Critical Appraisal in Operation Management - Article Example

Operation management is the art of utilizing the resources of the business in the most efficient and effective manner. This article is revolving around the importance of this concept in the Australian economy. It a well researched piece of work that has the information derived from the managers of various service sectors of the economy. The service industry is in its boom in the Australian economy as it has shown impressive figures of growth from the part four decades and will continue to do so in the coming future too. This sector of the economy employs the vast majority of the work force of the country. It is due to this reason that the researchers and economist have carried out studies the study due to the significance and contribution of this industry in the country's annual GDP. Different theorist has described services in different ways which helps the management to understand the positioning and formulation of strategies to organize the resources. There conclusions can be used to get the wider view and all the dimensions of the various theorist, based on that the management can draw their own conclusions from their own understanding. These researchers covered different areas of the service industry but this paper specially discusses the implication of operation management in the Australian service industry. In order to understand the challenges faced by the management it is very important to understand the characteristics of the services. Operation management is a technique which can help to resolve the problems faced by the company. Before that there is an overview of the different researchers. Their work has helped to form the basis of understanding. Nie and Kellogg distinguished the services into some unique characteristics which makes services different from manufacturing. A service oriented business has more customer interaction due to which the entire process of delivering the service also becomes important. Services are intangible, there can be variations in the output, they are perishable, there production delivery and consumption all takes place at one time and they are more labor intensive. Schmenner has come up with one of the most useful topology of service industry which can be applied in all kinds of service oriented professions. He has defined these degrees in a simple matrix form which is indicating a high and low level of labor intensity and customer interaction. Such distinction can help the management in classifying each profession into a certain area like service factory professions have low labor intensity as well as customer interaction. Similarly professional services like doctors have high customer interaction as well as high labor intensity. Based on this the management can increase their focus and see which area needs more attention. Schmenner's theory can be connected to Wright and Mechling conclusion which explains that how these topologies can be used in the planning and controlling process. The key performance indicators are the managerial tools which help an organization in achieving its long term goals. Once the goals are set and strategies are implemented there has to be a way to measure the progress or success and KPI is one of the ways. These are measurable indicators. It can be one or many depending on the organization. For the service oriented businesses the key indicator can be the number of clients per month in an auditing firm. KPI is a useful management tool because when you know the strengths and weakness of your business and your goals are specific and clear to all then one can define a certain indicator to measure its evaluation and performance over the period of time. These can be applied in different service processes such as the framework of Armistead which had categories like delivery system and the volume of output. Such measures can be taken as as an indicator and can be used to upgrade the entire process. Service industries face many problems which can be resolved through the implication of the operational management tools. Operations management itself is an area of study in business which ensures that limited resources are used in the production of goods and services. It manages the process and does the function of adding value to the process and making it more effective and efficient. Operation management can be can be more efficient given that there is a good management control with a customer experience culture in the organization. This is where the role of the leader comes in, as a leader one ones responsibility is to guide the employees and plan the resources. The employees look up to the leader so it is very important for the leader to create an environment and culture in the organization which motivate the employees and takes out the best from them. Service sector is a kind of a business where the employees normally have to interact with the customers unlike the manufacturing where the end products are just sold on to the and there will be no one to one contact between the two sides. Motivated and satisfied employees will reflect this through their attitude and their performance and interaction with the employees. If the customer doesn't like the attitude of the employee or doesn't have a good experience then he is unlikely to come back again. The leader has the ability to derive the organization and take it towards success and it is important to remember that happy employees make happy customers. There are 4V's of leadership which broadly define the role of the leader. These include the vision, value added and the vitality. These make up a successful leader. You take decisions based on the employees. This even fulfills the criteria of ethics and social responsibility of a leader. There are many ways of resolving the operational issues in an organization. Six Sigma is one of the management strategies which was originally used by Motorola but now its benefits are widely recognized. It's very beneficial as it reduces the number of errors and enhances the business model. Management can use this in order to sequence its work and set targets which will lead to long term success. For this the leader has to make the employees familiar with the concept and its implementation only then the targets can be met. Lean management is a process of adding more value to the process with less work. It can be applied in the service industry too. It focuses on the elimination of the wastage of resources. It can reduce cost and increase efficiency. First of all the employees need to be trained in order to use lean management. Cellular manufacturing can be used in the service industry. One of the best lean management tools which can be applied in the service business is "kaizen" which means continuous improvement. Example a kaizen can be developed for the reduction in the time of hospital check in and so on. It depends on the leader and the management that how well they understand this concept and is able to integrate it into their business model (Heizer, Render 230-235). Similar to this concept of lean management is another Japanese technique which reduces business costs and wastage. It can be used I the service in the service sector in order to resolve operational issues it is a formularized way of doing the work (Brown et al. 125). In order to succeed in today's businesses it is important to implement the new work practices. The service industry can equally add value to their work through this technique (Brown et al. 125). The sources of information for this research paper are the managers who are actually working in the service sector of the Australian economy therefore they know the challenges that are faced by the business everyday and the common issues related to work. Hence it is not a theoretical based research paper it is supported by solid statistics too. Apart from this the service organizations which are made part of the survey cover all the different kinds of service businesses in the economy to get a wider perspective from all kinds of business be it insurance, retail or any non profit government owned business organization. These sectors and companies are then analyzed using Schmenner's, Wright and Mechling guide and categorization of the service businesses. These finding and survey results drew conclusions like services tend to have low differentiation. Services are usually standardized and it is very difficult to create a point of differentiation in the service sector because competitors follow it immediately and offset the advantage. Then there are certain statistical techniques which were used in the analysis process such as the ANOVA test (Heizer, Render 230-235). The results of the study also indicated that the most important things to the customer in the service industry are the delivery, customer service and quality. For the firms the highest priority is placed to the retention of the customers. The brand loyal customers are the ones that generate profits for the business. Over all it was seen that technology does not tend to play a vital role in the service industry but recently it has been seen that workers are being replaced by labor such as the increased usage of ATM machines now has decreased the contact with the customer directly of the organization. However this is more likely to affect sectors such as banking whereas other professions like doctors and lawyers do not get affected by the technological change apart from the fact that it eases the organization of work and speeds up the maintenance and record keeping. The study also concluded that firms place more importance to the external factors than the internal factors of performance in order to affect the customer directly. Customers place more importance on the brand image brand make perceptions about a service. Usually customers do not try to use different brand and take the risk if they are satisfied with the performance of a certain brand. This gain connects to the factor of brand loyalty. Service is a type of a business where word of mouth also plays a significant role which means that if one individual is satisfied with a brand one would communicate it to other potential customers and vice versa. Negative publicity can hit the reputation and profits. There are many challenges faced by the mangers such as retention of the customers, creation of the customer loyalty and creating an appropriate service culture. The first step is to understand the needs of the customers and communicate it to the employees as well so that they know their level of responsibility and contribution in the entire process. This is mandatory for the success of the business. In the service industry customer relation management plays an important role. Like any organization for the service organization too there is a need to hire the right kind of employees. In the Australian economy the labor in the service sector is highly skilled and qualified. But the problem with the staff in these companies is that the study showed that most of the workers are part time casual workers around 30% of the workforce. This is a challenge for the management because it is very hard to keep the part time worker motivated and committed to the organization and its goals. The strength of the article is that it has taken the view points of a number of theorists in the field of operation management and service sector of the Australian economy. It has supported the arguments with the backing of calculated figures which has made analysis much easier. However the weakness are in some of the finding and conclusions drawn form them such as it showed little difference in the Schmenner's topology of matrix. Some of the services fall on the boundary of the quadrants which has made categorization difficult to understand. Classification was one of the problems in the study. The article could have been improved by using more statistical tools for the findings. This would have verified the results and would have given a clearer picture. More theorists could have been used instead of focusing more on Schmenner's topology. Though it was a helpful way of categorizing the service industry but his study just confined the study. The article was able to draw some of the valid conclusions and findings which can help the mangers in planning their resources and make use of operational management techniques. There was connection between the findings and the challenges that are faced by manager's everyday. By prioritizing the various results strategies can be drawn but then again it depends on the nature of the business. There were challenges mentioned in the article that are faced by the management of the companies but there were no solutions to it. Implications of operation management and ways to counter those in the Australian economy would have increased the value of the article even more. Moreover the article didn't discuss the negative impact of such implications on the service industry or on a firm in particular. It covered the area which indicated what the most important factor is for the consumers and the employers. It didn't discuss the problems that can arise or any real time example or a situation of a business though the survey was taken from all the managers. It did not discuss the Australian economy in detail. Only statistics were given and results were explained. But over all the article has drawn some of the very useful finding for the managers which can help them in using these in their work in order to make it more profitable, efficient and cost effective. Bibliogrpahy Brown, Steve; Blackmon, Kate; Cousins, Paul; Maylor, Harvey (2001).Operations management: Butterworth-Heinemann. Heizer, Jay; Render, barry (2005).Operations Management. 8th ed.: Prentice Hall. Ganeshan, Ram, & Harrison, Terry P. An Introduction to Supply Chain Management. Retrieved June 14, 2009, fromhttp://lcm.csa.iisc.ernet.in/scm/supply_chain_intro.html. Teigen, Rune (1997, May 27). Supply Chain Management. Retrieved June 14, 2009, from Utoronto Web site:http://www.eil.utoronto.ca/profiles/rune/node5.html Read More