May 2017 Q7 b.
Both service and manufacturing companies have goals of satisfying customer demand. However, service organisations differ from manufacturing organisations when considering capacity management. Maintaining sufficient capacity to meet demand is one of the great challenges of operations management.
Required:
Identify FOUR differences between service and manufacturing organisations in relation to capacity management. (8 marks)
View Solution
Service organsiations may differ from manufacturing organisations when considering capacity management in the following ways;
- Production and consumption occur at the same time. Inventories of services cannot be built up in quieter times, which makes the balancing of capacity and demand more difficult.
- Greater interaction. The customer plays an active role in the delivery process. Customer service quality is integral to the customer experience.
- Output is different each time. Each customer service interaction is different in some way e.g. different conversation, attitude, etc. Achieving a consistently high level of output is more challenging.
- Generally greater reliance on staff. Service delivery depends on the people delivering the service. The “mood’ of staff on the front line should not adversely impact upon the customer experience.
- Intangible output. This makes measuring the quality level of output more difficult as there is no physical product to inspect. Obtaining feedback of customer satisfaction is important. (Any 4)