As manufactured products are tangible, customer demand can be anticipated and products may often be produced, transported, and held win inventory until customers need them. This allows manufacturers flexibility in deciding when to produce products. Inventory can be used as a buffer between a stable production capacity and a highly variable customer demand. This means that when production levels are held constant, in periods of low demand inventory levels of finished goods will climb, and in periods of peak demand inventory levels of finished goods will fall. This is not to say that all manufacturers inventory finished goods, because some manufacturers choose to wait until products are demanded, then produce the products and ship them directly to customers. Services cannot ordinarily be produced in advance of customer demand and must be delivered to customers at the time of demand or later. This means that service operations must ordinarily plan production levels to approximately equal customer demand.
With manufactured products, customers do not ordinarily intrude into the manufacturing process. In fact, customers have little contact with the manufacturing system in most cases. In service operations, however, customers are routinely involved in the production process. In such service operations such as hospitals, restaurants, and banks, the customers enter the production process, are routed to the necessary service operations, and exit from the service system. In almost all services, operations personnel need training in people skills because the key element of quality control is the way in which operations personnel conduct their transactions with customers.
Service characteristics include:
Outputs cannot by inventoried
Extensive customer contact
Short Lead times
Services quality subjectively determined
Manufactured product characteristics include:
Products can be inventoried
Little customer contact
Long lead times
Product quality objectively determined
2. The six major components of operations strategy include:
1 Positioning the production system
2 Product/service plans
3 Outsourcing plans
4 Process and technology plans
5 Strategic allocation of resources
6 Facility plans
Operations strategy is a long-range game plan for the production of a company's products/services and provides a road map for what the production or operations function must do if business strategies are to be achieved. Operations strategies include decisions on such issues as what new products or services must be developed and when they must be introduced into production, what new facilities are required and when they are needed, what new technologies and processes must be developed and when they are needed, and what production schemes will be followed to produce products/services.
3. Competitive priorities can be thought of as the things that customers want from products/services; thus, they can be used s tools to capture market share. But, all of these competitive priorities cannot ordinarily be used for a single product. Once the competitive priorities are set for a product or service, operations strategy must then determine the required production system needed to provide the priorities for the product or service.