- 8 Marks
Question
Both service and manufacturing companies have goals of satisfying customer demand. However, service organizations differ from manufacturing organizations 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 organizations in relation to capacity management. (8 marks)
Answer
- Production and Consumption Occur Simultaneously:
In service organizations, production and consumption happen at the same time. Inventories of services cannot be built up during quieter times, making it more challenging to balance capacity and demand. (2 marks) - Greater Customer Interaction:
The customer plays an active role in the delivery process in service organizations. The quality of customer service is integral to the customer experience, which affects capacity management. (2 marks) - Variability in Output:
Each customer service interaction is different, making the output variable each time. Achieving consistently high levels of output is more challenging compared to manufacturing organizations. (2 marks) - Reliance on Staff:
Service delivery heavily depends on the people delivering the service. The mood and attitude of staff on the front line can significantly impact the customer experience, which in turn affects capacity management. (2 marks)
- Topic: Operations strategy
- Series: MAY 2017
- Uploader: Dotse