Differences between Products and Services: * Services don’t require moving parts but most products do * Services = People * Services are intangible where products are tangible * Services are more complex * Services are instant and cannot be stored or kept * Services are produced and consumed simultaneously – they are inseparable * Services must be managed differently than products * Services are more uncertain – not sure of the outcome until after the service is performed - You cannot test out a service before you buy * Services vary – they are not the same every time and different people, even thought they may work for the same company, will perform services in a different way
Performance Objectives – Trying to make company good at something
What can a company do to satisfy customers and contribute to competitiveness? * Do things right – Quality - There are two important points to remember when reading the section on quality as a performance objective. * The external affect of good quality within in operations is that the customers who ‘consume’ the operations products and services will have less (or nothing) to complain about. And if they have nothing to complain about they will (presumably) be happy with their products and services and are more likely to consume them again. This brings in more revenue for the company (or clients satisfaction in a not-for-profit organisation). * Inside the operation quality has a different affect. If conformance quality is high in all the operations processes and activities very few mistakes will be being made. This generally means that cost is saved, dependability increases and (although it is not mentioned explicitly in the chapter) speed of response increases. This is because, if an operation is continually correcting mistakes, it finds it difficult to respond quickly to customers requests.
* Do things fast – Process Speed - Speed is a shorthand way of saying ‘Speed of response’. It means the time between an external or internal customer requesting a product or service, and them getting it. Again, there are internal and external affects. * Externally speed is important because it helps to respond quickly to customers. Again, this is usually viewed positively by customers who will be more likely to return with more business. Sometimes also it is possible to charge higher prices when service is fast. The postal service in most countries and most transportation and delivery services charge more for faster delivery, for example. * The internal affects of speed have much to do with cost reduction. The chapter identifies two areas where speed reduces cost (reducing inventories and reducing risks). The examples used are from manufacturing but the same thing applies to service operations. Usually, faster throughput of information (or customers) will mean reduced costs. So, for example, processing passengers quickly through the terminal gate at an airport can reduce the turn round time of the aircraft, thereby increasing its utilisation. What is not stressed in the chapter is the affect the fast throughput can have on dependability. This is best thought of the other way round, ‘how is it possible to be on time when the speed of internal throughput within an operation is slow?’ When materials, or information, or customers ‘hangs around’ in a system for long periods (slow throughput speed) there is more chance of them getting lost or damaged with a knock-on effect on dependability.
* Do things on time as promised – Dependability - Dependability means ‘being on time’. In other words, customers receive their products or services on time. In practice, although this definition sounds simple, it can be difficult to measure. What exactly is on time? Is it when the customer needed delivery of the product or service? Is it when they expected delivery?