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The unique challenges of managing services supply chain - Essay Example

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The United States economy has shifted towards a service economy due to the fact that 84% of the gross domestic product generated in America comes from the service sector. Managing supply chain occurs in both the manufacturing and service companies, but the academic community has…
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The United s economy has shifted towards a service economy due to the fact that 84% of the gross domestic product generated in America comes from the service sector. Managing supply chain occurs in both the manufacturing and service companies, but the academic community has historically focused on supply chain for manufacturing operations. “Supply chain management is the management of information, processes, goods, and funds form earliest supplier to the ultimate customer, including disposal” (Ellram & Tata & Billington). The first difference between a manufacturing and service sector supply chain is that manufacturing operations require lots of inventory, while in service operations there is none or little miscellaneous inventory such as office supplies. There is a difference in terms of how the labor is utilized in each supply chain. In manufacturing labor is used for procuring, transporting, and handling physical material, while almost all service industries labor is used to manipulate information and develop relationships. SCM includes supplier relationships, supplier network, and supplier collaboration (Sengupta, Heiser, Cook). Logistics and transportation costs in the supply chain of manufacturing companies are high, while service firms do not incur in these types of costs. The inventory category in manufacturing firms is subdivided into finished goods, work in process, and raw materials. None of those inventory accounts categories exist in the service industry. The service supply chain has more human involvement which makes it harder to standardize solutions to problems since they are resolve on case by case basis. In manufacturing lines processes are standardized. Take for instance the service that is provided by a barber. Each individual hair cut service is different because each human on earth has a different set of hair.
In order to improve the supply chain of a service company the managers have to divide their strategy into three levels: strategic, tactical, and operational level. The service supply chain is more visible at the operational level. A fast food restaurant can improve its operational level offering by always having three cashiers instead of one taking orders from the customers. Such a strategy would reduce the waiting time of the customers by eliminating the long lines. At the tactical level a service organization such as the global managing consulting firm Accenture can begin recruiting its new batch rookie college graduates a year become the students graduate. Giving these students internships is a great way to test the employees and provide valuable training that will ultimately be used to improve the quality of service that is provided to the customers. At the strategic level the supply chain of a service firm can improve by increasing the total budget that is allocated for this function and by obtaining more support and help from the executive management team. Keeping better track of time can help service organizations recognize processes that are leading to inefficiencies and waste. The implementation of a customer feedback mechanism would help the company determine if the customers are satisfied. The feedback mechanism would be included in the receipt. The customer would receive within the receipt a $5 coupon on their next purchase if they fill out an online questionnaire. The offer would be limited to the first 200 customers that fill out the questionnaire. The implementation of information technology tools can be use to improve the supply chain of service organizations.
Work Cited Pages
Sengupta, K., Heiser, D., Cook, L. “Manufacturing and Service Supply Chain Performance: A Comparative Analysis”. Journal of Supply Chain Management. 2006.
Ellram, L., Tate, W., Billington, C. “Understanding and Managing Services Supply Chain.” The Journal of Supply Chain Management. 2004. Read More
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