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 Have impact but
lack form
control
Cannot be
physically stored
•Translating a subjective description of a need
into an operational concept that bears only remote Consumption
simultaneous with
resemblance to the original idea their production

Work flow design and control methods: time-motion engineering, PERT/GANTT charting
Lack customer’s relationship to and interaction with services
No provision for people-rendered services that require less of mechanical approach
No account of the service’s products that need to be managed simultaneously
Don’t 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. 

Isolating fail Analyzing

• Identifying components points • Establishing a standard profitability
of an action reveals the execution time
inputs needed • Helps in reducing the • Based on complexity of
• Identifying processes consequences of service the delivery acceptable • To see how delay from
invisible to the customer failure execution time is standard execution time
as well • Sub-process can be calculated affects profits
designed to correct such
Identifying errors Establishing
processes time frame

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 service’s 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 management’s
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 Week’s 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
Creating value
value through
through This
Foundations This method
method hashas evolved
evolved
customer experience
customer experience Foundations ofof service
service significantly
Customer
Customer focused
focused blueprinting were significantly as a useful
as a useful
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suggest aa need
need for
for approach blueprinting were approach for addressing
approach for service
for service introduced, approach for addressing
innovative
innovative methods,
methods, innovation introduced, two
two decades
decades
innovation and service
and service ago,
many
many of
of the
the challenges
challenges in
in
techniques
techniques and
and R&D
R&D improvement ago, in
in seminal
seminal articles
articles services
improvement by G. Lynn Shostack services design and
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practices for services
practices for services by G. Lynn Shostack innovation
innovation

It
It allows
allows firms
firms to
to Highly
Highly effective
effective and
and very
very
visualize the service
visualize the service adaptable
adaptable technique for
technique for Since,
Since, Blueprints
Blueprints cancan bebe
Blueprints
Blueprints illuminate
illuminate and
and
process,
process, points
points of
of service
service innovation,
innovation, used
used strategically
strategically atat aa
connect the underlying
connect the underlying
customer
customer contacts and
contacts and quality
quality improvement,
improvement, very
very micro-
micro-
support
support processes
processes
physical evidence
physical evidence customer
customer experience
experience implementation
implementation level,
level,
throughout
throughout the
the
associated
associated with
with their
their design,
design, and strategic
and strategic managers at all levels
managers at all levels
organization
organization
services
services from
from their
their change
change focused
focused around
around find
find them
them very
very useful
useful
customer’s
customer’s perspective
perspective customers
customers
 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

Onstage/Visible Backstage/Invisible
Customer Actions Contact Employee Contact Employee Support Processes Physical Evidence
Actions Actions

those
those that
that involve activities
activities carried
●
●
involve ●
●
carried
invisible
invisible out by individuals
interaction
out by individuals ●
all
all the
the tangibles
tangibles
interaction with
●
●
● makes
makes
●
● Those
Those actions
actions of
of with and
and units
units within
within
customers (e.g.,
customers (e.g.,
that customers
that customers
blueprinting
blueprinting frontline contact
frontline contact the
the company who
company who
telephone
telephone calls)
calls) as
as are
are exposed
exposed to
to
different
different from
from employees
employees that
that are not contact
are not contact
well
well as
as any
any other
other that can
that can
other
other occur
occur as part of
as part of employees
employees but but
activities
activities that
that influence
influence their
their
flowcharting
flowcharting aa face-to-face
face-to-face contact that need
that need toto
contact employees
employees happen quality
quality
approaches
approaches encounter
encounter do
do in
in order
order to
to happen in in order
order
for perceptions
perceptions
prepare
prepare to
to serve
serve for the service to
the service to
customers be delivered
be delivered
customers
Service Blueprint Example
 Designing Innovative New Services
Yellow Transportation
 The process started with blueprinting an “ideal guaranteed express service” from the customer’s 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 company’s 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 customer’s 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 customer’s
point of view—something 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
ARAMARK’s 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 customer’s 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 doesn’t 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: Aðalskoðun 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 Aðalskoðun
• Employees(101, 52 for vehicle inspection division) rotated among Frumherji locations
• Communicated the company’s 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)
 Hestháls 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 company’s 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 Hestháls 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 Hestháls – 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 else’s
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!