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Operations management plays an important role in today’s global economy because it designs and controls the process of production in service industries. It aims to identify and satisfy the needs of customers within the framework of daily competition. The economics of major participants in the world market is characterized by a significant increase in the service sector that has replaced the growth of industrial production. This paper seeks to explore how operations management affects business operations in service industries.
The Concept of Operations Management
Operations management is a process of transformation of goods or services into the finished product and its delivery to the customer (Parker, 2012). It is part of management techniques, rather than one of the methods of decision-making. In service industries, it manifests itself as a system for the realization of administrative decisions regarding development, design, planning, monitoring, maintenance, and organization of services. Operations management is designed to achieve efficiency in operations, influencing the effectiveness of any organization in satisfying consumers’ needs and obtaining the greatest profit possible. Mudie and Pirrie (2012) suggest that great attention should be paid to recruiting, planning, scheduling, and other areas of the use of human resources because people who are skilled at management, information technology, as well as mathematics, biological and physical sciences can be efficient in decision-making. It is equally applicable to both medical and insurance offices, and for hotels or airline companies.
The Purpose of Operations Management in the Service Sector
Operations in service industries are similar to ones in the production sector. In both cases, there are certain costs, such as resources, and an operational process, whereby an organization receives a finished product or service. Although it has its own peculiarities, operations management in service industries is not much different from the one in commodities production. The model of managing operations in the first case begins from the selection of the market segment and leads to the concepts of “service,” “its delivery system”, and “enterprise policy” (Mudie & Pirrie, 2012). The latter is considered as an information tool with the help of which management builds a relationship with the environment, in particular, consumers and suppliers of resources and their own employees. Company policies affect its position in the market and effective functioning. Operations management in service industries is based on values formed by a particular culture and philosophy that are of primary importance for the control, delivery and development of services that benefit customers. Thus, values of the company are the most important factors affecting long-term effectiveness of its operations (Mudie & Pirrie, 2012).
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The goal of operations management in the area of service industries is to ensure the profitability of a company due to the efficient use of human resources and the rational organization of the service provision process (Johnston, n.d.). Since services cannot be separated from their consumption, organization’s managers have to solve specific tasks related to the participation of consumers in the provision process. Thus, they should train the personnel, create favorable conditions for the client, and build an effective monitoring system that allows them to separate results associated with the work of employees. Since many services are provided in the presence of consumers, the selected mode of the organization, place, and scheduling must be convenient for the majority of them (Johnston, n.d.).
Features of Operations Management in the Service Sector
Any company working in the service industry has to combine a unique set of the quality of service options, HR policy, and others. From the point of view of operations management, this field has a number of important characteristics. Firstly, the consumer is usually present in the production process, and managers are more rigidly involved in contact or interaction with him or her than in industrial production. Secondly, operations management in service industries requires a higher degree of the individualization of a product in accordance with customer requirements. Thirdly, operations in this sector are more time-consuming than the ones in industrial production. According to Parker (2012), these three features make the process of operations management in the service sector more severe in terms of efficiency.
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In the service sector, high economic efficiency is determined by a greater degree of interaction with the consumer and product differentiation than in industrial production. Research asserts that in service delivery activities, customers are part of this process (Johnston, n.d.). However, the quality of services is not possible to check in advance, because it takes place at the time of production and consumption. Furthermore, although any demand is a variable, the one for services is characterized by large, complex and rapid fluctuations. In addition, it is seasonal. All these variations are predictable, but the challenge is to meet the demand during peak hours or days, avoiding inefficient idle capacity at the rest of the time because stock cannot be created. Moreover, to attain effective operations management, organizations providing services are searching new ways to satisfy customers’ needs. For instance, transportation companies, such as airlines, must get their clients to the required destinations shortly. Furthermore, firms that deliver packages, such as UPS or FedEx, should pick up and do it on time (Johnston, n.d.).
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Operations management in service industries has its specific features. Remarkably, consumers are present in the production process that requires a higher degree of individualization and interaction. Therefore, operations management serves to achieve efficiency in any business activities to satisfy consumers’ needs and to obtain the highest profit possible.