Operations Management (Coursework Sample)

Operations Management
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Abstract
Operations management and organizational improvement is one of the basic and most important disciplines in the contemporary business world. The discipline cuts across pertinent issues that are important for the success of an organization in its attempt to gain competitive edge in different industries it operates. Some of the fundamental topics under this discipline include inventory management, quality management, and supply chain strategy (Walter & Esper, 2014). Organizations can be categorized into two major types; that is either service organizations or manufacturing organizations. The application of inventory management, quality management, and quality management practices is different depending on the nature of the industry an organization is operating in. Differentiating factors of the two industries such as tangibility of goods, location, and inventory result to the contrasts in inventory, quality, and supply chain management of the service and manufacturing organizations. This paper aims at examining different aspects by comparing them between the service and the manufacturing industry.
Operations Management
Introduction
Service organizations and manufacturing firms have differences in terms of their operations and how management of their various activities. However, there exist similarities between the two industries because the both aim at maximizing profits and some processes are similar. The distinguishing factors of a service and a manufacturing firm are such as tangibility of goods, flexibility of operation, location of business, and inventory management practices. These factors lead to the contrasts between manufacturing organizations and service industry in inventory, quality, and supply chain management approaches.
Inventory management
According to Anderson (2013), inventory management is the process of monitoring the flow of services and products in and out of a firm to ensure efficiency and effectiveness in production. Inventory management techniques are adopted according to the nature of an organization and the type of its services and products. This management practice differs in different firms depending on whether an organization is a service or manufacturing oriented firm. Companies apply inventory management practices in making purchase orders, generating invoices, providing receipts for received items, and managing inventory and stocks they acquire. The term inventory is always used by many scholars in reference to the manufacturing organizations only. Inventory is usually defined as the raw materials and goods that a company holds for them to sell at a future date and gain profits (Piasecki, 2009). However, the dynamics of business are changing and the service industry also practices inventory management. The service industry inventory is not directly defined as it is in the manufacturing firms. In service companies for instance, in the health sector, the patients waiting from the emergency are termed as the inventory. To manage such inventory, the health care facility is faced with a challenge of serving more people promptly for them overcome the outcomes of poor inventory management practice. This results to a debate as to whether it is appropriate to call humans inventory.
To understand the contrast and the comparisons of inventory management approaches between a service and a manufacturing organization, it is important to note the differences between the two types of organizations. In a service providing company, there is concurrent production and utilization. This means the producer gives the service while the consumer derives utility instantaneously. A good example is at the barber shop or the beautician where as the barber is shaving the client, he is giving the service while the customer is consuming. In the case of a manufacturing firm this different because consumption and production happen at different times and places (Water, 2011). Another important distinction between the two firms is the intangibility aspect. The service industry produces intangible products for the clients such as accommodation, transport, and massages. On the hand, a manufacturing business provides their clients with tangible products in most cases. Such products include clothes, vehicles, electronics, and food staffs among others. Manufacturing firms produce products that are tangible. Clients in the service industry access a wide variety of services while the manufacturing firms offer goods with insignificant variations because of the different place of production with the clients. There is high variability while delivering service in the service industry while in the manufacturing business service variability is minimal.
In the service business, inventory is characterized by the intangible goods. However, inventory for services industry may involve some tangible products as inventory. Inventory in most cases is assumed to be the finished products kept in the stores (Piasecki, 2009). Inventory is best described as anything from the raw materials used in the production process to the ultimate product. A service organization such as the hospitality sector may have inventory in form drinks and foods. This is similar to the manufacturing firms. The hotel’s bar manager will keep track of the drinks in inventory and the drinks consumed. By doing this, the manager will be practicing inventory management. Similarly, the chefs and the kitchen staffs have to observe keen inventory management by monitoring the food stores to ensure enough ingredients for the meals and also to ensure inventory is not kept in excess to avoid wastages due rotting. Accommodation is another famous service industry that observes its inventory. However, in accommodation inventory is different compared to the manufacturing firms. A good example of inventory for the accommodation sector is the guests’ rooms. Rooms not booked in the hotel are regarded as inventory. The difference with the manufacturing business is that the guests cannot carry the rooms along with them. The hotel administration considers a good inventory management when all the rooms are occupied with the right rates and the right capacity. In the case where a room for two is occupied by one, then that inventory is underutilized while in case the room has more than the capacity then the inventory is overstretched and this for expansion of the hotel. Inventory management in the service organizations is also perceived in terms of monetary instruments. This is applicable mostly where is not readily obvious. In such a scenario then the monetary instruments and the accounts become the inventory for the particular service industry. But an account is not established until the customer makes payment and that is when an account is made and the transaction effected instantaneously (Water, 2011). The banking industry and financial institutions also have aspects of inventory management in their service provision activities. An example is the money they lend to their clients can be termed as inventory. This is because such money is prevented from conducting other capital investment of the bank and instead transferred to the borrowers account. In medical services, human beings are at times considered as inventory. This analogy may receive a number of critics, but a hospital that keeps many patients waiting at the emergency rooms implies that they lack sufficient inventory of manpower. Manufacturing firms are characterized with inventory and buffers while service businesses inventory may take the form of virtual inventory such clients’ requests for service and customers waiting for a service to be provided like in the case of patients in a health care facility. Customers of a service organization have interaction with the service provider as the service must exist with the service provider simultaneously. This makes the issue of inventory management in a service industry be complex as opposed to the conventional inventory in manufacturing companies. Production firms have tangible stocks and the manufacturing process may not include the ultimate consumer instantly. This makes the aspect of inventory management more pronounced and well structured in a manufacturing company where the inventories are managed from their state as raw materials, to finished goods, and until they make the final sale to the consumer.
Quality Management
Scholars have invested in the field of quality management and several researches conducted in both service and manufacturing quality management. In Hoyle (2011), quality management is described as management activities employed to establish an inclusive structure of constant development of all the firm’s activities. To achieve sustainable quality management firms have to plan, take an action, evaluate the actions, and document the results of the process. Customers are becoming more rational and they are exposed to variety of substitute goods which makes the demand for quality products and services. Competition among businesses is also one of the major factors that have led to firms considering quality management as one of the most important strategies in case they want to achieve a competitive edge in the industry and meet their customers’ needs. Both service organizations and manufacturing companies’ objective is to provide goods and service that lead to customer satisfaction. Satisfying customers needs leads to customer loyalty, and attraction of new potential clients which makes the revenues of a business to increase. Customer satisfaction also helps organizations gain competitive advantage in service delivery or production of goods. It is for this reason that both the manufacturing and the service industry are adopting the new trend of en...