Competing Through Quality - Essay Example

Operations Analysis and Effectiveness Name Course Institution Date Operations Analysis and Effectiveness Business entities are created mainly for profit generation. This is regardless of whether that business entity is dealing with services or goods. An organization will work towards optimizing production through achieving high levels of efficiency and effectiveness. From a far, the resulting product does not seem to have huge influence on the level and nature of inputs. What is of great significance is the fact that businesses are focused on satisfying the needs of customers (Edgett&Parkinson1993, p. 25). For that reason, businesses invest a lot of finances in market research and development. This is aimed at ensuring that the business understands the needs of the consumers well and as fast as possible. This is very important. It is based on the needs of the consumers that businesses invent goods and services to meet those needs. Therefore, the underlying factor is the issue of satisfying the needs of customers. This is because regardless of the nature of the market, the issue of consumer rationality does not change. Consumers are considered rational because their desire is to satisfy their needs at lowest price ever. That is to imply that consumers have a desire to maximize utility at the lowest price possible (Brown2000, p. 10). Therefore, while differences may exist between the manner in which manufacturing goods and services are operated, they all aim at achieving the same objectives. Having laid the foundation in the above paragraph, it is important to analyze the factors of operations management that distinguishes goods from services. One of the issues in operations management is the storage. The degree or capacity of a product to be stored provides a clear separation that exists between the goods and services. The bundle of services does not require considerations that relate to inventory management (Kellogg&Nie 1995, p. 330). For an entity that deals with bundled services, there is no need of factoring the cost of storing the product as it is for manufacturing goods. Inventory management has been a critical issue for the businesses that deal with manufacturing of goods. In most cases, it has been found that inventory management is very costly because of the risk element that is attached to it (Chase, Jacobs& Aquilano, N 2006, p. 107). Such risks include fire, theft, expiry, physical damage, obsolescence, etc. These risks are in addition of the fact that most go-downs are located near market places making it more expensive. Therefore, an entity that deals with manufacturing of goods has more considerations in terms of the storage for the finished products. The operations management issues surrounding the manufacturing of goods seem to be more comprehensive and demanding as well. There is also the issue of interaction between the sellers of products and the consumers. When the seller is delivering the product to the consumer, these two are likely to interact on a certain platform. Nevertheless, the degree or rather the intensity of interaction differs greatly. For those offering bundles of benefit, the intensity of interaction is surely high compared to those offering goods. The service provider is in a position to interact with the consumer and this has greater impact on the business (Gronroos1982, p. 36). Take an example of a barber. The barber, who is the service-provider, cannot supply the service without interacting with the consumer. At the same time, the customer cannot receive the service through any other medium except he or she is able to interact with the service-provider. The interaction may create or destroy the goodwill of the business. In such cases, the service-provider will be concerned with more than just providing the main service. He/she will have to consider issues like courtesy, communication, music, facilities, etc. These items have a cost element and this becomes an operations management concern. They have to understand how to minimize these costs while at the same time attracting the optimal number of customers (Berry& Parasuraman1991, p. 89). On the other hand, the goods do not have high level of interaction between the seller and the buyer. Since they do not have a high point of interaction, the costs are generally minimized. This is because for those dealing with goods, it is easier to sell through outlets and this reduces the point of interaction. At the same time, the consumer may also choose to buy the product through another person. This shows that the good may be transferred from the seller to the buyer without them interacting at all (Corrêa, Ellram Scavarda& Cooper2007, p. 27). From an operations management perspective, there less concerns in terms of costs involved. It is easier to attain efficiency in supplying goods to the consumer with less cost. In addition, another difference is in relation to the simultaneousness between production and consumption. The element of storage in the production of manufactured good implies that the there is a difference between the time when a product is manufactured and when it is finally consumed. There are far reaching implications for the difference between the production and consumption of the product. For manufactured goods, the consumption is not instantaneous. On the other hand, services are consumed instantly. The fact that the manufacturing good is stored implies that the business must plan for the storage (Morris&Johnston 1987, p. 20). For the bundled services, the main concern of the business is the quality management strategies. The organization is concerned about quality services to the consumers. This is very critical to the business that deals with bundled services. Therefore, the entire process requires control measures in order to ensure that the required quality is attained. As a result, the management must take the required measures in terms of the costs required to sustain that process. The operations management has a concern in the location of production plants as well as warehouses. There are different preferences for the entities dealing with services as well those of manufacturing goods. The operations management is concerned with the transportation costs of either finished products or raw materials. The raw materials ought to be transported from the warehouses to the production plants. At the same time, the finished products ought to be transported from the production to the finished goods warehouse (Roth&Menor 2003, p. 155). As a result, the cost element of transporting the goods is very important to the operations management. Therefore, most operations managers prefer locating the manufacturing plants close to the warehouses in order to minimize the cost of transportation. This is not the case for the entities offering services. This is because it does not need raw materials. As a result, the service offering entities must be located closer to consumers (Karmarkar1996, p. 131). This is very paramount to the entities offering services. From that comparison, it is clear that the manufacturing entity will have to spend more resources on the transportation costs between the manufacturing plant and the warehouses. Another consideration that must be made by the operations management is the issue of quality. The standards that can be used to assess the quality of the product definitely differ between the goods and services. When an organization is dealing with manufactured goods, it is easier to put in place measures that can accurately measure the quality of the product (Johnston1999, p. 112). The physical evidence can be used to provide information regarding the quality of the output in the company. This is not the case for the entities dealing with services. The operations management has unique expectation when it comes to offering services. This is because the issue of quality of services mainly leans on the consumers. They have a say on whether the quality of the services they are receiving is good. Since they are in the nature of bundled services, it is not easy for the supplier to tell. The perceptions and feedbacks communicated by the consumer will tell on whether the quality is good (Malhotra&Sharma 2002, p. 212). Therefore, market research has to be carried out in order to ascertain the quality of the services being offered. This is the uniqueness that accompanies the offering of bundled benefits. The organization needs to be smart in undertaking research findings to unveil the perception of consumers over the services. In spite of the above differences between the manufacturing goods and bundles of benefit, there are many ways in which the above entities are similar in terms of operations management. The businesses have the same focus of achieving efficiency in the production process. Efficiency is seen as a tool that can be used to facilitate production process. When systems are running efficiently, the profitability of the business entity can be guaranteed. Such measures do not vary depending with the nature of the product being produced (Edgett&Parkinson1993, p. 25). Therefore, in decision making, there is little or no difference at all. The operations management principles applicable to the case of manufacturing goods are not any different from those offering services. Therefore, while the specific issues relating to production of goods may be somehow different from offering bundled benefits, it still holds that the general production features are similar. This implies that it does not trouble the operations management when setting the required operational standards (Edgett&Parkinson1993, p. 33). The only underlying consideration is to ensure that production of quality goods and services is guaranteed. This will make it easier to market the product to consumers whether it is a service or a product. In the production process in any company, the product is as a result of two factors. These are the people and technology. These are the main resources that determine the quality of output whether they are services or products. The operations management ought to ensure that the organization has the best human resource arm to stir up creativity and innovation. This is achieved through hiring the best skilled labor force to the organization (Brown2000, p. 11). The organization must put into place the mechanisms that will make it possible to attract the best talents in the market. This is based on the understanding of the need of human capital in the organization. Human capital is responsible not only for innovating technology, but also handling technology so as to realize maximum output. The high level of efficiency is achieved through proper technology as well as its operations. Similarly, the organization must ensure that it adopts up-to-date technology to support its production function. Technology creates an upper hand over other competitors in the market. This is emerges as another crucial component in the manufacturing of goods or offering of services. The similarity indicates that there are no different methodologies that can be used in terms of operations management. At the same time, the management of both manufacturing of goods and offering of services has the interest of consumers at hand. The applicability of the law of demand and supply is not different for the two different entities. Demand and supply definitely determine the quantity of production (Edgett&Parkinson1993, p. 24). This does not seem to vary between the firms producing goods and those offering bundled benefits. The organization ought to ensure that for optimization of production, there is need to appropriately forecast the demand for the various products. While the time variation could be an issue when dealing with the issue of forecasting for demand for services and goods, the fact remains that forecasting is a very important issue to the operations management. This is because the operations managers must be certain of demand before deciding on the volume and nature of production (Kellogg &Nie 1995, p. 328). This is to avoid unnecessary costs that could be incurred in the production of goods or services. It is meant to ensure that the output is strategically positioned in order to get the required demand. This is critical for the offering of services as well as the manufacturing goods entities. In conclusion, the manufacturing of goods and offering of services provides unique challenges to the operations management. There several ways through which the operation of the entity that offers services is different to those manufacturing goods. It provides unique challenges to the operations management in the various entities. At the same time, there are similarities that exist for the entities dealing with manufacturing goods. At the same, the complexities for the two entities differ. The operations management must be in position to understand the differences and put the required measures in place to ensure the core objectives of the organization are achieved. References Berry, L. L. & Parasuraman, A 1991,Marketing Services: Competing Through Quality, New York,The Free press, pp. 87-91 Boudreau, J., Hopp, W, McClain, J.O & Thomas, L.J 2003, “On the interface between operations and human resources management,” Manufacturing & Service Operations Management, 5 (3), 179-202. 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L. & Nie, W 1995, “A framework for strategic service management,” Journal of Operations Management, 13 (4), 323-337. Malhotra, M. K. &Sharma, S 2002, “Spanning the continuum between marketing and operations,” Journal of Operations Management, 20 (3), 209-219. Morris, B. &Johnston, R 1987, “Dealing with inherent variability: The difference between manufacturing and service?” International Journal of Operations & Production Management, 7 (4), 13-22. Roth, A. V. &Menor, L 2003, “Insights into service operations management: A research agenda,” Production and Operations Management, 12 (2), 145-164. Read More