Successful business activities can only be realized through efficient and effective processes of operations management that plan, identify, control, and organize resources based on competition and market demand. Operations managers are indispensable and valuable in the 21st century due to the hyper-competitive and continually changing environment. Unfortunately, many enterprises have not acknowledged the essence and value of operations management for the development of brand and product power. Many business managers often lack the requisite operations strategies and knowledge to coordinate resources to achieve success and competitive advantage. The area of operations management is challenging and requires one to be conversant with business tools, processes, and their application in designing and delivering value to clients and all stakeholders (Johnston 1999, p.104-124). This paper will define operational management and its objectives and review some of the operational management challenges that managers encounter in service organizations relative to manufacturing organizations.
Operations management is the designing, execution, and modification of systems used in the creation of goods or services. Operations management can also be defined as initiating, directing, and controlling processes that are responsible for transforming inputs into products and services for customers (Krajewski, Ritzman and Malhotra 2013, p.2). There are four basic reasons organizations apply operations management in their businesses. To start with, it is part of three basic elements of business, including marketing and accounting. Secondly, operations management is an area that considers the actual systems that produce goods or services and the knowledge of how goods or services are produced is important in making appropriate changes that increase customer satisfaction. Additionally, the role, function, and work of operation managers affect the safety and well-being of the society through the quality of goods or services produced, and finally, a large part of an organizations revenue goes to the management of its operations (Heizer and Render 2011, p.1-4)
Service products are intangible. Services refer to business activities involved in producing immaterial products such as education, health, entertainment, and lodging (Heizer and Render 2011, p.10). Operations managers in the service sector constantly deal with the challenge of creating invisible products that need to be experienced. Measuring the value of intangible products is a great undertaking. The manufacturing organizations do not face such challenges and are accurately able to measure whether a product is productive or not through running a variety of tests. For example, a product can be measured as sweet, bitter, durable, tough, or associated with other tangible characteristics. The service challenge is a difficult encounter for managers when called upon to apply theories, techniques, processes, and tools for operations management to create value since these techniques and tools were initially limited to the manufacturing sector.
Another challenge to the quality produced by operational managers is capacity building. The creation and consumption of services is simultaneous, leaving no room for inventory. Service firms are faced with the challenge of building enough capacity to meet clients needs based on demand (Gebauer et al. 2012, p.120-136). On the other hand, manufacturers are able to predict demand, produce a product, take inventory, and deliver products once they are ordered. Operations managers for service industries constantly face the giant task of forecasting demand and capacity, a feat that has a slim chance of success.
Another major challenge facing the quality delivered by managers in the service industries is that services are unique; therefore, they require different kinds of resources because service provision will vary significantly. For example, one client may demand a certain haircut while another will have a different preference. Though both of these services are the same, different resources will be required to guarantee quality. However, the manufacture of products may be fixed to adhere to a certain quality, making it is easier to achieve the desired value. For example, Nike Sportswear follows fixed criteria consisting of the same resources and procedures for producing its Nike series of shoes. To achieve quality in the service sector, frequent customer interaction and contact is required owing to the unique qualities of customers and the effects on their tastes or preferences. Services are inconsistent product definitions, which cannot be standardized (Heizer and Render 2011, p.10). Operation managers in the service sector have to come to terms with the fact that services are knowledge-based since they depend on the conceptual, technical, and interpersonal skills of service providers.
A distinct advantage of the manufacturing industry over the services industry is that the former does not have to entertain its customers while the success of the latter depends on hosting clients. Operation managers in the service sector are tasked with the responsibility of identifying an ideal location for the business. Since manufacturing plants are rarely subject to client patronage, the location, size, and layout of the plant is irrelevant, with the focus being entirely on production needs. For the service sector, a lot of time is spent on location and forecasting demands to determine the size of the business since a poor site is tantamount to a low clientele. Successful service providers should be easily accessible to customers and must be located in areas with a high volume of clientele. The service sector is hereby required to deal with the daunting task of keeping the best interests of the client in mind while at the same time minimizing operational costs (Johnston 1999, p.104-124). The process of managing the operations of a service organization subjects the operations manager to additional challenges, especially if the service organization requires constant contact with clients. Service organizations need to offer customers personal attention and satisfy all their needs in time. This responsibility is complicated since it is hard to predict the level of demand (Maull and Caldwell 2014, p.242-269). In this regard, it is necessary for operational managers to be keen on employee shifts to ensure they complement the demands of customers. This is different from the manufacturing industry, where operation managers are mostly involved with scheduling activities necessary for transforming raw materials into finished products.
It is worth noting that managers in service industries like their manufacturing counterparts have to come to terms with globalization. The implications of globalization are such that local companies compete with international corporations as well as the increasing pressure for local companies to expand overseas. The strategy used by managers to retain and attract clients encompasses delivering quality goods and services at convenient rates. This becomes a problem for operations managers since they need to run organizational functions in a manner that ensures that their products or services are still competitive (Thomas and Griffin 1996, p.1-15). Therefore, to remain significant in the market, local managers need to be creative. The issue of globalization is also a challenge to operational managers who are accustomed to dealing at the local level as they may be called upon to expand internationally, a process that comes with increased responsibilities. Therefore, it is imperative for operational managers to understand the international market, identify potential clients, learn cultural differences, and finally customize their products or services according to these elements.
Lean implementation is another huge challenge for operational managers in the service and manufacturing sectors. Lean implementation is based on wastes that an operational manager should eliminate to achieve quality. These wastes include:
Delays: This occurs when customers are waiting to be served, for delivery or in queues. When the customer seeks services elsewhere because of delays, this is regarded as waste.
Duplication: Involves re-entering data or details from different sources in the same organization and is a waste of valuable time that could be spent elsewhere
Unnecessary Movement: Poor ergonomic, lacking in a one-stop service point, and queuing many times are common features of this kind of waste (Dues, Tan and Lim 2013, p.93-100).
Unclear communication: When people are confused about the use of a service or product, waste time looking for a location or seeking clarification, and all of these are considered wastes.
Wrong inventory: Running out of stock or failing to gather all that is required is a waste.
A lost opportunity to win or retain a customer: This includes failing to develop rapport, unfriendliness, or rudeness.
Errors during service transactions: This covers defects in products/services, lost/damaged goods.
Service quality errors: Lacking in quality of service processes
The main distinguishing factor between lean services and lean manufacturing is the difference between value and failure demand, and their implications on quality. While value demand refers to the demand customers have for a particular service, failure demand is demand brought about by the failure to act right with the customer (Van Landeghem, Bauters, and Limere 2014, p.173). The latter, therefore, occurs when the customer is not pleased by the initial demand; for example, when a large percentage of calls received at a call center are tracking down earlier inquiries or correcting earlier work. Since the lean concept aims at eliminating waste, failure demand is a kind of waste in service industries. Value demand in the manufacturing industry is the demand for a particular product, whereas failure demand is the demand that arises from failure in the production process. Failure demand in the manufacturing sector includes inspections, audits, inquiries, and administration rework. Although experts have encouraged the application of the principles of lean manufacturing in service industries for management quality, implementing this concept is a difficult process. In manufacturing, identifying waste is easy because of the aspect of visibility (Sarkar 2009). Identifying abnormalities is enhanced through tools such as value stream routes. In service organizations, processes cannot be seen, and invisible processes amount to invisible waste. For this reason, managers need to employ work around strategies, complexity manifestation, and other similar mechanisms. These mechanisms are further authenticated using tools such as value stream maps and questionnaires.
Service processes rely on people and not raw materials like the manufacturing industries. Therefore, lean implementation for quality management involves the tedious effort of aligning all stakeholders on the improvement objectives (Sarkar 2009). The improvement goals have tangible and intangible components. The intangible aspect of lean implementation depends on the different temperaments of people. Getting consistency in the moods of all people affected by improvements is a difficult undertaking. The manufacturing industry does not rely on the moods of people, rather focuses on the pressure of demand in making improvements on quality.
Many service processes are enabled by technology, as are manufacturing processes. In many cases, these IT systems are not in harmony with one another, and this may be as a result of the slow movement of business intelligence, data integrity, flex...
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