The Service Process Matrix is a classification matrix of service industry firms based on the characteristics of the individual firm's

service processes. The matrix was derived by Roger Schmenner and first appeared in 1986. Although considerably different, the Service Process Matrix can be seen somewhat as a service industry version of Wheelwright and Hayes' ProductProcess Matrix. The Service Process Matrix can be useful when investigating the strategic changes in service operations. In addition, there are unique managerial challenges associated with each quadrant of the matrix. By paying close attention to the challenges associated with their related classification, service firms may improve their performance. The classification characteristics include the degree of labor intensity and a jointly measured degree of customer interaction and customization. Labor intensity can be defined as the ratio of labor cost to plant and equipment. A firm whose product, or in this case service, requires a high content of time and effort with comparatively little plant and equipment cost would be said to be labor intense. Customer interaction represents the degree to which the customer can intervene in the service process. For example, a high degree of interaction would imply that the customer can demand more or less of some aspects of the service. Customization refers to the need and ability to alter the service in order to satisfy the individual customer's particular preferences. The vertical axis on the matrix, as shown in Figure 1, is a continuum with high degree of labor intensity on one end (bottom) and low degree of labor intensity on the other end (top). The horizontal axis is a continuum with high degree of customer interaction and customization on one ends (right) and low degree of customer interaction and customization on the other end (left). This results in a matrix with four quadrants, each with a unique combination of degrees of labor intensity, customer interaction and customization. The upper left quadrant contains firms with a low degree of labor intensity and a low degree of interaction and customization. This quadrant is labeled "Service Factory." Low labor intensity and little or no customer interaction or customization makes this quadrant similar to the lower right area of the Product-

Process Matrix where repetitive assembly and continuous flow processes are located. This allows service firms in this quadrant to operate in a fashion similar to factories, hence the title "Service Factory." These firms can take advantage of economies of scale and may employ less expensive unskilled workers as do most factories. Firms classified as service factories include truck lines, hotels/motels, and airlines. The upper right quadrant contains firms with a low degree of labor intensity but a high degree of interaction and customization. The upper right quadrant is labeled "Service Shop." Hospitals, auto repair shops and many restaurants are found in this quadrant. The lower left quadrant contains firms with a high degree of labor intensity but a low degree of interaction and customization. This quadrant is labeled "Mass Service." Mass service providers include retail/wholesale firms and schools. Finally, the lower right quadrant contains firms with a high degree of labor intensity and a high degree of interaction and customization. The lower right quadrant is labeled "Professional Service." This quadrant is similar to the upper left section of the Product-Process Matrix where job shops and batch processes are found. Doctors, lawyers, accountants, architects, and investment bankers are typical service providers that tend to be labor intense and have a high degree of customer interaction and customization. In 1994, Dotchin and Oakland proposed that in addition to the four categories: service factory, service shop, mass service and professional service, a fifth category should be added: personal service. They justify the inclusion by describing personal services as those directed at people, thereby high contact, as opposed to professional services which are directed to things, thereby, achieved with little contact time. MOVEMENT WITHIN THE MATRIX: On Wheelwright and Hayes' Product-Process Matrix processes appear on a diagonal running from the upper left corner to the lower right corner. Firms that position themselves directly on the diagonal are seen to be the most efficient. Similarly, a notional diagonal can be said to run from the upper left corner to the lower right corner of the Service Process Matrix. Schmenner states that many of the segmentation steps taken by service firms have been toward the diagonal. The attraction seems to be better control. From the perspective of the matrix, need for control would be greater

for service shops, which lie completely above the diagonal, and mass services, which lie below the diagonal. The need for control is not as great for service factories and professional services, as evidenced by the fact that the diagonal transverses each of those quadrants. Schmenner also states that most services that have changed their positions within the matrix over time have tended to move up the diagonal. This, of course, implies a decrease in the degree of interaction and customization and a decrease in labor intensity. Those firms most affected by a move up the diagonal would be found in the professional services where labor intensity and interaction/customization was high. Obviously, any move up the diagonal, be it with professional services, mass service, or service shops, would be a movement toward the service factory. The legal field, a Professional Service, is a prime example of "up the diagonal" movement. Most have surely noticed the increase of television advertising on the part of some in the legal profession. Other than personal injury, the most prolific amount of advertising seems to come from lawyers seeking cases involving bankruptcy and uncontested divorces. Obviously, these are the cases that require the least amount of customization. By handling this case "in bulk" the attorney also lowers the labor intensity by handling multiple cases in one trip to the court house and enjoys economies of scale just like a factory, a Service Factory. The traditional restaurant had a considerable degree of customization, customer interaction putting it into the Service Shop category. The fast food industry has taken restaurants into the Service Factory area through the dramatic elimination of customization and lowering of labor intensity. However, the degree of standardization may vary. Banking has made movement toward the Service Factory with the universal use of ATMs. Retailing has also seen changes within the Matrix. Warehouse stores such as Sam's Club and Internet sales have allowed retailers to move from Mass Service to Service Factory by drastically cutting labor intensity. However, some have gone in the opposite direction by becoming full-service boutiques and specialty stores stressing customer interaction, customization and labor intensity.