Manufacturing Vs Service Operations

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Operations are activities that directly add value for the customer.

Manufacturing vs service operations

Competitive priorities
1. Price

2. Quality of design
Design quality of the product – how well it does the job
3. Conformance quality
Consistency of performance as intended
4. Customisation
How well it matches customers’ individual requirements
5. Delivery speed
Time customers need to wait
6. Delivery reliability
Consistency of achieving promised delivery time

Operations characteristics
Volume and variety
Low variety = standardised products
High volumes = capital investment = less flexibility

Customer contact
Separating some operations to the back office can be more efficient
Level of customer contact depends on a firm’s competitive strategy:
Cost leader - competes on price
Cheap convenience – competes on delivery speed
Dedicated service – competes on quality
Product focus vs process focus
Product focus: excelling at a particular product or service suitable for high volume and low variety (e.g. McDonald’s)

Process focus: excelling at a process that can be used for many products or services lower volume and more variety (e.g. restaurant with skilled chefs
Make-to-order or make-to-stock
Make-to-order - starts manufacturing when order is received
Make-to-stock - stock of finished goods
Intermediate position – keep stocks of components and assemble-to-order
Different types of layout
Layout concerns the grouping of operations and the routes products or customers follow

1. Process layout –

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