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Introduction
A product-process matrix proposed by Hayes and Wheelwright (1979a; 1979b; 1984) has gained wide acceptance in describing goods-producing decisions concerning strategy, process choice, and product mix. This product-process matrix is an important management model used in almost all introductory operations management textbooks (Chase and Aquilano, 1992; Krajewski and Ritzman, 1993; Schmenner, 1990).
However, the Hayes and Wheelwright product-process matrix does not transfer well to service businesses and processes. Their premise is that product volume, the number of products, and the degree of standardization/ customization determine the manufacturing process that should be used. This relationship between volume and process is not found in some service businesses. For example, as volume increases service businesses such as retail outlets, banks, and hotels have historically added stores, branch banks, and new hotels (i.e. bricks and mortar) to meet demand but do not change their processes. As Silvestro et al. conclude, "... in service operations, significant volume increases can be made, and frequently are made, without any change in the service process, as would be expected in manufacturing" (1992, p. 66). However, with the current capabilities of information technology, volume may be more correlated with process design decisions, especially for information-intensive businesses such as banks.
Service organizations need business models that more accurately account for the effects of service system designs and the roles of customer and service-provider choices in creating and delivering service encounters. The development of a meaningful positioning matrix for services is an important contribution to the management literature. Many authors (Fitzsimmons and Fitzsimmons, 1994; Kellogg and Nie, 1995; Lovelock, 1991; Schmenner, 1990; Silvestro et al., 1992; Tinnila and Vepsalainen, 1995) have tried to develop classification schemes or positioning matrices for services. To date, none of these schemes or matrices is truly satisfactory. For example, most matrices fail to establish a clear direction of influence between matrix axes (e.g. the direction of influence in Hayes and Wheelwright's product-process matrix is from the product axis to the process axis). Other problems and areas for improvement for positioning matrices applicable to services are discussed later in this article.
In this article, we present the service positioning matrix (SPM), a model for service organizations to follow in determining the appropriate service system design based on the nature of the...