OPERATIONS MANAGEMENT IN SERVICE AND
MANUFACTURING ENVIRONMENTS
In defining an organization we usually come across two major categories of
organizations. First Manufacturing organization and the other Service
organization. Both, above-mentioned organizations are completely different from
one another and hence the role of operations management is different in both.
Operations management is mainly concerned with making the proper use of
available resources of the organization. Resources available to the organizations
are completely different and are used by them in differently. Looking at the
broader picture in a manufacturing organizations productivity is easily measured
because of the production of tangible products whereas in service organizations
it’s difficult to measure productivity because products are intangible (Dilworth,
2000). According to Krajewski and Ritzman (2002) the differences between the
services and goods production can be classified as: Manufactured goods are
physical and durable products whose quality can be measured easily whereas
services are perishable products like ideas and concepts with high degree of
customer contact and there quality cannot be measured easily.
Operation Managers are the people responsible for almost all activities concerned
with the production of goods or services of organizations, they convert the ideas
into final products. Operation managers usually work with all the other
departments of a company because all the other departments are closely related
to the operations department. Slack et al. (2010) has cited that wherever the
word ‘produce’ is used there is some operation function associated to it. Both
type of organizations have objectives of making profits from producing products
or services. In manufacturing organization operations management make the use
of machines to effectively assemble products whereas in service organization the
operations management uses ideas and information for fulfilling the needs of
consumers. In service organization it is difficult to establish quality standards and
product quality is difficult to evaluate. Therefore, it can be concluded that
operations management is completely a distinct subject in the two different
organizations (Slack et al., 2010; Reid and Sanders 2010; Bowen and Ford 2002;
Dilworth, 2000). Further, it can be said that service industry is not isolated from
frequent customers interaction. The customer actually goes into the service
organization to receive services and there is a major consumer-organization
contact. The best examples can be of hospitals and colleges, where patients and
students are the customers respectively. So the operations department and
customers contact each-other directly. But, in manufacturing organizations the
consumer-organization contact is bare minimum and organization could increase
and decrease the inventory of finished products depending upon the market
requirements. A good example would be an automobile manufacturing company.
In this organization the consumer is only in contact with the dealer, rather then
the manufacturer. Hence, in such organizations the operations department is in
contact with the company’s resources and machinery rather then the customers
(Krajewski and Ritzman, 2002; Dilworth, 2000).
In contradiction to the above statements Winter and Kellogg (1999) described
decisions and choices which operations managers make are related to following
area: location, layout, product design, process choice, capacity, quality,
productivity, inventory, technology, work force and job design (e.g., Chase and
Aquilano 1998; Heizer and Render 1996; Stevenson 1996). Therefore it becomes
clear that the strategies on which operation manager’s work are pretty similar
and they apply in similar ways in the field of service and manufacturing
organizations. But all the manufacturing corporations don’t produce the same
products and similarly all the service providers don’t provide the same services
therefore, from above mentioned, only relevant choices apply to both
organizations. Therefore, in some way a conclusion can be drawn and stated that
operation managers in manufacturing organizations and service organizations
undertake similar decisions. We can argument here, that if people in the
operations department make somewhat similar choices in service and
manufacturing environments then why should we treat them differently. It is
agreed that services are non-tangible and goods are tangible, the customer-
organization contact is high in one and almost negligible in other organization.
But as Winter and Kellogg (1995) stated a term “customer influence”. So, the
customer plays a major role in both the organizations. Either customer is in direct
contact with operation department, like in service industry, or in no contact with
operation department, in manufacturing industry. But manufacturing firms now
have a strategy of customer focus, and they concentrate on those factors which
provide value to customers (Johnson, 1990 Cited by Perera et al., 1997). The
customer influences the choices of the operation department of both
organizations. Therefore, it does not look feasible to consider operations
management as a separate subject for service and manufacturing organizations.
In view of Bowen and Ford (2002) “marketing scholars have discussed the
differences extensively, but management scholars have rather discussed
similarities.” Hence, according to Bowen and Ford, even the scholars are in doubt
whether to recognize operations management as a separate subject or the same
for service and manufacturing industry.
In conclusion, I agree with Winter and Kellogg (1999), the operation managers
face challenges in service industry due to factors like intangibility and
inseparability of production and consumption. The operation managers in
manufacturing industry work on theories, tools and techniques developed in
manufacturing organizations, which restrict them to be applied in service
industry. Therefore it is difficult to say whether operations management should
be treated as same or as a different subject in manufacturing and service
organizations.
Biblography
Slack, N., Chambers, S., & Johnston. R., 2010. Operations Management. 6th ed.
FT Prentice Hall
Dilworth, James B., 2000. Operations Management Providing Value in Goods and
Services. 3rd ed. The Dayden Press
Krajewski, Lee J., and Ritzman, L.P., 2002. Operations Management. 6th ed.
Prentice Hall publication
Heizer, J., and Render, B., 2006. Operations Management. 8th ed. Pearson
Prentice Hall publication
Winter Nie, Kellogg Deborah L., 1999. Production and operations management,
Vol.8, No.3, [online] Available at:
[Link] pg_3/?
tag=content;col1 [Accessed 20 October 2010]
Bowen John, and Robert C. Ford, 2002. Managing Service Organizations: does
having a ”thing” make a difference?, Journal of Management, Vol 28, No. 3,
[online] Available at: [Link]
86_5300_Managing_service_operations_Hulkkonen.pdf [Accessed 20 October
2010]
Perera, S., Harrison, CT., and Poole, M., 1997. Customer-focused Manufacturing
strategy and the use of operations-based Non-financial performance measured.
Accounting, Organizations and Society, Vol. 22, No 6, pp. 557-572, [online]
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