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It's Time for Service Industries to Re-Invent the Services they Deliver

Wednesday, April 29, 2020

By Susan Meyer Goldstein

 

Re-Thinking the Service Industry

Since the earliest days of the COVID-19 pandemic, much discussion has centered on product supply chains, and whether organizations and individuals will be able to access the products they want or need.  A parallel challenge runs through the service economy– industries that provide something less tangible than products, but still very much wanted or needed.  Services include everything from critical government, police, and fire services, to essential services such as grocery retailers and health care services, to desired services such as restaurant meals, movies, travel, education, banking, and the (deeply-missed) haircuts and salon services!

Services have always been delivered in a variety of ways – and likely will continue to be in the near future, but with some challenges for certain types of interactions with customers as well as interactions among workers. Services with delivery that is relatively automated or can be delivered remotely are unlikely to change much based on COVID concerns. Financial services, for example, are already fairly automated or provided remotely – ATMs accept check deposits and provide cash, paychecks are directly deposited, bills are set to be auto-payed, and retirement accounts need only occasional adjustments made safely from one’s home computer. 

Services that are traditionally delivered face-to-face (F2F), on the other hand, may require minor or even major adjustments, particularly to re-attract customers who are currently – in a word - gone. Higher end travel and vacation-related services – airlines, hotels, and attractions such as museums, concerts, and amusement parks – have seen drastic reductions in demand (90% or more), while economy versions of these services have seen less drastic falls in demand (closer to 30%).  Health care, food service of all sorts, and in-person retail are all highly impacted F2F services. 

During and following the pandemic, service managers must tap into their deep understanding of both their customers and their own operating systems. This will help them determine where opportunities, preferences, and potentially regulated necessities can be addressed. Just as Ford and GM are now manufacturing ventilators, service businesses can extract from their operating system new forms of flexibility to adjust, re-design, and re-invent the services they deliver. Service operating systems are typically more flexible than manufacturing systems; it is time to exploit the possibilities they present.

 

Three considerations around service delivery that should be front and center for every service manager as they plan for the near future:

  1. SAFETY:  Following the 9/11 terrorist attack, customers sought safety from harm.  During this pandemic, safety has been redefined to represent cleanliness and avoiding “too much” human contact. Every service business must understand what their customers will need to feel safe. When safety means cleanliness, that activity should not only take place, but be visible or tangible in some manner to give customers confidence in the cleanliness that they do not see.  

    Target stores have stationed team members with spray bottles and disposable paper towels by their shopping carts to assure customers a clean cart.  A New York City restaurant owner is searching for clear face masks for his staff so that both customers and staff are protected, and yet, customers can see the workers’ facial expressions – a very human touch.  Airlines and others will need to develop ways to assure customers (and staff) that the air around them is not contaminated.
     
  2. REDESIGN FACE-TO-FACE (F2F): Services needing the most significant adjustments in their operating systems right now - and those with the greatest declines in demand during the early months of the pandemic - are those traditionally delivered in a high contact F2F manner.  Personalized service – from a waiter, medical professional, or child care provider – is often a differentiator that wins customer loyalty. Customers rely heavily on and trust these people to guide them through service delivery. How can these typically F2F services be redesigned for today’s need? Telemedicine, for example, has rapidly replaced many in-person medical office visits (tele-vet visits for pets as well), and illustrates how the ubiquitous communications technologies already in customers’ hands can be useful. Telemedicine regulations have been eased and customers are incentivized (via fear of COVID-19 exposure) to log on for low-tech health care services.

    Other F2F services may need to shift to different business models for the time being. Travel and food services will have to identify alternative ways to utilize their capacity to create enough income to weather the period of light demand. Hotels housing health care workers, restaurants creating takeout or take-home-and-cook meals, even remote cooking classes, are a few examples. Service managers should consider any logical uses for their facilities and staff capabilities.
     
  3. AUTOMATE OR CONVERT TO SELF SERVICE:  Service activities that can be automated or converted to self-service – to remove human-to-human interaction - should be, at least in the near term. A recent news story reported ATM-type machines being used to distribute rice in Vietnam. This technology replaces the currently very hands-on food shelf dissemination processes we often see in the U.S.  A report from Asian says that many consumers are choosing hands-off service at grocery retailers with self-checkout.  Around the world restaurants are using smart, no-touch carry out, and nearly all education and training is currently online This points to at least temporary preferences for reduced human interaction, and customers’ willingness to self-serve to enhance their perceptions around safety.

Delivering a Human Experience without Human Touch

As new information regarding health and COVID-spreading continues to come forth, service managers may need to make adjustments along the way. Their ability to respond to this crisis will inform these managers just how flexible and adjustable their staff and operating systems are. This may be useful information for other purposes in the future.

Consumers may shop and bank online, but they still enjoy their daily stop at their favorite coffee shop.  This need for personalized connection will be missed during weeks or months of staying home. Smart service businesses will figure out how to deliver a human experience without an actual human touch.

susan meyer goldstein

Susan Meyer Goldstein

Associate Professor
Supply Chain and Operations

Susan Meyer Goldstein is an associate professor of Supply Chain and Operations. She earned her BS in Genetics and Cell Biology and MBA at the University of Minnesota and her PhD in Operations Management from The Ohio State University. Her research interests include service process design, management, and improvement. Her teaching interests are in service management, operations strategy, and general operations management. 


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