Operations Management is a discipline based on science. Operations management is a vitally important component of management all organizations and business which involves getting work done from people or machinery. Operations management involves planning, organizing, enforcement and control of either industrial or service processes. The processes of decision-making, planning, control and monitoring are all vital elements of operations management. Evolution of operations management has occurred from the development of business management from an object-oriented science (Hope and Mühlemann, 2007). Soon management of social institutions, production economy and industrial management merged together to form a new discipline which came to be known as operations management. The major premise of operations management is to understand an organization as purposeful activity systems with interpersonal division of labor and optimum arrangement of physical resources (Kellogg and Nie, 2005). Essential elements of operations management include modules for materials management, job description and preparation, provisions for maintenance, staff training and even industrial engineering.
The core objective of operations management is to select optimum arrangement from the possibilities of a vast array of options. Operations management relates to the limits under which organizational processes needs to be carried out with the objective of minimizing the production cost, compensation for load peaks and troughs, increasing the flexibility, efficiency and effectiveness, decisions pertaining to in-sourcing or outsourcing, and most importantly product and cost mix optimization (Katos and Adams, 2005). Therefore, operations management is very vast and rapidly evolving discipline. Several theoretical areas of operations management are still under development. There are several theoretical key areas of the discipline of operations management contingent on the type of organization and its functions. Operations of a service organization are entirely different from those pertaining to manufacturing businesses. While the later gets majority of work done from human resources and deliver intangible services to the consumers, the later type of businesses are concerned with conversion of physical input resources into outputs.
The aim of the research is to contribute to the theory of operations management by exploring the key differences between theoretical principals of operations management in a service business and a manufacturing process. The aim is to enhance the applications of operations management theory is service oriented businesses and organizations by increasing focus of theory for this particular category of operations.
The questions for the research are:
Q1 – What are the most important tools of operations management in context of a service oriented business entity?
Q2 – What are the key components of operations management for manufacturing processes?
Q3 – How do the principles of operations management theory differs for a service organization in comparison to a manufacturing business
The hypotheses for the research are:
H0 – The principles of operations management for service business are entirely different for service and manufacturing businesses
H1 – The principles of operations management for service business are only marginally different for service and manufacturing businesses
H0 – It is difficult to implement operations management tools in a service organization is comparison to manufacturing-based businesses
H1 – It is NOT difficult to implement operations management tools in a service organization is comparison to manufacturing-based businesses
H0 – The degree of differences in operations management theory between two business forms is large enough to justify creation of a distinct disciplines altogether
H1 – The degree of differences in operations management theory between two business forms is NOT large enough to justify creation of a distinct disciplines altogether
Significant work has been done on the area of operations management. Considerable research has been carried out on various aspects of management of operations within the organization. Badra, Urien and Hajjeh (2007) mentions that the fundamental aspect of all forms of opertions management is planning. Planning is defined by Badra, Urien and Hajjeh (2007) as the anticipation of action steps required to achieve. Badra, Urien and Hajjeh (2007) state the result of all operations management efforts is dependent on the quality of the plan. Plan is also referred to as a time-ordered set of data. Planning in operations management takes into account the requirement of funds which are required to achieve the goal, the manner in which those funds can be used to achieve the goal and the controls which needs to be established. As a result of planning process both short-term and long-term action plans are created (Badra, Urien and Hajjeh, 2007). Hope and Mühlemann (2007) state operations management technique are highly contingent on the business model of the organization. Organization is defined by Hope and Mühlemann (2007) as a social structure that arises from the systematic and goal-oriented interaction between people, and distinguishes itself with the environment.
Wright and Mechling (2002) has done extensive work on operations management specific to service organizations. Wright and Mechling (2002) states the process description or documentation of procedures is the first step for operations management in a service oriented company. Sullivan (2002) also emphasies the need for documentation of all service steps to be performed regularly. According to Sullivan (2002), the process description is the standard benchmark for an organization to gauge performance of its staff. The essential components of a process description are to identify who is responsible to take care of a particular step and the second one provides a regular update (Rudberg and Olhager, 2003).
In contrast, work of Hope and Mühlemann (2007) has been highly focused on operations management of manufacturing organizaitons and production processes. Production management is applied and interdisciplinary teaching of production management (Butler, Leong and Everett, 2008). It is considered as a special original business studies to examine the planning, organization, coordination and managerial control of production, as well as the upstream and downstream business functions (Lewis and Slack, 2003). According to Hope and Mühlemann (2007) the goals of operations management in every form of business model and business entity is quality assurance or quality control. Quality control is a collective term for different approaches and measures to ensure the specified quality requirements. For operations management to be implemented properly, according to Hope and Mühlemann (2007) the agreed quality benchmarks must be regularly audited and examined. There are external auditors in the organization and perform previously agreed upon by manufacturers.
Quality control can be established trough external auditors through a process during which auditors evaluate whether the organization has reached the minimum requirements and can receive the certification. The certification does not represent the whole organization, but is limited to the agreed quality range. For adequate operations management for all types of operations – both service and manufacturing – the importance of dynamic quality assurance within an organization is paramount. Therefore, there are no external requirements; however the organization has to decide in which areas they want to implement process control. The dynamic quality control is mainly used in organizations that maintain the structure and process knowledge in rapidly growing areas (Hope and Mühlemann, 2007). Quality assurance serves primarily as an indispensable tool for creating efficiency and transparency in operations management of both service and manufacturing organizations.
Lewis and Slack (2003) view differs slightly and they are of the opinion that quality control is not restricted to manufacturing processes only, rather it is important for service operations management, as well. Lewis and Brown (2012) state quality assurance or quality control is a collective term for different approaches and measures to ensure the specified quality requirements for service oriented processes too. Quality assurance measures to ensure that for both product and a service, a specified level of quality achieved. Rudberg and Olhager (2003) also agree that for implementation of quality control for operations management, the product can be both material and a service rendered.
Nevertheless, there are certain areas of quality assurance in operations management which are specific to manufacturing processes. Jones and Lockwood (2004) mentions operations management of production control comprises of measurements and tests in the production process. These controls are based on order-lot tests on which statistical process controls are carried out (Jones and Lockwood, 2004). Test equipment are used for such processes controls. These test equipment are capable of objectively assessing conditions for monitoring results (Samadi, Morris and Rubin, 2009). The testing and measuring equipment monitoring is carried out in manufacturing process to ensure the availability of optimum condition (Sullivan, 2002). These quality management procedures in manufacturing processes set out the procedures that are necessary to achieve the required product quality (Heineke and Davis, 2007).
When similar operations management is carried out in service operations, it involves the definition of the test, the sample size, identification of errors with the communication channels and training of staff in charge of service delivery (Chase and Apt, 2007). This is because in service organizations humans need to be controlled as compared to machinery and equipment (Olhager and Johansson, 2012). Contents of operations management in service oriented operations include the optimization of communication structures, professional solution strategies that maintain or increase the satisfaction of customers or clients, as well as the motivation of the workforce (Metters and Pullman, 2007). For instance, when operations management is carried out in hospital industry, as mentioned by Mabert (2002), the organizaitons attach importance to vocational training, design of workrooms, etc.
Lashley and Taylor (2008) quotes the example of operations management in healthcare organizations which represents need for professionally qualified – but also economical – medical care with the aim of increasing the likelihood of desired health outcomes in individuals and in the general population. A central goal of quality management, according to Lashley and Taylor (2008), of the medical profession is a responsive and economical patient care at a high level. A major feature of the operations management in a service organization is the fact that the fact that the payer of the service charge has little bargaining power. For this reason, process control in such forms of service processes is highly important.
Work by Johnston (2005) has focused on the differences in service operations and manufacturing processes in terms of operations management theory. Johnston (2005) emphasizes that the manufacturing industry is characterized by discrete production units, that is related with manufacturing of parts and assembly processes. The process industry is characterized by continuous or discontinuous – for instance, batch-oriented – processes characterized output measured by weight or volume units of measure (Rudberg and Olhager, 2003). In the operations management of a manufacturing process, the individual plants are interconnected through logistics networks, which include the storage and transport capacities. The logistics provide the time-and volume oriented supply and transport of intermediates for downstream products and finished products to the customer (Johnston, 2005). Another key differentiating feature of manufacturing process is the element of logistics. Logistics deals with the organization, management, deployment and optimization of processes of goods, information, energy flows along the value chain and supply chain (Lewis and Brown, 2012). More concretely, logistics is defined as integrated planning, organizing, controlling, managing and controlling all materials and goods flow with the associated information flows, starting in sales planning, marketing, development and production, through the company value chain (Rudberg and Olhager, 2003).
The objectives of the logistics are the provision of a high performance, quality and cost reduction. These conflicts arise. For example, a high inventory level is reduced while the shortage costs and improves delivery performance, but increase by the warehousing costs automatically. The logistics cost accounting serves as a tool to determine the optimum. Logistical tasks include the transportation of goods (Chase and Apt, 2007). Another task is to transport including the internal transport of goods, material and information, for example, goods from the warehouse to the production site, employees with information and study materials, etc (Lewis and Slack, 2003).
Discussion of research methodology is highly important because it is necessary to choose the most appropriate method of research conducted to gain better results. This section discusses in detail the design of the research, the rationale for choosing particular research design and key factors to be kept in consideration during execution of the research.
Both primary and secondary methods of research are adopted for evaluation of research problems in this study. For primary research, qualitative research design is employed for this research keeping in perspective the nature of the problem. A holistic approach of using a combination of techniques of in-depth interviews, and secondary research analysis are adopted during the research.
Research design will comprise of:
with ten experts/consultants in the areas of operations management. Equal representation will be given to experts/consultants for service providers and manufacturing entities. Interviews will be carried out via unstructured questionnaire. Using a questionnaire is a good way to get response from participants in a sequential manner. Questionnaire will be designed to examine the key considerations for operations management for each type of business i.e. a manufacturing concern or a business pertaining to service provision. The goal of the interview is capture experiences and insight of these efficiency experts about the core difference and consideration for operations management of the two types of entities. Selecting sample from a diversified set of industries will increase chances of generalization of research findings.
secondary data is a huge research tool for the purpose of this study. Secondary research for this study is carried out with the help of peer-reviewed journals and books sources related to the topic of operations management of a manufacturing business or a service concern. Secondary sources do not include information from web sources, since they are not considered reliable source of information for an objective research (Collis and Hussey, 2009). The purpose of secondary research analysis is to learn from the contribution of the researches which have already been done on the topic. It is an important phase of the research for it saves wastage of resources by repeating what has already been done on the topic. Secondly, it helps to refine the research problem and to give direction to the research. Researches in the area of operations research related to manufacturing and service industry is relatively easy to access for they are widely available through different research portals (Welman and Kruger, 1999). Valuable learning will be made from research methodologies of other researchers.
Data analysis for the study will be carried out by evaluation of key findings of researches and analyzing them with respect to research responses gained during the course of the expert interviews. During expert interviews, efficiency consults will share their experiences and insights pertaining to the two forms of operations management methods. These responses will be converted into a written transcript for each and organized in the form of thematic analysis. These themes will be compared against the respective salient findings of peer reviewed researches. Hypothesis will be supported or rejected based on the findings of this analysis.
The research proposal pertained to the theory of operations management in organizations. It is theorized that processes of decision-making, planning, control and monitoring are all vital elements of operations management in all forms of operations. Yet considerable differences are found in operations management of organizations that relate to provisions of services and manufacturing. The research proposes secondary data analysis and expert interviews to evaluate key differences between operations management of the two forms of organizations. It is hypnotized that operations management of service business is much more challenging for managers in comparison to manufacturing organizations.
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