The Different Operations Strategy Planning Process for Service Operations

Abstract

The manager who moves from manufacturing to services or the professor who wishes to research and teach service operations must recognise the key differences for developing an appropriate operations management strategy in a service business. For this process to be successful, the operations manager must participate assertively in the strategy debate. In manufacturing it is important that the functional strategy supports the corporate strategy in the marketplace and is co‐ordinated with other functional strategies. There is sufficient buffering between the manufacturing system and the customer that functional strategies can be developed within corporate strategies and then be co‐ordinated. In services, however, there are many issues where co‐ordination is not an adequate response. Virtually all strategic issues involving customer contact and front‐office operations must be the result of joint decision making involving marketing, operations, finance, and human resources. What little buffering there is occurs between the front office and the back room. This interface then becomes the locus for interfunctional co‐ordination on strategic issues. Consequently, planning for the front‐office operation differs in many ways from the manufacturing strategy development, while the back‐room strategy differs little from the manufacturing strategy model. This article outlines and contrasts the processes for both manufacturing and services, paralleling the models of Wheelwright and Hayes and Hill. The observed process differences have major implications for both teaching and research in service operations. The new and interesting issues are predominantly interfunctional and, given the intellectual backgrounds of the various functional areas, interdisciplinary.

Strategy, structure, and performance of U.S. manufacturing and service MNCs: A comparative analysis

“…Davidson and Haspeslagh's (1982) study also found the matrix structure doing a better job in new product introduction and sales growth than the multidivisional structure for international operations. Theoretical arguments in favor of 'matrix structures at high levels of product and market diversity have been forwarded by Davis and Lawrence (1977), Miles and Snow (1978), and Galbraith and Kazanjian (1986).…”

“…Therefore, it is probably at this business and operational level of service MNCs that the need for strategy-structure fit is more crucial. For backroom operations and subsidiary head office relationships, the information need may be similar to manufacturing MNCs because this part of the system is sufficiently buffered from the customer (McLaughlin, Pannesi and Kathuria, 1990). As a result, the strategy-structure fit at the corporate level may not be significantly different than the manufacturing ones.…”

The operations management role in hospital strategic planning

“…Most of the operations oriented articles focus narrowly on issues of hospital and health care operations such as cost containment, capacity planning or personnel scheduling. We argue, however, that operations encompass a much broader range of decisions than those currently found in the literature, and are a significant factor in health care strategic planning and management.Research on operations strategy in the service sector is relatively new (McLaughlin et al, 1991;Roth and van der Velde, 1991), and it has yet to greatly influence hospital strategic planning. In one notable exception, Roth (1993) discussed her re-0272-6963/96/$15.00…”

“…Research on operations strategy in the service sector is relatively new (McLaughlin et al, 1991;Roth and van der Velde, 1991), and it has yet to greatly influence hospital strategic planning. In one notable exception, Roth (1993) discussed her re-0272-6963/96/$15.00…”

Process design principles in service firms: Universal or context dependent? A literature review and new research directions

“…High-contact processes deal with customer-induced variability, while low-contact processes, the technical core, are focused on possible economies of scale and maximising process efficiency. The view that processes devoid of customer contact can be made as efficient as assembly lines in manufacturing operations is widely supported by the existing OM literature (Levitt, 1972;McLaughlin et al, 1991;Silvestro et al, 1992;Collier and Meyer, 1998;Verma and Young, 2000).…”