1.1.

OPERATIONS MANAGEMENT

Operations management is central to the functioning of an organization and encompasses all the
activities carried out within the organization that enables it to accomplish its goals. Slack et al.
(1998) sees operations management as involving the totality of events that take place in an
organization with the aim of producing goods or services. Slack et al. (1998) further assert that
operations management entails the design and management of the processes by which goods and
services are produced in order to fulfill the requirements of the organizations customers. These
processes consist of the procedures followed by organizations in obtaining and developing
resources needed in delivering their products to the customers in the most efficient and cost
effective way. Resources may be in the form of people, raw materials, energy, or infrastructure.

The main focus of operations management for many years was the factory
organization. As a result the discipline tended to be called ‘manufacturing
management’. Later other bodies such as distributors came
within the boundary of the subject and its name evolved into production
management. During the 1960s the service sector was included as a focus
of attention and the name of the subject continued to evolve into today’s
title: ‘operations management’.
The following are among the key factors currently driving the continued
development of operations management.
1 Globalization of the economy
Increasing competition from foreign companies has stimulated
organizations to strive for better ways of producing efficiently
and effectively. One aspect of this fierce competition has been
the steady decline in the importance of domestic manufacturing
to the economy.
The current battleground for marketplace dominance is
being fought on the speed objective, described as time-based
competition. This requires the quick provision of goods and
services and rapid design-to-market lead times. These are
major challenges for operations managers.
2 Total quality management
In the 1980s and 1990s total quality management ideas swept
across all types of organizations. The approach was seen as
embodying a unified way of managing operations for improved
quality and productivity. Amongst other ideas, the movement
emphasized the need to get all operational personnel involved
in improvement activities (the idea of operations being part of a
chain of linked operations) and the necessity for operations
managers to have an external orientation.
3 Empowerment
In the 1990s empowerment was viewed as the key to cost-effective
operations. It challenged the way that work was designed
and managed, attempting to place responsibility for decisionmaking
with the people who actually performed the work.
Currently the challenge is to make the workforce of the operation
a source of knowledge and ideas.
4 Technology
The information technology revolution of the late twentieth
century has posed new opportunities for the way in which operations
function. Operations managers have to master all aspects
of technology, from its design to its implementation and operation.
The technology has vast potential to improve the way that
operations work. On the downside, technology can also be
poorly managed and lead to major organizational problems.

1.2. AREAS OF CONCERN IN OPERATIONS MANAGEMENT

Key issues in operations management involve planning, organization and control. Planning
involves actions that are undertaken with the aim of formulating procedures and guiding future
management policies. The operations manager in this context is engaged in outlining the goals of
the organizations operational function and formulating structures that will guide the achievement
of these goals. Organization involves the allocation of responsibilities and the determination of
information channels in within the operations department while control involves making sure
that the organizational goals in terms of performance are met according to projected outputs.
Operations managers are also concerned with the effects of their management policies on the
behavior of the employees and the effects of employees’ behavior on management activities.

2. OPERATIONS MANAGENT IN SERVICE INDUSTRIES

The fact that operations management involves the processes engaged in the conversion of inputs
into outputs means that it applies to both manufacturing and service industries. Manufacturing
involves the transformation of inputs comprising raw materials, labor, and capital into finished
commodities. The service industry transforms the same inputs into intangible outputs. Slack et al
(2008) observe that for service and manufacturing industries, the operations function works to
ensure that goods and services are produced within budget constraints, delivered to markets
according to plan and possess the required level of quality

2.1. QUALITY CONTROL

Quality control is one aspect of operations management that has different approaches in
manufacturing and service industries. Quality of service is measured using qualitative methods
while quantitative methods are used to measure the quality of physical commodities (Hollins and
Shinkins, 2006). Delivering quality service demands particular attention to the development of
the employees’ social skills since service delivery mostly involves interpersonal contact between
the customer and the provider (Thompson, 1993). While operations managers are faced with the
need to improve quality while cutting costs and increasing efficiency, the operations function in
the service industry with respect to quality assurance encounters more difficulty than that in the
manufacturing industry due to the labor intensive nature of the service industry (De Menezes,
2012).

2.2. INNOVATION
Innovation refers to the formation of new procedures in the organization with the aim of
generating efficiency in the production process coupled with decrease in production costs and
improved product quality (Slack et al., 2008). Innovation forms a key aspect in the operation
function of both manufacturing and service industries. Innovation in the manufacturing industry
may result in a new car model, for instance, which has a lower fuel consumption rate due to
improved engine design. Innovation in the service sector can include the introduction of new
approaches to customer service, such as contact centers offering 24-hour customer support which
are in use today. Service companies also innovate by offering bonuses and perks to regular
customers in order to retain them and attract others into habitually using the service. Other
innovations that have been made by the service industry include reward programs for regular
users and discount packages that entice customers into subscribing to the service.

2.3 SUPPLY CHAIN MANAGEMENT

Supply chain management entails proper organization and planning regarding entities that are
encountered during the movement of products from the suppliers to the end user (Mahadevan,
2010). Lee and Billington define supply chain management as the organization and coordination
of activities that are involved in the procurement of resources, conversion of these resources into
intermediate and final commodities, and the delivery of these products to customers through
appropriate channels of distribution (2002). Purchasing, transport and logistics are key
components of supply chain management.

The purpose of supply chain management is to ensure that the product is available in the right
quantity where it is needed in order to achieve efficiency in terms of costs and satisfy the needs
of the customers. Service and manufacturing organizations have similar approaches to managing
inbound supply chains, which involve the movement of raw materials and other resources into
the organization for transformation into finished products (Thompson, 1993).

2.3. CAPACITY MANAGEMENT

Capacity issues form an essential part of operations strategy. Slack et al. define capacity as the
highest level of value added activity that can be attained under typical operating conditions with
regard to time (1998). Operations managers in service organizations control capacity through
manipulation of capacity and manipulation of demand (Wright and Race, 2004). Service
organizations consider under-utilization of their capacity to be more profitable than the loss of
their customers to competitors and will take an approach that maximizes capacity. Time is useful
in predicting demand for operations managers of service organizations since services are offered
in the context of time. In creating demand projections, operations managers in service
institutions consider the arrival times of customers and their quantity, the length of time required
to serve each customer, and the scheduling of resources, which should be in concert with the
projected numbers of customers accessing the service at specific time periods (Wright and Race,
2004).

2.4. PERFORMANCE MEASUREMENT

Performance measurements involve the assessment of feedback coming from sources from both
inside and outside the organization. Performance measurements are done with a view to improve
the goods or services provided by the organization (Hollins and Shinkins, 2006). Operations
management involves performance measurement in terms of resource utilization, profitability,
market performance and employee performance (Wright and Race, 2004). Methods of measuring
customer service include score cards, statistical process control and benchmarking. Service
organizations structure their performance measurements qualitatively in terms of the degree of
customer service delivered by their employees.

3. HOW SERVICE INDUSTRIES CAN BENEFIT FROM MANUFACTURING

APPROACHES AND SYSTEMS

3.1. AUTOMATION

Methods used in the manufacturing industry’s production process include the adoption of new
technologies for the automation of tasks. Automation can be used to benefit the services industry
by automating routine activities in the service delivery process. The benefits that may be gained
from such automation include a reduction in the workforce and subsequently, operating costs.
Reduction in the workforce will occur under this scheme.

3.2. MASS PRODUCTION

A service organization might be required to produce physical goods. An example of such an

organization may be a restaurant, which can be seen as a service provider that deals in the
provision of tangible goods in the form of food to its customers. This type of organization may
therefore utilize manufacturing techniques in the production of food to ensure efficient food
production in terms of time and quality, and thus provide quality service to their customers. To
achieve cost efficiency and quality in their production, the organization needs to incorporate
aspects that are similar to the decisions made in manufacturing organizations.
5. REFERENCES

De Menezes, L. M. (2012) Job satisfaction and quality management: an empirical analysis,

International Journal of Operations & Production Management, 32 (3), pp.308

Hollins, B, and Shinkins, S. (2006) Managing Service Operations: Design and

Implementation. London: Sage

Mahadevan, B. (2010).Operations Management: Theory and Practice.New Delhi: Pearson

Education

Mc Afee, P.R. and Te Velde, V. (2012). Dynamic pricing in the Airline Industry.Pasadena:
California Institute of Technology Press.

Slack, N., Johnston R., Chambers, S., Harland, C., and Harrison, A. (1998). Cases in Operations
Management (Third edition), FT: Prentice Hall

Thompson, John L. (1993).Strategic management: awareness and change (2nd edition),London:

Chapman and Hall

Wild, Ray. (2002). Essentials of Operations Management (5th edition), Andover:

Cengage Learning, EMEA

Wright, J. Nevan, and Race, Peter. (2004). The Management of Service Operations (2ndEdition),
Andover: Cengage Learning EMEA