11.9: Operations Management for Service Providers

Operations management in service companies and manufacturing companies differs significantly due to the nature of their outputs, processes, and customer interaction.

Though the primary function of both manufacturers and service providers is to satisfy customer needs, there are several important differences between the two types of operations. Let’s focus on three of them:

• Intangibility. Manufacturers produce tangible products—things that can be touched or handled, such as automobiles and appliances. Service companies provide intangible products, such as banking, entertainment, or education.
• Customization. Most manufactured goods are standardized. Services, by contrast, are often customized to satisfy the specific needs of a customer. For example, when you go to the hairdresser, you ask for a haircut that looks good on you because of the shape of your face and the texture of your hair.
• Customer contact. You could spend your entire working life assembling cars in Detroit and never meet a customer who bought a car that you helped to make. But if you were a restaurant server, you’d interact with customers every day. In fact, their satisfaction with your product is determined in part by the service that you provide. Unlike manufactured goods, many services are bought and consumed at the same time.

As the Canadian economy has changed from a goods producer to a service provider over the last sixty years, the dominance of the manufacturing sector has declined substantially. Today, only about 10 percent of Canadian workers are employed in manufacturing, in contrast to 30 percent in 1950. Research highlights manufacturing’s steady decline relative to the growing service sector, with automation and international trade reshaping the industry.^[1] Most of us now hold jobs in the service sector, which accounts for approximately 80 percent of Canadian jobs.^[2]

In service firms, managers typically organize their responsibilities into three key areas: planning operations, managing operations, and controlling quality. These areas help ensure the firm operates effectively and efficiently while meeting customer expectations.

Media Attributions

“Men Having Their Haircut” by Thgusstavo Santana, used under the Pexels license.