FRUMHERJI LTD.

,REYKJAVIK: THE VEHICLE

INSPECTION AND EMISSIONS-TESTING PROCESS
GROUP 2
VISWESH S (188)
GAYATHRI R (228)
SRINIVAS NAIK (216)
S AKSHAYA (233)
SPANDANA A (243)





Designing Services That Deliver
-G. Lynn Shostack
CHARACTERISTICS OF SERVICES
REASONS FOR SERVICE FAILURE
Lack 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


Have impact but
lack form
Cannot be
physically stored
Consumption
simultaneous with
their production
Work flow design and control methods: time-motion engineering, PERT/GANTT charting
Lack customers relationship to and interaction with services
No provision for people-rendered services that require less of mechanical approach
No account of the services products that need to be managed simultaneously
Dont allow for special problems of market position, advertising, pricing or distribution
Designing a Blueprint
A 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.
Identifying components
of an action reveals the
inputs needed
Identifying processes
invisible to the
customer as well
Identifying
processes
Helps in reducing the
consequences of
service failure
Sub-process can be
designed to correct
such errors
Isolating fail
points
Establishing a standard
execution time
Based on complexity of
the delivery acceptable
execution time is
calculated
Establishing
time frame

To see how delay from
standard execution
time affects profits

Analyzing
profitability
ISSUES CONSIDERED IN A BLUEPRINT
Designing a Blueprint Contd.
EXAMPLE OF A SIMPLE BLUEPRINT
Delivering the Service
A 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 Evidence
Consumers deduce nature of service from tangible evidences
such as color schemes, advertising, printed or graphic
materials etc. Eg: Airlines
Making People Special
At design stage, the developer must plan and consider every
encounter between consumer and provider
Good manners, attentiveness must be made part of hiring,
training and performance standards Eg: Disney, IBM
Modifying a Service, Applying the Principles, Creating
Better Service
MODIFYING A SERVICE
Market research during a services operating life enables to measure quality and
identify need for redesign
APPLYING THE PRINCIPLES
Important fail points show where the service may experience quality or
consistency problems
Shows execution time standards that can be easily monitored and quantified
Permits analysis of competitive differences
New processes and products added or enhanced can be mapped on the
blueprint and their impact can be analyzed
CREATING BETTER SERVICE
Blueprint illustrates that workers are never to be blamed for flaws and that
process design is managements responsibility
Blueprint encourages creativity, preemptive problem solving and controlled
implementation
SERVICE BLUEPRINTING:
A PRACTICAL APPROACH FOR SERVICE INNOVATION
Services represent appx. 80% of the U.S. GDP and
growing percentage of GDPs of countries across the
world
Services dominate global economies and economic
growth
Business 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 INNOVATION
Services are fluid, dynamic and frequently co- produced in real
time by customers, employees and technology, often with few
static physical properties
The 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 customers
Through co-creation of memorable experiences potentially
involve constellation of goods and services
The importance of customer experience management is not
only touted in customer markets but also in business-to-
business context

Service Blueprinting
Creating value through
customer experience
suggest a need for
innovative methods,
techniques and R&D
practices for services
Customer focused
approach for service
innovation and service
improvement
Foundations of service
blueprinting were
introduced, two decades
ago, in seminal articles
by G. Lynn Shostack
This method has evolved
significantly as a useful
approach for addressing
many of the challenges
in services design and
innovation
It allows firms to
visualize the service
process, points of
customer contacts and
physical evidence
associated with their
services from their
customers perspective
Blueprints illuminate and
connect the underlying
support processes
throughout the
organization
Highly effective and very
adaptable technique for
service innovation,
quality improvement,
customer experience
design, and strategic
change focused around
customers
Since, Blueprints can be
used strategically at a
very micro-
implementation level,
managers at all levels
find them very useful
Services as Customer Experiences
Although 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 experiences
The 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 loyalty
Service Development and Design
Organizations that are most successful in providing new services keep their service development processes from
being ad hoc
They 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 feedback
Service 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 points
A well designed service that is pleasing to experience can provide the firm with a key point of differentiation from
competitors
As 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 employees
As 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 employees
Service 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 development
During 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 produced
Departmental sub-processes can be magnified, rendered in fine detail, and blueprinted on their own as sub-
documents of the main blueprint



Blueprinting Components
Customer Actions
makes
blueprinting
different from
other
flowcharting
approaches
Onstage/Visible
Contact
Employee Actions
Those actions of
frontline contact
employees that
occur as part of
a face-to-face
encounter
Backstage/Invisibl
e Contact
Employee Actions
those that
involve invisible
interaction with
customers (e.g.,
telephone calls)
as well as any
other activities
that contact
employees do in
order to prepare
to serve
customers
Support
Processes
activities carried
out by
individuals and
units within the
company who
are not contact
employees but
that need to
happen in order
for the service to
be delivered
Physical
Evidence
all the tangibles
that customers
are exposed to
that can
influence their
quality
perceptions
Service Blueprint Example
Designing Innovative New Services
Yellow Transportation
The 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
blueprints
The blueprinting process allowed marketing, operations, and delivery channels to
communicate clearly with each other
Service Improvement
Through 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 delivery
Everyone could see their critical role(s) on the blueprint and logical changes and
improvements ensued
Integrating a Customer Focus Across Sales, Operations and Customer Service
the company was still operations-driven in many of its decisions and that a stronger customer
and service orientation was needed
Initially, top management, all the way to senior vice presidents and the CEO were taken
through service blueprinting training workshops
Then, 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 recommendations
Forced 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 recommendations
Within 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 company
Yellow executives across functions in the company came to appreciate the
customers point of viewsomething many of them had not been directly
exposed to previously
The service changes that came about following the blueprinting exercises
were significant, further reinforcing the value of the methodology throughout
the organization

Aramark Parks & Resorts
ARAMARK 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 groups
One 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 Retention
A 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
Arizona
Research 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 destinations
Ms. Ryan employed both traditional and visual (photos, videotape) blueprints
PROCESS:
developed a blueprint of a typical, quality, hotel/resort experience from a typical customers point of view
blueprinted the Lake Powell resort experience
two blueprints was revealing differences in terms of basic services, standards, and processes
Visual blueprint:
showing all aspects of the service through photos and videotapes, the need for service
upgrades became apparent
The 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
vacation
blueprinting 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 systems
The result for Lake Powell of all of these service quality improvements and innovative new
services was 50 percent fewer complaints
Repeat business increased by 12 percent, and customer satisfaction also increased
significantly
Insights for Service Innovation Practice

Providing a Platform for Innovation
Recognizing Roles and Interdependencies
Facilitating Both Strategic and Tactical Innovations
Transferring and Storing Innovation Knowledge
Designing the Moments of Truth
Clarifying Competitive Positioning
Understanding 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 Iceland
Services: mandatory vehicle inspections and emission tests, driver testing, carwash, inspection of ships, boats
and fish processing plants
Vehicle inspections constituted 52% and private vehicle inspections represented 7%
In 1997- Iceland govt. decided to outsource inspection functions to private sector
Private 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 Iceland
Primary competitor: Aalskoun Ltd.
75% of vehicle inspection market in rural areas, 60% in Reykjavik area
Qualified auto workshops were minor competitors: inspection of those vehicles that had been repaired after
failing initial inspection a Frumherji or Aalskoun
Employees(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 Requirements
Inspection for emissions before vehicle was sold
Again when they were 3 yrs old
Again after 5 yrs and regular annual checks thereafter
Last digit on license plate indicated the month a vehicle should be inspected(this ensured even
demand throughout the year)
Hesthls Station Facility
Frumherji remodeled and adapted it to changing situations
Issue of increasing number of large vehicles imported into Iceland which were not easily
accommodated by existing narrow lanes and elevators
3 lanes for standardized vehicles: 2 for personal vehicle inspection, 1 for high volume
customers with special requirements
4th lane for large vehicles was separated from the other 3 lanes by a wall
Employees applied 5S principles in alignment with the companys goals
Only Out sign in the inspection hall
Desk at either end of inspection hall
Refreshments and reading materials for customers available at reception area




CASE FACTS(3/3)
Operations at Hesthls Station in Reykjavik
Operating hours- 8:00 to 17:00 Monday through Friday
No advance booking (to reduce customers who did not keep their appointments)
Average vehicles inspected per day-75
Variation in demand by month: May was the busiest month, Nov-Dec lowest
Variation in demand by day of the week: Thursday and Friday busiest
Variation in demand by time of the day: Highest in afternoon near closing time
Challenges in maintaining sufficient staffing levels:
Shortage of qualified mechanics
Employees took vacations during summer when demand was highest
Aged 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 Points
Missing their turn when number is called Customers fall asleep
while waiting for their turn
Delay in reception area due to insufficiency in the number of
receptionists
Manual errors in paper work which might have to be redone
Only one sign board (The exit board) - Customers might drive into
the wrong lane and not the one designated to them
Customers forgetting to leave keys in the ignition
Faulty inspection in one base leading to unnecessary delays in the
subsequent bases
Mismatch in documents collected at exit (Customer might collect
somebody elses document)

Recommendations
Increase number of receptionists to parallely process multiple
customers
Have specific counters for driver testing, license plates, buying drinks
and sweets and inspections
Hire more inspection officers
Have clear signboards giving directions to the designated inspection
lanes and bases
Provide 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 themselves
Maintain electronic record keeping system to avoid paper work
To 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 comes
Thank You!