4. Evolution of an Economy
Extractive
Goods Producing
Trade & Commerce
Domestic Services
Refining & extending Human Capacities
Health
Education
Research
Arts
Transportation
Retailing
Finance &
Insurance
Real Estate
Government
Hospitality
Beauty Treatment
Laundry
Repair & Maintenance
Child – Day Care
Manufacturing
Processing
Agriculture
Mining
Fishing
Forestry
8. 8
What is a Product?
A Product is anything that can be offered to a market for
attention, acquisition, use, or consumption and that might
satisfy a want or need.
Includes:
Physical Objects
Services
Events
Persons
Places
Organizations
Ideas
Combinations of the above
12. 13
What is a Service?
A Service is a form of product that consist of activities,
benefits, or satisfactions offered for sale that are
essentially intangible and do not result in the ownership
of anything.
Examples include:
Banking
Hotels
Tax Preparation
Home Repair Services
13. Classification of Services
• Business Services
Consulting
Finance
Banking (Personal / B2B)
Insurance
• Trade Services
Retailing
Maintenance
Repairs
• Infrastructure Services
Communication
Transportation
Rail/Road Network
Airline Services
• Social / Personal
Restaurants
Hotels
Service Apartments
Day care for children
Hospitals, clinics
• Public Administration
Education
Government
– Water
– Electricity
14. 1-16
Products vs Services
Can be resold
Can be inventoried
Some aspects of
quality measurable
Selling is distinct
from production
Reselling unusual
Difficult to
inventory
Quality difficult to
measure
Selling is part of
service
Goods Service
15. 1-17
Products vs Services
Product is
transportable
Site of facility
important for cost
Often easy to
automate
Revenue generated
primarily from
tangible product
Provider, not product
is transportable
Site of facility
important for
customer contact
Often difficult to
automate
Revenue generated
primarily from
intangible service.
Goods Service
16. Manufacturing vs Service
Characteristic Manufacturing Service
Output
Customer contact
Uniformity of input
Labor content
Uniformity of output
Measurement of productivity
Opportunity to correct
Tangible
Low
High
Low
High
Easy
High
Intangible
High
Low
High
Low
Difficult
Low
quality problems
High
17. Quiz: Product vs Service Operations
Element Product Service
Output Tangible Intangible
Demand Per
Product
Uniform Variable
Ownership Possible Not Possible
Customer
Involvement
No or Low High
18. Parameter Service Goods
Customer Participation in production process Yes No
Simaltaneous production & Consumption Yes No
Can be stocked (Inventoried) No Yes
Full Impact of Demand Transferred to System Yes No
Selection of Location dectated by Customers Yes No
Economies of Scale Difficult Possible
Standardisation Difficult Possible
Performed in Controlled Environment ? Yes
Control on Decentralised Facilities ? Yes
Employee Attitude & Performance Important ?
See , Touch, Feel , Test Possible Yes No
What is the Product? Process Goods
Can the Output be Measured Easily? ? Yes
"In Service Business,you cannot make happy guests with unhappy employees."J.Willard Marriott.
Quiz: Product vs Service Operations
21. 1-23
Products-Service Continuum
0 25 50 75 100
25
50
75
100
Automobile
Computer
Installed Carpeting
Fast-food Meal
Restaurant Meal
Auto Repair
Hospital Care
Advertising Agency
Investment Management
Consulting Service
Counseling
Percent of Product that is a Good Percent of Product that is a Service
24. Example - Food Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned
vegetables
Metal Sheets Making cans
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
25. Manufacturing Operations - Classification
Capital Intensive versus Labour Intensive
Manufacturing
Capital Intensive Labor Intensive
Monitored by
Unskilled
Operators
Automatic Operated by
Skilled
Operators
Unskilled
Labor
Skilled
Labor
Professionals
Chemicals
, paper
production
Food
production,
saw mill
Autos,
power
plants
Toys,
leather
goods
Tailored
clothes,
eyeglasse
s
Sculptors
, artists
27. Example - Hospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy
patients
Hospital Surgery
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
28. Value-Added
The difference between the cost of inputs
and the price of outputs.
Inputs
Land
Labor
Capital
Transformation/
Conversion
process
Outputs
Goods
Services
Control
Feedback
Feedback
Feedback
Value added
29. 1-31
Operations Strategy
Operations function is the set of activities
that creates goods and services by
transforming inputs into outputs
Production is the creation of goods and
services
Operations Management is the management
of systems or processes that create goods
and/or provide services
30. Operations Strategy
Operations Strategy is the design; operation; improvement
of system that create & deliver the firm’s primary products
& services
Transformation
(Conversion)
Process
Energy
Materials
Labor
Capital
Information
Goods or
Services
Feedback information for control
of process inputs & process
technology
Operations as
a System
