since it is likely that no customer will be truly average, nor provide truly average inputs.

What to do about it

Design sufficient flexibility into the service production process to handle the necessary variability in customer inputs and production outputs.

For example

Tax accounting may seem to the uninformed to be a relatively routine and standardized production process. The output from the process includes, among other things, completed tax documents. It is clear that every tax document produced is different from every other one produced. Although the forms may be standardized, the data recorded on the forms is (or should be) completely contingent upon the information provided by the customer. Thus, no two tax forms will be completed in exactly the same manner.


My airline example

On the surface, it would seem that airlines produce a relatively standardized service–every coach-class passenger on a given flight arrives at the same destination at the same time. However, airlines recognize that too much standardization would adversely affect the ability to meet passenger's varying needs. Instead of offering one flight per day to Albuquerque with a 600-seat jumbo jet, the airline offers perhaps four 150-seat flights at various times. Passengers recognize that arriving at 8:00 a.m. is very different from arriving at 8:00 p.m. Airlines offer first-class for passengers who are willing to pay for larger seats and more attention in flight. They offer direct flights and some less convenient indirect flights. They provide window and aisle seats. Movies and drinks are optional. Further, passengers can choose to redefine the production process to meet their specific needs for sleep, for reading, or for casual conversation with perfect strangers. This heterogeneous production of air travel makes relevant the commonly asked question “So, how was your flight?” (The answer is <U>not</U> “Exactly like every other flight.”)

How manufacturing differs

With manufacturing, inputs and specifications are relatively standard, resulting in standardized outputs. The standards and specifications generally come from engineers, not from individual customers.

Analysis questions

  1. What is a “unit of output?”
  2. Is output standard, or does it vary?
  3. What percent of our production output is unique?
  4. What percent of each product is unique?
  5. Is each output composed of different amounts of production resources? (Does each output cost differing amounts to produce?)
  6. Does each output command a different amount of “willingness to pay?” (Does each output generate differing amounts of revenue?)

Application exercise

Analyze the output variety resulting from the service process in terms of standardization versus variability. List some ways (or characteristics) in which the output from the service process is relatively standardized. List some typical ways the output varies from one unit to the next. What factors explain why some output characteristics are on the “standardized” list and others are on the “varying” list?

[up to index]

== Public sections == * [[usb:toc|Understanding Service Businesses]] book. * [[ibm:ssme:ust|UST paradigm for Service Science]] * [[ibm:ssme:cambridge07|Cambridge 2007 notes]] ---- * [[:start]] * [[http://services.byu.edu/sw/doku.php?do=index|Site map]] * [[http://services.byu.edu/sw/doku.php?do=recent|Recent Changes]] * [[:wiki:dokuwiki|Help]] == Private sections == * [[gscm:pub|BYU GSCM student recruiting]] * [[ibm:scm|IBM SCM case study]] * [[cos:top|Commoditization of Services]] research

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