The Manufacturing and Service Operations and Their Differences - Essay Example

?Running head: OPERATIONS MANAGEMENT Operations Management Insert Insert Grade Insert March 9, Operations Management Introduction Business organizations are engaged in the creation of products to be offered to their clients. These products can be good or services or a combination of both. Effective development of these products requires operations management, which is concerned with the ‘design, and management of products, processes, services, and supply chains’ (MIT Sloan School of Management, 2012). Operations management will entail all the processes involved in obtaining these resources, their development, and final usage by the organization (The University of Alabama, 2012). The roles in operations management take different dimensions. Strategic roles involve making some long-term operations plan for the organization, especially at the onset of a given business project. Operations management applies for both a manufacturing company and a service company (McNamara, 2012). A manufacturing operations manager may be required to determine the size of a manufacturing plant and its convenient location (MIT Sloan School of Management, 2012). Similarly, an operations manager may be required to determine the appropriate type of service to be provided and to develop the technology supply chain that will be used. OM also involves tactical roles like choosing on the appropriate resources that are to be used in a given operation. Operational roles like inventory management, quality control and inspection, or production scheduling and control are the other category of operations management (McNamara, 2012). This paper focuses on the manufacturing and service operations, their differences, and the operation processes and systems that may be common to the two. Differences between manufacturing and service operations In order to get a distinction between manufacturing and service operations and processes, it would be appropriate to differentiate between two types of products, goods, and services. Goods refer to a ‘physical product that can be held, relocated, and possibly inserted into a larger assembly’ (Artige Company, 2005). On the other hand, a service is a non-tangible product that can neither be held nor relocated, and yet it is used to bring about some change on a tangible/physical item. The quality of a service is realized when it consumed and this quality is quickly lost if the service is not received as fast as possible (Artige Company, 2005). It is almost difficult to provide or claim ownership of a service. Rather, it can just be lent temporarily. A product can be a physical item (goods), non-tangible items (services), or a combination of both the categories. Manufacturing operations involves creation of goods whereas service operations involve creation and delivery of services to consumers. A number of differences occur between the operations in the service industry and those in the manufacturing industry, which translate to a difference in some operation management techniques. Firstly, the service industry is labor-intensive (Zhou, Park & Yi, 2009) as it involves many manual processes characterized by interaction between human beings. This is contrary to the manufacturing processes where most functions are mechanized. As such, it is difficult to use standardized and automated systems to improve operational efficiency in service industry (Zhou, Park & Yi, 2009). Besides, the employees have their own preferences and different processes may require varying amount of labor at a given time. This calls for a more integrated system for scheduling and control. The service industry is characterized by simultaneous production and consumption of the service products (Abilla, 2010; Zhou, Park & Yi, 2009). In manufacturing process, the goods are manufactured at some earlier dates and some lead-time is created in readiness for risks and uncertainties that may be encountered in future. The buffer is not possible in the service industry, which will just apply a Just-In-Time (JIT) system of inventory management (Zhou, Park & Yi, 2009). This also implies that there is no period for distribution and warehousing as witnessed in the manufacturing processes. A customer initiates the production by presenting the kind of service to be issued and it starts. In the manufacturing operations, the process of development of product occurs without involving the customers. The customers will only meet the finished product according to the manufacturer’s design. In the service industry, the customer is involved in the service delivery process leading to heterogeneity in the services provided (Zhou, Park, & Yi, 2009). The customer has the ability to input in the delivery process and since the needs of the customers are often different, the same service product can be eventually delivered differently for different clients making it difficult to measure the quality of services in such cases (Zeithaml et al, 1996). The other difference is in tangibility of products involved that have impacts on the inventory management. Manufacturing operations involve tangible products that can be easily stored and accounted for. The management of inventory in this case is direct. On the other hand, service operations involve intangible products (Abilla, 2010) such as a piece of information that a college tutor has about some concept. It is difficult to store the intangible goods, account for them, or even identify their suppliers (Zhou, Park & Yi, 2009, p.139), and yet these are important aspects of supply chain management. The traditional inventory management process through buffering is then changed to capacity management. Nonetheless, dealing in manufacturing operations does not necessarily preclude service operations. A manufacturing organization may often need some services in the production of its goods (Artige Company, 2005) and these services may be provided from within the organization or outsourced from external sources. Similarly, a service company may need to use goods in providing its services and the goods can be created within the organization or obtained from external sources. Applications of manufacturing processes and systems to services Commonalities exist between service and manufacturing industry and the former processes are considered a subset of the manufacturing processes (Artige Company, 2005). Even though the service sector had expanded in different countries by the 1950s, the application of operations management in the service industry received no attention until the mid 1970s (Johnston, 1999, p.106). The field of study, traditionally known as Production Management, began to expand to cover the service activities like hotel management, banking, or education (Shim & Siegel, 1999, p.2). Manufacturing and servicing share certain processes and they have common goals of operational and financial success (Zhou, Park & Yi, 2009). It has to be recalled that the service processes are not concerned with the production of tangible but non-tangible products, and the creation of such product will be manifested by the change observed over time on a given physical item. A service system is used to enhance this shift from one state to the other (Artige Company, 2005). As such, a service process seems less complicated as compared to the manufacturing process. Nonetheless, the commonalities between servicing and manufacturing appear to be more than their differences (Zhou, Park & Yi, 2009). Apart from the creation of goods, a service process will use all the other methods that are applicable in the manufacturing process (Artige Company, 2005). The similarities imply that the managerial techniques and insights developed in manufacturing can be extended to the service industry (Zhou, Park & Yi, 2009). These include the techniques for performing the OM roles at strategic, tactic, and operational levels. There are tactical commonalities in both OM in manufacturing and in servicing; both the processes deal with tangible products at some point. One of the applications that are common to both businesses is supply chain management (Zhou, Park & Yi, 2009). It has been pointed out that service firms also need tangible goods to perform some aspects of operations. They have to procure these goods from other suppliers. The decisions that will be made in the procurement process follow similar patterns that are observed in the manufacturing processes (Zhou, Park & Yi, 2009). Such scenarios illustrate the commonalities between the service industry and manufacturing industry, and the transfer of techniques that is possible. The operations manager in the service industry can use tools like Materials Requirements Planning (MRP), which is traditionally applicable in managing material distribution in manufacturing. In MRP, every manufacturing unit informs the supplier on the amount of materials needed and when they will be needed (Institute for Manufacturing, 2012). Commonalities between supply chain management in manufacturing and service also extend to the strategic and operational levels. The major driving force in the supply chain is demand of the products at any given time, and the idea is often to meet these demands in good time. It is often profitable if a production plant has the required amount of raw materials at any production time to avoid time wastage. Some production processes need to have the required workforce at any given time. Similarly, a warehouse or retail store should have the right amount of products that will meet the demands of clients. Failure to meet customer demands has negative implications on customer loyalty. Studies have shown that these factors linking demand to the supply chain do prevail in the service supply chain as well (Zhou, Park & Yi, 2009). The demand factor generates similar profits to all the players in the service supply chain. The demand for a given service may increase or decrease at different times. An example is the demand of various services in a beach resort that may depend on seasons and joyful events. An analogy of material requirement planning will be appropriate in allocating resources (human and products) to these service centers. There is need to share information and establish proper coordination in the manufacturing and service supply chains. Some past studies have shown that there is positive correlation between information sharing and financial performance in both cases (Zhou, Park & Yi, 2009, p.138). Quality management is one of the concerns in the manufacturing processes. A tool that is commonly used in the Manufacturing process is the Generic Error Modeling System (GEMS) that helps minimize failures improving the quality of products. GEMS examine the human errors by considering switching during execution of some manufacturing task among the three human information processing, skill, rules and knowledge (Embrey, N.d). It examines failures following a combined effect of skill-based errors, rule-based errors, and knowledge-based errors in human beings executing some routine practice (Reason, 1990, p.62). The system will be helpful in identifying and fixing a problem that has been encountered by a worker who is involved in some regular operation. Some study conducted by Stewart and Chase (1999, cited in Zhou, Park & Yi, 2009) showed that GEMS can be used to study failures in the service delivery. The duo applied the tool in a service setting and noted that it was applicable in identifying failures in the delivery of service when the delivery process involves some tangible steps (Zhou, Park & Yi, 2009, p.138). Human errors of some kind will contribute to some of the failures in these processes; manufacturing or servicing. The management of these errors is essential in improving the quality of the products (services or goods). Conclusion Firms need different resources for the production of goods and services. Operations Management involves making decisions on how to allocate these resources for effective and efficient operations. The decision has to be made considering the current situation as well as what to expect in the future. Differences occur between the manufacturing and service operations that may influence the OM tools to be used in either case. However, the service processes are not that distinct from the manufacturing processes and some of the operations management roles applicable in manufacturing can be extended to the service industry. Both the businesses have the same operational and financial objectives. They would wish to improve the quality of the products and the efficiencies of the operations. In both cases, the major concern is to manage organizations resource effectively to meet customer demands so that the organization derives optimum returns. Reference List Abilla, P., 2010. Difference between Manufacturing and Service. (Online). Available at: http://www.shmula.com/lean-difference-between-manufacturing-service/7773/ (accessed 08 March 2012). Artige Company. 2005. All About Manufacturing and Service Processes. (Online). Available at: http://artige.com/msp.htm (accessed 08 March 2012). Embrey, D., N.d. Understanding Human Behavior and Error. Human Reliability Associates. (Online). Available at: http://zonecours.hec.ca/documents/A2007-1-1399575.UnderstandingHumanBehaviourandError.pdf (accessed 08 March 2012). Johnston, R., 1999. Service operations management: return to roots. International Journal of Operations and Production Management, Vol.19 No.2, 104-124. 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(Online). Available at: http://areas.kenan-flagler.unc.edu/Marketing/FacultyStaff/zeithaml/Selected%20Publications/The%20Behavioral%20Consequences%20of%20Service%20Quality.pdf (accessed 08 March 2012). Zhou, M., Park, T., & Yi, J., 2009. Commonalities and Differences between Service and Manufacturing Supply Chains: Combining Operations Management Studies with Supply Chain Management. California Journal of Operations Management, Vol.7, No. 1, pp 136-143. Read More