Class Assignment

Submitted to: Dr Adnan Pitafi

Submitted by: Anum Memon
Roll # 17S-MBA-NBS-01
Q#1: What is service operations management? Give a detailed account of the various types
of service operations, Discuss the difference between goods and services in operations
management?
Services operations management is related with delivering service to the customers of the
service. It involves understanding the service needs of the target customers, managing the
processes that deliver the services, ensuring objectives are met, while also paying attention to the
constant improvement of the services. As such operations management is a central organizational
function and one that is critical to organizational triumph. Service organizations react to the
wants of customers and leave certain experiences in the minds of the customer through a service
delivery system. It was found in research study that growth of service industry is rapid at global
level. Service organization is one when two or more people are engaged in systematic efforts to
provide services to customers. These organizations exist to serve customers and satisfy their need
(Wright, 2004). Functions of service operation are to restore the normal service to the user as
quickly as possible. There is service desk that made up dedicated number of staff responsible for
dealing with variety of services events, often made via telephone call, web interface or
automatically reported infrastructure events. Wight (1999) identified that key attribute of
marketing strategy of service organization is the interaction between the customers and the
organization itself. Factors such as high consumer contact, consumer participation in the process,
labor intensiveness, intangibility of output, difficulty of measuring quality, difficulty of
measuring productivity, and a site dictated by consumers' location, are some of the explanatory
characteristics of service operations. Therefore, service quality must identify what sensual
benefits, physical items, and psychological benefits the customer is to receive from the service
(Watt, 2007).
Types of Service Operations
 Line operations.
 Job Shop Operations.
 Intermittent Operations
Difference between goods and services in operations management

Operations management involves managing business processes that occur during the conversion
of inputs, which include raw materials and labor, into outputs in the form of goods and/or
services. From an operations perspective, then, goods and/or services are the creation of value
 that consumers desire or expect. In this regard, goods and services are referred to in their
traditional sense.

 Services are intangible and without physical attributes. On the other hand, goods are tangible and
can be weighed or measured based on their physical aspects.
 Services cannot exist separate from the customer. For instance, a doctor needs a patient in order
to conduct a diagnosis, which is a medical service. On the other hand, goods do not require
customer interaction in order to be goods. For instance, a bottle of soda is a good even before it
reaches the customer.
 Services are susceptible to changes in the consistency of how they are delivered, while goods can
be created consistently using the same process and materials.
 Services can’t be preserved for future use. Goods, on the other hand, can be stored.

Q#2: List various recent dimensions in service operations management and importance of
each dimension?
Every business operates along four basic focus dimensions: finance, customers, internal
processes, and learning and innovation. These theoretical divisions of operations management
come from the research of Robert S. Kaplan and David P. Norton. The dimensions aren’t
mutually exclusive. For example, employees who become more competent through learning can
improve the functioning of internal processes. These are the dimensions of service operations
management:

Finance
The heart of the financial dimension for most businesses is profit, though short-term financial
goals might entail sacrificing current profits to increase future capacity. For example, a company
might decide to reinvest all its profits into new and better machinery to increase production
capacity and efficiency, but the ultimate goal remains greater profit. Managers must control the
flow of money through the organization to ensure short-term goals align with long-term goals.
Customers
Customers are the foundation of your business. Without the flow of their money through your
organization, everything grinds to a halt. Managers aim to maximize the flow of customer
money, but that doesn’t always mean securing as many customers as possible. A boutique hotel,
for example, might focus on serving relatively few high-paying customers, while a chain hotel
focuses on the wide swath of people who are unwilling to pay high prices. Though each business
targets customers who have different needs, meeting those needs is equally vital to their
profitability.
Internal Processes
Optimization of internal processes leads to greater profitability and customer satisfaction. For
example, a manager might focus on developing efficient communications within an organization
to ensure orders travel quickly from the customer service department to the production line. The
manager further expedites the order by ensuring the production department syncs with the
shipping department to get the order to the customer quickly. Fine-tuning the process to make it
maximally efficient keeps operating costs low and pleases customers, leading to greater profits.
Learning and Innovation
Technology progresses and so must businesses. An invention that improves a manufacturing
process, for example, might be a game changer that forces factories to upgrade their processes or
lag behind competitors. A good manager stays abreast of technological shifts; a great manager
anticipates and initiates change by encouraging her organization to focus on learning and
innovation. Practically, this can mean anything from having a well-funded research-and-
development team to paying for continuing education for employees. An organization that
surmounts cognitive limitations stays one step ahead of its competitors.
Q#3: What is Sustainable Procurement? How can sustainable procurement be
implemented in SMES?

Sustainable procurement is the adoption and integration of Corporate Social Responsibility

(CSR) principles into your procurement processes and decisions while also ensuring, they meet
the requirements of your company and its stakeholders.
Sustainable Procurement integrates requirements, specifications and criteria that are compatible
with the protection of the environment and the society. It is not simply about not using child labor
or illegal chemicals that can damage the environment and peoples’ health.
Policies and strategies for sustainable procurement
It is developed by companies are based on the need to future proof themselves primarily around
scarcity in supply and ability to cope with the demand of emerging markets, pressures brought
upon by cost and ability to reduce this through reductions in energy consumption and waste
reduction. Also the need to protect brand reputation, taking sustainability in procurement seriously
demands risk management and addressing of weakness areas that could bring about scandals and
bad publicity. Lastly, differentiation of their brand with the view of procuring sustainably for
creation of opportunities that entail developing services & products that are more innovative and
sustainable that are also relevant to their markets and customers.
Well sustainable is quite vague, so procurement must just do its work good enough not to be
outsourced, or must procurement operate in such a manner that it sustain or rather keep the business
afloat, by checking the cash flow vs expenditure of the organization and to incorporate method to
save the organization expenses even though any of those activities will not be directly accredited
to procurement.
There is no doubt that sustainable procurement involves a higher degree of collaboration between
all supply chain entities and the businesses worldwide have adopted a broad interpretation of
sustainable procurement which resulted in development of tools and techniques to support
collaboration among them. But for SMEs there are many issues such as
1. Manage demand
2. Encourage innovation
3. Develop a competitive, sustainable supply chain
4. Full and fair opportunity.

Q#4 What Is Just in Time (JIT)? And is the dependent demand approach to service and
manufacturing planning and control still suitable? Is there a better approach?

The just-in-time (JIT) inventory system is a management strategy that aligns raw material orders
from suppliers directly with production schedules. Companies use this inventory strategy to
increase efficiency and decrease waste by receiving goods only as they need them for the
production process, which reduces inventory costs. This method requires producers to forecast
demand accurately.

The JIT inventory system contrasts with just-in-case strategies, wherein producers hold sufficient
inventories to have enough product to absorb maximum market demand.

 The just-in-time (JIT) inventory system is a management strategy that minimizes

inventory and increases efficiency.
 Just-in-time (JIT) manufacturing is also known as the Toyota Production System (TPS)
because the car manufacturer Toyota adopted the system in the 1970s.
 Kanban is a scheduling system often used in conjunction with JIT to avoid overcapacity
of work in process.
 The success of the JIT production process relies on steady production, high-quality
workmanship, no machine breakdowns, and reliable suppliers.

JIT
Just-in-time (JIT) manufacturing, also known as just-in-time production or the Toyota Production System
(TPS), is a methodology aimed primarily at reducing times within production system as well as response
times from suppliers and to customers.

Just‐in‐time is not just for manufacturing: a service perspective:

Service system design is similar to that of manufacturing, which indicates that service industries could
benefit from the application of materials requirements planning (MRP) and other inventory control
techniques in the same way as have manufacturing operations (Khumawala et al., 1986; Wasco et al.,
1991). The majority of JIT research and case studies focus on the manufacturing sector and the technical
elements of JIT, and thus, generally exclude the service sector. Manufacturing and service organizations
both produce a product, whether that product is a good or a service. The JIT concepts and techniques are
equally applicable to both manufacturing and service operations because they are process rather than
product oriented. It may even be argued that service organizations have a better chance of successful
applications of JIT because of the lack of work‐in‐process and finished goods inventories in pure service
environments. In analyzing the differences between services and manufacturing, it would be insightful to
explore how JIT themes can support the unique operating characteristics of services, and their usefulness
in improving service‐sector performance measures. Vonderembse and White (1991) suggest that JIT
approaches in the service sector could be implemented in terms of simplifying production processes,
reducing inventories of supplies, and focusing on the quality of the service being provided.

MRP/MRPII/ERP (push-based) JIT (pull-based)

Very expensive software, difficult/time- Manual card-based system or inexpensive software,
consuming to install and implement. efficient to implement, minimal setup-times and costs.
Fast reactions to demand changes due to
Reaction to demand fluctuations takes more time.
centralized data management.
Higher raw material inventories, levels of work- Lower raw material inventories, levels of work-in-
in-progress and holding costs. progress and holding costs.
Defect percentage is higher. Rework is often
Defect percentage much lower. Almost no reworks.
necessary.
Variety of suppliers who are often distant and
Few suppliers who are near and very reliable.
unreliable.
More discounts and better price opportunities. Price opportunities are limited.
Short range contracts, few deliveries. Long range contracts, frequent deliveries.
Small number of setups and larger lot sizes. Frequent setup changes and smaller lot sizes.
Managers and workers typically have no
Better relationship and understanding between all levels.
relationships.
Workforce has limited responsibility, less
Workforce has big responsibility, high commitment and
commitment and specialized knowledge is not
requires continuous training.
required.

Q#5 (A) Discuss DEA tool and its application in service industry?
DATA ENVELOPMENT ANALYSIS:

Data envelopment analysis (DEA) is a technique used to compare the performances of several
units. These units in the context of services can be various service organizations like banks,
hospitals, schools etc. This technique is used in places where a relative performance of different
units is to be compared and evaluated.
•DEA can be used to analyse the performance of several units to set a benchmark.
•The analysis can be used to discover the inefficient operations or units even for the most
profitable organizations.
•DEA has an advantage over other analysis techniques as it can handle complex relation between
multiple inputs and multiple outputs and the units are non-commeasurable.
•DEA techniques are based on linear algebra and are related to linear programming concepts.
The technique is similar to mathematical duality relations in linear programming.
11.1.1 DEA process
DEA can be used to measure performance and evaluating the activities of organizations such as
business firms, government agencies, hospitals, educational institutions. DEA measures the
performance in the form of ratio of Output and Input to some processes like efficiency and
productivity are measured.
Productivity can be measure by two methods.
 Partial productivity measures
 Total factor productivity measures
Partial productivity measures does not consider all output and input factors, whereas, total factor
productivity measure can take into account of all the outputs and inputs. Therefore the mistake of
imputing gains to one output that are attributable to another output in partial productivity
measures can be avoided using total factor productivity measures.
The conventional data envelopment analysis (DEA) relies on linear averages of outputs and
inputs to measure operational efficiency, a process that renders the direct application of linear
programing techniques untenable. To overcome this difficulty, the average input is often
normalized to equal one. This paper offers an alternative approach in which the use of nonlinear
averages results in log-linear relationships, thus making it possible to directly use linear
programing for optimization purposes. The paper also illustrates the new approach by analyzing
the efficiency of a sample of Turkish banks, where it is shown that the extent of inefficiency
among these banks is much smaller than implied by the use of the more conventional approach.

Q#5 (B) What are disadvantages of six Sigma in service quality?

Six sigma
Six Sigma is a customer-driven quality-control program that is most commonly associated with General
Electric (GE), which embraced the program even though it was developed by Motorola. After observing
GE's many successes with Six Sigma, other firms adopted it with varying results. Some small businesses,
particularly those in manufacturing, may find Six Sigma principles ideal for ensuring the quality of their
products. Other businesses may find the Six Sigma system too rigid or otherwise impractical for their
particular situations.

Six Sigma Disadvantages

Because Six Sigma is applied to all aspects of the production and planning process, it may create
rigidity and bureaucracy that can create delays and stifle creativity. In addition, its customer
focus may be taken to extremes, where internal quality-control measures that make sense for a
company are not taken because of the overlying goal of achieving the Six Sigma-stipulated level
of consumer satisfaction. For example, an inexpensive measure that carries a risk of a slightly
higher defect rate may be rejected in favor of a more expensive measure that helps to achieve Six
Sigma, but adversely affects profitability.

Disadvantages for Small Businesses

Six Sigma is extremely costly for many small businesses to implement. Employees must obtain
training from certified Six Sigma institutes in order for an enterprise to receive Six Sigma
certification. Even if a firm wishes to implement Six Sigma without formal certification, much
training is necessary in order to understand the system and how to apply it to particular business
processes. Many small businesses cannot possibly afford such training, even for a single
employee. In addition, small businesses that need to remain nimble and creative often find the
Six Sigma system of process analysis stifling, bureaucratic and overly time consuming.

Q#6: what is the relation between new service development and service design?
Service Development and Design
The purpose of Service Development is to introduce new services and service development
initiatives for the business. Service Development takes input from business projects, concept
development, key users and service integration and carries out the development efforts either as
projects, service releases or individual changes. It is essential both react to development needs
coming from the business, and also continuously develop new digital business opportunities for
the business. Service Owners and Service Managers have a crucial role in proactive development
within services.
Service Design consists of involving key stakeholders (e.g. existing or future users of services,
business and service delivery representatives) into designing the services. The purpose of Service
Design is to build a holistic comprehension about various key stakeholder perspectives, and then
incorporate that information into the design and development of the services. Service Design is
used to improve the end-user satisfaction of the services, and also it can help to manage and
deliver the services in the most efficient way.
Service Design consists of identifying problems and needs, setting the business objectives,
profiling user groups as well as developing, evaluating, testing and improving the solution ideas.
In addition, some special Service Design practices help to measure and continuously improve the
implemented solution. Service design is used to either create entirely new services or improve
the existing ones.
Service Architecture consists of four elements which has a major role in enabling purposeful
Service Development, Service Design and Lifecycle Management. These four elements are:
 Service Offering
 Service Roadmap
 Service Delivery Model
 Service Structure