Modularity

From MicroJustice

Erik Vosselman s27 45 46

What is expected from this project?

First of all we like to state that we are enthusiastic about this project. After reading the papers, examples and protocol, a lot came clear to us. The project in Bolivia appealed in such a way that, for us, it is something completely new and a great opportunity to enhance our skills and experiences. So we are looking forward to this collaborative project. For us, economists, the approach is slightely different than, for example, law students. The issues we would like discuss are different in a way that it is less anthropology focused. After thorough discussion and consultation with Dr. Job de Haan we agreed on some points. It seems less useful for us economists to go to the rural area in Bolivia and stay there for a certain period to live with the people. The main reason is: our skills in anthropology are not sufficient, because this is no part of the education we received throughout the years. We think we can add some valuable insights to this project with our economist point of view. Therefore we would like to describe and optimize the distribution system of the “microjustice service”. From the discussion we got the idea that a lot of the whole process is not yet fully investigated and maybe even not known. We would like to research the service process to be able to propose an efficient design of the processes. We think that an efficient design can help to reach the goals of the project. (If it is needed we can also make a cost analysis of the project, but this will not be part of our research).

For our research we first need to define the need of the people, during our conversation with Dr. De Haan we agreed on defining the needs of the people in a way like this is done in the research of the healthcare system in the west. We are thinking of modularity. This means that every module differs from the other in a way that the needs are different, but also the urgent of the needs differs. The result is that the processes per module are different, depending on the needs. All of this has to be done in close collaboration with the other students and people in Bolivia.

Modularity is becoming a popular item in lots of research areas and we think it is a great starting point in this project. This strong basis is a key part of the research and the set-up of an organisation and “distribution system”.

One of the difficulties for us will be the influence of the legal part of this project, that is: the questions of the people will differ in legal subjects and corresponding advice and the intensity of this advice. This advice will differ per region/country and with increasing difficulty of the legal affair the person that will give advice has to be more skilled. Our lack of legal education makes that we will need the help of the law students/legal practitioner to be able to tackle these difficulties.

The access to legal advice and the obstruction to this access should be a main topic in our research. This is because efficiency is not the only requirement but also access to the service is an important issue.

A question that has to be addressed is which other organisational forms are also possible. Another part of the research could be focussed on the effect of the professionalisation on the access to legal advice for the poor. It is also interesting to research what are the thresholds to change the organisational form.

Theoretical part of the Thesis

Introduction

In the field of operations management, scholars make a distinction between products and services. That is, the field of operations management has a process perspective where the scholars created a distinction between processes that are creating products and those that are creating services (Nilsson et al, 2001). The definition of the concept product depends on one’s perspective, but almost everybody understands what a product is, a good definition of the concept service is harder to develop. In simple words, services are deeds, processes and performances (Zeithaml & Britner, 1996). In reality the difference between a service and a product is not so obvious, for example a surgeon that transplants a heart is delivering a service to the patient but this is not possible without an important facilitating product. The other way round a product contains often some kind of service. The distinction between products and services is not clear-cut, and an easy dichotomy between manufacturing and service firms does not exist (Berry and Parasuraman, 1991).

Despite these difficulties scholars agree that services have three defining attributes to a greater or lesser degree; they are relatively intangible, they tend to be produced and consumed simultaneously, and they tend to involve the consumer in the production process. There are two other differences between products and services; their perishability and the fact that there is no change of ownership with service transactions (Heiskala et al, 2005).

The specific attributes of services result in heterogeneity in service provision and give rise to difficulties in the service management (Stewart, 1998). These difficulties give rise to certain challenges that include poor documentability, irreproducibility, non-storability, subjective quality assessment, and challenging process and resource management (Heiskala et al, 2005).

A service can be a process or a sequence of operations (Gallouj, 2002). Services consist of hundreds or thousands of components, these components are often not physical entities but rather are a combination of processes, people, skills and materials that must be appropriately integrated to result in the ‘planned’ or ‘designed’ service (Goldstein et al, 2002).

Service industries are the largest and fastest growing sector in developed countries (Sundbo, 1999, Trimbell et al, 2005). Apte and Nath (2006) indicate that the importance of services for the economy and GNP is growing and accordingly there is more acknowledgement for this subject. An important aspect of this growing attention for services focuses on the design and development of these services. The terms used in the literature referring to this field are ‘service design’ and ‘new service development’ (NSD). NSD is the overall process of developing new service offerings. The term service design is defined as the concretization of the service concept in drawings, flowcharts, specifications, etc. Edvardsson et al. (2000) define the service concept as a detailed description of the customer needs to be satisfied, how they are to be satisfied, what is to be done for the customer, and how this is to be achieved. Clark et al. (2000) and Johnston and Clark (2001) define the service concept as follows: 1. Service operation: the way in which a service is delivered. 2. Service experience: the customers direct experience of the service 3. Service outcome: the benefits and results for the customer and 4. Value of the service: the benefits the customer perceives as inherent in the service weighed against the cost of service.

This research concentrates on the first point, service operation. However, it should be avoided that this deconstruction of the service results in belying the complexity of many services or ignoring the fact that the customers may see a service as a ‘whole experience’ (Goldstein, 2002). The four constructs have to be aligned to deliver this whole experience.

Professional service providers In literature and in reality a distinction is made between service and professional service. Professional service firms have distinct operational challenges due to the type of work that is transacted by the employees of these firms, and due to the nature of the employees themselves (Goodale, 2007). It is obvious that in common sense a dentist provides a more professional service than for example a hairdresser. In theory, Goodale (2007) points to the knowledge system and abstraction as the tenets of professionals. Knowledge systems provide valuable expertise, based upon which, the group can restrict entry into the market for providing the services of the occupation. Also important is the abstraction of the knowledge such that the professional can redefine problems and tasks so that the knowledge applies to particular cases. Goodale (2007) also suggests that professionals exist due to their education level and professional societies, which restrict membership to the profession by special requirements. In essence, professional service firms sell their production capacity in the form of professional service providers with abstract knowledge who expertly apply it to particular cases (relatively complex and customized jobs). Professional service providers encounter the pressure to act as entrepreneurial individuals and as company collaborators.

In professional service firms, the managers have the role of defining professionals’ task boundaries and managing coordination between the administrative core, thus guiding them to act in the best interest of the firm. In these firms there is an important role for the customer. The customer’s participation in the service delivery is perhaps necesary, but also serves a governance purpose. The exchange allows the customer to develop an enduring relationship with the professional service provider so that the customer can observe and evaluate the highly intangible experience.

Service mapping

Before designing or redesigning the service operation(s) it must be clear out of which processes this operation consists. Every organization can be seen as a ‘value chain’, a term first introduced by Porter in 1985. The underlying notion of this value chain is that a product or service gains value as it passes through the vertical stream of production within the organization (Hergert and Morris, 1989). To understand the relationship between the activities, it is useful to map the activities. According to Porter (1985) the value chain divides a firm into the discrete activities it performs in designing, producing, marketing, and distributing its product. A helpful tool to divide the activities is to map the processes and eventually the activities. Process mapping involves describing processes in terms of how the activities within the service relate to each other. Process mapping identifies the different types of activity and shows the flow of materials, people and/or information through the process. According to Monczka et al. (2005) process mapping reduces processes to their component parts or activities.

One significant advantage of mapping processes is that each activity can be systematically challenged in an attempt to improve the service (Slack 2004). Process mapping gives a clear insight in the performed activities, which is needed to be able to (re)design a process. Mapping service activities is a challenge, because of the specific attributes of a service, therefore Armistead and Clark (1993) suggest to map only the service operations tasks.

Another point that can be improved by using process mapping is the identification of constraints. Within a production or service process there are always constraints because of sequence or concurrency (Monczka et al, 2005). Using process mapping gives the opportunity to identify the bottlenecks within the process that are the cause of these constraints. This can be visualized using a flowchart.

In literature it is common to divide the delivery of services in two parts: frontline and back office. In the frontline part of the service there is direct contact between the customer and the service supplying staff. The back office part contains all activities were work is carried out without direct contact with the customer. According to Armistead and Clark (1991) is the degree of close link between the two influenced by the extent of customization of the service package and the extent of customer participation. Separating the back office and the frontline may increase the output.

Frontline and back office

Compared to delivering goods, one of the most distinguishing features of delivering services is the amount of customer contact involved in the service delivery process. The important feature of the service process is the degree of customer influence on the service process. The unique characteristic of the service package is that it consists of both tangible and intangible aspects. The service package is described by the degree of customization found in those tangible and intangible elements (Kellogg & Nie, 1995). Most services cannot be provided without the customer being apparent in the process itself. On the other hand there are parts of services which can be carried out without the customers presence. The activities in which the direct interaction with the customers is needed are called front office activities, and those carried out without the direct interaction with the customer are called back office activities. This difference between the two activities is important because the two have different operational consequences (Zomerdijk, 2005). The customer contact in the front office activities causes uncertainties and variety, which distinguishes services from goods, which are not seen in back office activities. The customer contact makes the activities more difficult to control because the front office is dependent from the customer (time of arrival, demand, etc.) which often decreases the efficiency. At the other side there is the back office. Here, the customer contact is not an issue so there are less uncertainties and the back office does not have to be designed in a customer based way.

One of the most important issues regarding front and back office activities is the choice between those two (Zomerdijk, 2005). Even though some activities or processes are clear back or front office activities, there are a few activities for which the label front or back office is not quite obvious. Usually this results in a trade-off between the efficiency potential of the back office and the benefits related to front office activities (Zomerdijk, 2005). Another important issue is about the way to combine front office and back office activities in one service. Because of their different nature, explained above, this can be quite difficult. In literature several authors vowed for the entire decoupling of the two to get an optimal design and efficiency. On the other side there is a stream which support the view that front office and back office should be closely coupled in order to avoid interface problems. It is a complicated decision which is influenced by the kind of service that a company or firm offers.

Service Blueprinting

To clearify the line between front office and back office there is a method called service blueprint. A service blueprint is a picture or map that accurately portrays the service system so that the different people involved in providing it can understand and deal with it objectively regardless of their roles or their individual points of view. A blueprint can be regarded as a two-dimensional picture of a service process: the horizontal axis represents the chronology of actions conducted by the service customer and the service provider. The vertical axis distinguishes between different areas of actions. These areas of actions are separated by different ‘‘lines’’(Flieβ, 2004). A service blueprint visually displays the service by simultaneously depicting the process of service delivery, the points of customer contact, the roles of customers and employees and the visible elements of the service. It provides a way to break a service down into its logical components and to depict the steps or tasks in the process, the means by which the tasks are executed, and the evidence of service as the customer experiences it (Zeithaml et al., 2006). A service blueprint contains a so called ‘line of visibility’, activities above the line of visibility is what can be called the front office, while everything underneath that line is the back office. A blueprint can be looked at as a whole to assess the complexity of the process, how it might be changed, and how changes from the customer’s point of view would impact the contact employee and other internal processes, and vice versa. Blueprints can also be used for several other goals like the assessment of efficiency and productivity, the evaluation of potential changes, the analysis of failure points or bottlenecks in the system. According to Zeithaml et al. (2006) service blueprinting has several benefits: - Identifies fail points-that is, weak links of the chain of service activities. - Line of interaction between external customers and employees illuminates the customer’s role and demonstrates where the customer experiences quality, thus contributing to informed service design. - Line of visibility promotes a conscious decision on what customers should see and which employees will be in contact with customers, thus facilitating rational service design. - Provides a basis for identifying and assessing cost, revenue, and capital invested in each element of the service. - Facilitates top-down, bottom-up approach to quality improvement.

Standardization

For a company there is often value in standardising certain product/service designs and related systems and procedures, whilst at the same time localising delivery in line with the specific conditions prevailing in relevant markets and environments (Brotherton and Adler, 1999). That is, that apart from the unique challenges a firm faces in designing its service, it has to balance the trade off between increasing customer satisfaction through customization and increasing firm’s productivity through standardization (Rust, 2005). A balance between internal consistency and externally contingent adaptation is essential for corporate success (Trompenaars, 1994). According to Slack (2004) standardization is the degree to which processes or services are prevented from varying over time. Standardization has given way to product differentiation (Rust, 2005).

A useful tool to identify the possibility of standardization is process mapping. Process mapping gives a clear view out of which components the service operations consists. This insight can be used to identify those service components that are the same for all users, here there is room for standardization. Standardization allows an organization to restrict variety to only those activities that have real value for the customer (Slack, 2004). The standardization of the components means that the accompanying activities are standardized.

The specific attributes of services, have also influence on the standardization possibilities. The customer participation within the service makes that standardization in those components of the service almost impossible. The fact that the service is simultaneously produced as consumed makes that the capacity management of services a challenge. This real time element of the service makes the matching of supply and demand very important (Armistead and Clark, 1991), producing a buffer is not an option; this reduces the effects of standardization.

Modularity

One option to increase the possibilities of standardization is modularity of design. Originally modularity was put forward as a product design strategy aimed at a standardized set of interfaces among components. Each component is allocated a specific function to be performed with respect to the given interfaces (Brusoni, 2001). Modularity is common use in the field of technology, and the fields of organizational design and operations management are increasingly applying the concept. According to Langois (2000) modularity is a very general set of principles for managing complexity. By breaking up a complex system into discrete pieces one can eliminate what would otherwise be an unmanageable spaghetti tangle of systemic interconnections (Langois, 2000). The idea of intrafirm modularity goes back to Adam Smith with his pin-making factory. When the workers specialize and therefore divide their work they will be more efficient. Dividing the processes into 18 steps was the first notion of modularity. Dividing a process into independent components creates modularity to arise. This independance increases the use of standardised components and create a wider variety of services using a much smaller set of components (Gershenson, 1997).

Sanchez and Mahoney (1996) assert that modularity in the design of products leads to – or at least ought to lead to – modularity in the design of the organizations that produce such products. This notion is in line with a mainstream idea in the field of economics; if the production process requires team production or calls for highly specific assets, a nonmodular structure (“hierarchy”) is in order; otherwise, a modular structure (“the market”) is more appropriate (Langois, 2000). Modularity, by simplifying design and development processes, would allow a greater division of labour across firms. As a consequence, firms can focus their capabilities on few modules or on the architecture (Brusoni, 2001)

Assuming that the modularity in the design of products has its effects on the design of the organization the modularity of the product/service is discussed first. The essence of modularization is the building of a product from smaller subsystems that can be designed independently, yet function as a whole (Baldwin and Clark, 1997). The flexibility that modularity offers is increasingly important as uncertainty in service requirements (due to new diagnostic and repair technology and ever changing warranty agreements) increase (Gershershon, 1997). By establishing standardized interfaces between the modules, companies can independently develop and produce modules that can be assembled into highly customized final products (Person and Ahlstrom, 2005). The authors identify three main benefits of modularisation for a company: • The division of a product into modules that are independent of each other allows a company to economically increase product variety that can be offered to customers. Modularisation gives the firm the ability to create customized products and still maintain economies of scale in the individual modules. • Modularisation can also create strategic flexibility, since it increases a company’s ability to respond to various demands from dynamic competitive environments. It is possible to increase strategic flexibility since it becomes easier to re-use modules across product models or model generations. • Modularisation allows reduced task complexity and enhances the ability to complete tasks in parallel. The nearly independent modules make it possible that the concurrent development of modules and components can be carried out autonomously by loosely coupled organisational structures.

It can be rationalized, that service mass customisation and modularisation could be utilised to alleviate the negative implications of service characteristics, i.e. to decrease perishability and inseparability, to systematise heterogeneity, to document the intangible, to increase the probability of high quality and to facilitate long-term customer relationships, where relevant and desirable (Heiskala, 2005).