Global Operations Management

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The points below only describe the characteristics of services and manufactured products but only on the polar extremes of the continuum because while some service organizations are strikingly different from manufacturers, other service firms can provide both tangible products and intangible services…

Introduction


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. ...
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