41 – ‘Where does the customer fit into a service operation?’ A brief discussion of the work of Richard B. Chase.

Posted by Lancing Farrell                                                                                                     1200 words

In 1978 Richard B. Chase published his paper Where does the customer fit into a service operation? John Seddon says this article began the separation of front and back office operations; something that he believes has created many problems in public sector service delivery today. Maybe he is right. But when you read the article, what Chase is advocating makes sense and I can’t help thinking that it isn’t necessarily a bad idea, rather it is an idea that has been used badly.

Chase is an operations manager. By 1978 he had already co-authored a popular operations management text. He starts his paper stating that a manager needs to understand the ‘operating characteristics that set one service system apart from another’ in order to make improvements. His view is that the less direct contact the customer has with the service system, the greater potential the system has to operate efficiently. And visa versa. By differentiating between high and low contact service systems a manager can develop a more effective service operation.

By customer contact, Chase refers to the ‘physical presence of the customer in the system’, in which the customer can affect the time of demand for the service, the exact nature of the service required, and the quality of service delivered because they are involved in the process itself. He argues that ‘de-coupling’ service delivery from outside influences (i.e. by creating a back office) is the equivalent of creating an inventory buffer in manufacturing. Understanding the amount of customer contact required to provide a service is central to many decisions managers must make. For example capacity planning, process design, time standards, scheduling and quality control.

Chase makes four generalisations about high and low contact service systems:

  1. High contact systems have more uncertainty about their day to day operations because the customer can always make an input to (or cause a disruption in) the service delivery process.
  2. Unless the system operates by appointment, it will only be good luck if the capacity of a high contact system matches the demand on that system at any given time.
  3. The skills required of the work force in high contact systems are characterised by a significant public relations component.
  4. High contact systems are at the mercy of time far more than low contact systems.

He identifies a number of implications for management. The first is pertinent to Seddon’s criticism of the creation of back offices. Chase warns that rationalising the operations of a high contact system can only be carried so far because the workers attitude, the environment in which the service is delivered, and the attitude of the customer determine the quality of service. Rationalisation has clearly been taken too far in many of the examples cited by Seddon.

Chase also recommends creating a distinction between the high and low contact elements of the service system. This effectively assigns high contact services to one work group and low contact to another. The front and back office. In each group the workers can be recruited for the required skills – people skills for high contact and technical skills for low contact. He concludes by saying that ‘high and low contact operations are inherently different and should be located and staffed to maximise their individual as well as joint contribution to the organisation’.

I can see where Seddon is coming from but I can also see the operations management logic in what Chase proposes. All of us will have worked in service systems that have separated high and low contact systems. I have been thankful for it when I have been able to concentrate on completing detailed analysis without interruptions from telephone calls.

Chase published a number of articles on this topic over the next 30 years, including: The Customer Contact Model for Organisation Design (1983), Want to Perfect Your Company’s Service? Use Behavioural Science (2001) and Revisiting “Where Does the Customer Fit in a Service Operation?”   Background and Future Development of Contact Theory (2010).

The Customer Contact Model for Organisation Design develops the idea of the ‘customer contact model’ and describes a contact-based classification scheme; pure services (service delivered in the presence of customers), mixed services (mix of face to face and back office), and quasi-manufacturing (virtually no face to face contact). The customer contact model has a direct influence on the way the organisation is designed and operated. This is illustrated by a series of propositions:

  1. High and low contact jobs call for different skill sets.
  2. Because they directly represent the organisation, high contact workers need interpersonal skills and knowledge of organisational policies. Low contact customers deal with customer surrogates (e.g. invoices).
  3. Low contact systems are more amenable to programmed decisions (rules) that are high contact systems.
  4. In high contact systems, capacity must be set to match peak demand.
  5. In low contact systems production planning can exactly match planned production to resource availability.
  6. In high contact systems the service facility must be located near the customer. In low contact systems the service facility can be located near resources.
  7. In high contact systems the service facility must be designed to meet the needs and expectations of customers. In low contact systems the facility can be designed to maximise production.
  8. Control is more uncertain in a high contact system because of the customer being an uncertain input into the process being controlled.
  9. Because they operate in different environments, high and low contact systems need different goals and operating objectives.
  10. High contact systems should seek to maximise effectiveness goals. Low contact systems should seek to maximise efficiency goals.

The paper goes on to discuss ‘de-coupling’ of high and low contact work groups. They don’t have to be uncoupled. It is possible to think of them as different processes but deliver them together. De-coupling is not favoured when face to face contact is seen as an essential element of the service, or rapid exchange of information with the customer is required.

After reading Chase’s papers, I started to understand the compelling logic in designing different operations for high and low customer contact activities. I could see how it would improve control over quality and increase efficiency where the costs of high customer contact were not warranted. I suppose that is the key. The decision about whether or not high customer contact is warranted. Chase provides some guidelines, but it is easy to see how managers over the years would have become excited at the prospect of cost savings through de-coupling, and the impacts on service quality, especially in the public sector, would have gone unnoticed or uncared about.

Chase, Richard B. 1978. Where Does the Customer Fit in a Service Operation? in Harvard Business Review, November/December.

Chase, Richard B., and Tansik, David A. 1983. The Customer Contact Model for Organisation Design in Management Science, September.

Chase, Richard B., and Dasu, Sriram, 2001. Want to Perfect Your Company’s Service? Use Behavioural Science in Harvard Business Review, June.

Chase, Richard B. 2010. Revisiting “Where Does the Customer Fit in a Service Operation?”   Background and Future Development of Contact Theory in Handbook of Service Science, P.P. Maglio et al. (eds).

Seddon, John 2014. The Whitehall Effect.