TOPIC I:

Managing Products and Service Operations

Outline
I. Introduction

II. What is operation management?

III. What are products and services?

IV. What is service operation?

V. Types of service operation processess

VI. Transformation Process

VII. Important Parts of Productive System

VIII. Assessment

IX. References

Learning Objectives
At the end of this chapter, the reader will be able to achieve the following;

1. Identify the steps and procedures to manage product and service operation.

2. Enumerate the types of goods and services.

I. Introduction
In high paced business climate, manufacturing and other industries focus their attention to
offer good services to customers. Manufacturing, service and agriculture are the major
economic activities in any nation. Statistical figure indicated that in India, manufacturing and
services together constitute nearly 75% of the GDP. Service industries effectively responded
to global competition by identifying that existence in the business field is dependent upon
reconstructing their operations to deliver better, faster and cheaper (Knod and Schonberger,
2001). Theorists like Johnston & Clark (2001) stated that product and service design involves
satisfying customer needs into product and service requirements, formulating quality goals
and cost target, documenting specifications, refining existing products and services, and
developing new ones as well. With these, product and service design can influence a large
proportion of an organization's functional area, especially the marketing and operations
area.

II. What is Operations Management (OM)?

Operations management focuses on carefully managing the processes to produce and

distribute products and services. A great deal of focus is on efficiency and effectiveness of
processes. Therefore, operations management often includes substantial measurement and
analysis of internal processes.

Ultimately, the nature of how operations management is carried out in an organization

depends very much on the nature of the products or services in the organization, for
example, agriculture, mining, construction or general services. Here are some additional
perspectives on the field.

“Operations management is chiefly concerned with planning, organizing and supervising in

the contexts of production, manufacturing or the provision of services.” — TOPMBA

“Operations management is an area of management concerned with designing and

controlling the process of production and redesigning business operations in the production
of goods or services.” — Wikipedia:

Operations and the Engineer Manager

The engineer manager is expected to produce some output at whatever managing level he
is. If he is assigned as the manufacturing engineer, his function is “to determine and define
the equipment, tools, and processes required to convert the design of the desired product
into reality in an efficient manner.”

The engineer in charge of operations in a construction firm is responsible for the actual
construction of whatever bridge or road his company has agreed to put up. He is required to
do it using the least-expensive and the easiest methods.

The engineering, as operations manager, must find ways to contribute to the production of
quality goods or services and the reduction of costs in his department.
The typical operations manager is one with several years of experience in the operations
division and possesses an academic background in engineering.

III. What Are Goods and Services?

Basically, a product is a tangible offering to a customer, whereas a service is an intangible

offering. The former is usually a one-time exchange for value. In contrast, a service usually
involves a longer period of time.

The value of a product is inherent in the tangible offering itself, for example, in the can of
paint or pair of pants. In contrast, the value of a service often comes from the eventual
benefit that the customer perceives from the time while using the service.

In addition, the customer often judges the value of a service based on the quality of the
relationship between the provider and the customer while using the service.

Wikipedia mentions that there are certain differences between manufactured goods and
services, including that services can have simultaneous (in the moment) production and
consumption, are perishable (there is no inventory management), ownership (ownership of
the service is not owned by the customer) and tangibility (it is difficult to evaluate). These
features make operations management more of a challenge in services.

Examples of Final Goods and services:

 Industrial chemicals like methylene chloride, borax powder, phosphoric acid, etc.,
which are produced by chemical manufacturing firms.
 Services like those for the construction of ports, high-rise buildings, roads, bridges,
etc., which are produced by constructions firms.
 Electrical products like transformers, circuit breakers, switch gear, power capacitors,
etc., which are produced by electrical manufacturing firms.

 Electronics products like oscilloscope, microwave test systems, transistors, cable

testers, etc., which are produced by electronics manufacturing firms.
 Mechanical devices like forklifts, trucks, loaders, atc., which are produced by
manufacturing firms.
 Engineering consultancy services like those for construction management and
supervision, project management services, etc., which are produced by engineering
consultancy firms.

IV. What is Service Operation?

Services operations management is related with delivering service to the customers of the
service. It involves understanding the service needs of the target customers, managing the
processes that deliver the services, ensuring objectives are met, while also paying attention
to the constant improvement of the services. As such operations management is a central
organizational function and one that is critical to organizational triumph. Service
organisations react to the wants of customers and leave certain experiences in the minds of
the customer through a service delivery system. It was found in research study that growth
of service industry is rapid at global level. Service organization is one when two or more
people are engaged in systematic efforts to provide services to customers. These
organizations exist to serve customers and satisfy their need (Wright, 2004).

Functions of service operation are to restore the normal service to the user as quickly as
possible. There is service desk that made up dedicated number of staff responsible for
dealing with variety of services events, often made via telephone call, web interface or
automatically reported infrastructure events. Wight (1999) identified that key attribute of
marketing strategy of service organization is the interaction between the customers and the
organization itself. Factors such as high consumer contact, consumer participation in the
process, labour intensiveness, intangibility of output, difficulty of measuring quality,
difficulty of measuring productivity, and a site dictated by consumers' location, are some of
the explanatory characteristics of service operations. Therefore, service quality must identify
what sensual benefits, physical items, and psychological benefits the customer is to receive
from the service (Watt, 2007).

Service operation is also responsible for on-going management of the technology that is
used to deliver and support services. Service operations are mainly associated with
efficiency, effectiveness, Quality and Cost. Dimensions of service quality are Reliability,
Responsiveness, Assurance, Empathy and Tangibles..

V. Types of Service Operation Processess.

There are five Service operation processes:

1. Request fulfilment- is the process to deal with service requests via the Service Desk,
using a process similar but separate to that of incident management.
2. Incident management- is highly noticeable to companies and it is easier to
demonstrate its value than in most areas of service operation. Incident management
is often one of the first processes to be implemented in service management
projects.
3. Problem management- this is vital for companies. Problem management comprises
of the activities required to identify the root cause of incidents and to determine the
resolution to the problems. It is also responsible for ensuring that the resolution is
implemented through the appropriate control procedures.
4. Access management- is the procedure to grant authorized users the right to use a
service, while preventing access to non-authorised users.
 5. 5. Event management- In this process, effective service operation is dependent on
knowing the status of the infrastructure and detecting any deviation from normal or
expected operation.

VI. Transformation Process

Refers to cnverts the inputs into final goods or services.

Types pf Transformation Process

1. Manufacturing Processess- Are those that refer to the making of products by hand
or with machinery.
2. Job Shop- Whose production is “based on sales orders for a variety of small lots. ”
3. Batch Flow- Is where lots of generally own designed products are manufactured. It is
further characterizes by the following:
There is flexibility to produce either low or high volumes.
Not all procedures are performed on all products.
The type of equipment used are mostly for general purpose
The process layout is used.
The operation is labor intensive, although there is less machine idleness.
The size of operation is generally medium-sized.
4. Worker-Paced Assembly Line- An assembly line refers to a production layout
arranged in a sequence to accommodate processing of large volumes of
standardized products of services.
Characteristics of Worker-Paced Assembly Line:
The products manufactured are mostly standardized.
There is a clear process pattern.
Specialized equipment is used.
The size of operation is variable.
The process is worker-paced.
The type of layout used us the line flow.
Labor is still a big cost item.

5. Machine-Paced Assembly Line- This type of production process produces mostly

standard products with machines playing a significant role. Among its other features
are as follows:
1. The process is of clear, rigid pattern.
2. Specialized type of equipment is used.
3. The line flow layout is used.
4. Capital equipment is a bigger cost item than labor
5. Operation is large.
6. The process is machine-paced

6. Continuous Flow - Characterized by “the rapid rate at which items move through the
system .” this processing method is very appropriate for producing highly
standardized products like calculators, typewriters, automobiles, televisions, cellular
phones, etc.
Its other characteristics are as follows:
 1. There is economy of scale in production, resulting to low per unit cost of
production.
2. The process is clear and very rigid.
3. Specialized equipments are used.
4. The line flow layout is used.
5. Operations are highly capital intensive.
6. The size of operations is very large.
7. Processing is fast.
7. Batch/ Continuous Flow Hybrid- This method of processing is a combination of the
batch and the continuous flow. Two distinct layout are used, one for batch and one
for continuous flow.
8. Service Processess- Are those that refer to the provision of services to persons by
hand or with machinery
9. Service Factory- Offers a limited mix of services which results to some economies of
scale in operations. Also affords the company to compete in terms of price and
speed of producing the service. Process Layout preferred by it's service factory is the
rigid pattern of line flow processing. Ex: McDonalds and Shakeys
10. Service Shop- Provides a diverse mix of services. The layouts used are those for jobs
or fixed position and are adaptable to various requirements. Ex: Servitek and
Megashell, which services provided by these shops are car engine tune-up, wheel
balancing, wheel alignment, change oil, etc.
11. Mass Service- Provides services to large number of people simultaneously. To be
able to serve many people, mass service companies offer limited mix of services. The
process layout used is typically fixed position where customers move through the
layout.
12. Professional Services- These are companies that provide specialized services to
other firms or individuals.
Examples of Firms:
 Engineering or management consulting services which help in improving he
plant layout or the efficiency of a company.
 Design services which supply designs for a physical plant, products, and
promotion materials.
 Advertising agencies which help promote a firm’s products.
 Accounting services.
 Legal services
 Data processing services.
 Health services.

VII. Important Parts Of Productive Systems

a. Product Design- the process of creating a set of product specifications

appropriate to the demands of the situation.
b. Production Planning and Scheduling- defined as “forecasting the future
sales of a given product, translating this forecast into the demand it
generates for various production facilities, and arranging for the
procurement of these facilities”. A very important activity because it helps
management to make decisions regarding capacity. Scheduling is the phase
 of production control involved in developing timetables that specify how
long each operation in the production process takes.
c. Purchasing and Materials Management- the approach that seeks efficiency
of operation through integration of all material acquisition, movement, and
storage activities in the firm.
d. Inventory Control-The process of establishing and maintaining appropriate
levels of reserve stocks of goods.
Ways of achieving proper inventory control
1. Determining reorder point and reorder quantity.
2. Determining economic order quantity.
3. The use of just-in-time (JIT) method of inventory control.
4. The use of the material requirement planning (MRP) method of
planning and controlling inventories.
e. Work-Flow Layout- is the process of determining the physical arrangement
of the production system. In the transformation process, the flow of work
may be done either haphazardly or orderly.

A good work-flow layout will have the following benefits:

1. Minimize investment in equipment.
2. Minimize overall production time.
3. Use existing space most effectively.
4. Provide for employee convenience, safety, and comfort.
5. Maintain flexibility of arrangement and operation.
6. Minimize material handling cost.
7. Minimize variation in types of material-handling equipment.
8. Facilitate the manufacturing (or service) process.
the organizational structure.
f. Quality Control- refers to the measurement of products or services against
standards set by the company.
VIII. Assessment
Direction: Incircle the letter of the correct answer.

I. Multiple Choice

1. Service is an economic activity whose output is

a. Intangible b. Tangible

c. Both a & b d. None of the above

2. Service level measures

a. Performance of a product b. Performance of HR

c. Performance of a service system d. None of the above

3. Business to business service includes

a. Internal services b. Public services

c. Consultancy services d. Retail

4. Which is an example of a Professional service

a. Schools b. Accountants

c. Airlines d. Hospitals

5. Below are types of transformation process. Except.

a. Job Shop b. Batch Flow

c. Service Factory d. Product/Goods

II. Enumeration

Give 5 examples of final goods and services and it's brief definition.

(10 points)

Enumerate 5 types of service operation management. (5 points)

IX. References
1. Managing Services-https://www.studocu.com/ph/document/nueva-vizcaya-state-
university/geodetic-engineering/im-engg-mgmt-4-managing-product-and-service-
operation/37971441
2. Introduction to Operations Management of Products and Services: Overview and
Resources-https://managementhelp.org/operationsmanagement/index.htm
3. Managing Production and Service Operation-
http://leionbased.blogspot.com/2014/11/managing-production-and-service.html?
m=1
4. Managing Production-https://www.slideshare.net/roseylicious06/managing-
productions-and-service-operation
5. Management of Service Operation-
https://www.civilserviceindia.com/subject/Management/notes/management-of-
service-operations.html
6. Service Operations Management: The Key to Superior
CustomerService-https://safetyculture.com/topics/service-operations-management/
7. Maximizing Success: Product and Service Management-
https://www.universalclass.com/articles/business/maximizing-success-product-and-
service-management.htm
8. What is Product Service Management- https://userguiding.com/blog/product-
service-management/
9. Managing Production and Service Operation-
https://www.scribd.com/document/175562070/Managing-Production-and-Service-
Operations
10. Service Operation Management Midterm Questions-
https://quizizz.com/admin/quiz/5f6f646a1752f4001b56e2aa/service-operations-
management-mid-term-20