What is Service Operations Management? Role, Challenges

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What is Service Operations Management?

Service Operations Management is the process of designing, operating, and managing the delivery of services to customers. It involves managing the systems, processes, and people involved in delivering services, with the goal of meeting or exceeding customer expectations while maximizing efficiency and effectiveness.

Concept of Service Operations Management

Before we understand the concept of service operations management, let us understand the meaning of two words viz. ‘operations’ and ‘operations management’. The word ‘operations’ refers to the process of gathering raw materials and converting them into a final product using processes, tools and techniques.

On the other hand, operations management refers to all those activities that are involved in the design and control ofgoods and services along with activities involved in the redesign of business operations.

Operations management in the service industry is called service operations management. A service operation is a transformation process that converts inputs (consumers) to desired outputs (satisfied consumers).

This transformation is achieved with the help of resources and processes such as material, labour, information, etc. Service operations management is a process of planning, executing, monitoring and controlling service operations.

Role of Operations in Services

An efficient service operation helps in achieving effective and timely service delivery. This ensures value for the customer and the service provider. The role of operations in services can be described in the following points:

  • Operations in a service organisation help in generating value for the customer and the service provider. For example, if the restaurant fails to provide quality food as demanded by the customer, the customer is unlikely to visit the restaurant again in the future.

    Similarly, assume that the number of the selection of candidates from a reputed coaching centre drops significantly. It can be predicted that the number ofadmissions to the coaching centre would reduce. This means that the restaurant and the coaching centre both fail at providing value to clients.

  • Service operations help toensurethat thereis co-ordination among people, processes and systems. In other words, it can be said that people, processes and systems are responsible for a smooth and successful running ofvarious operations in a service organisation.

    For example, in an organisation, it is the staff members who work according to organisational processes and systems; thereby ensuring uninterrupted services to the client.

  • Operations help in ensuring that services are delivered on or before the recommended time deadline. However, the service deliverable’s accuracy, precision and quality must not be compromised.

    For example, a restaurant decides that there must be one waiter who serves each table and he must not take more than five minutes in serving water to customers after they have arrived.

  • Operations ensure that the quality of service is maintained. For example, operations required to take back demonetised notes submitted in banks and issue new currency notes during the period of demonetisation done by the Government of India were very carefully designed to ensure smooth transactions and avoid any mishaps.

  • Operations ensure efficient and effective utilisation of resources that are used in service processes. For example, at a car service centre, operations are defined that the service of one car should not take more than 45 minutes when four mechanics are working on it simultaneously.

    Moreover, operations are also defined that no more than 200 ml of car wash shampoo should be used foreach car. All these operations would lead to the proper utilisation of assets.

Challenges Faced by Service Operations Managers

Managing service operations is different and a bit tougher than managing manufacturing operations. Some major challenges faced by service operations managers are as follows:

  • Managing a large number of customers having their specific requirements

  • Understanding the nature of service and how different customers may differ in their expectations from the service

  • Managing the way in which a service process is carried out because it affects the final outcome of service and the customer’s experience depends on it

  • Interacting and managing each individual customer during the process of service and afterwards in order to understand their experience and take a feedback of the same

  • Coordinating and managing various assets, processes and human resources involved in the service process

  • Understanding the impact of operational decisions on the success of the organisation

  • Understanding, implementing and influencing a service strategy

  • Managing conflicts and issues and making efficient utilisation of resources

  • Upgrading knowledge and skills of staff members along with service processes and systems in order to meet changes posed by globalisation

  • Managing operations in such a way as to increase or maintain profits

  • Acquiring new technology in terms of processes and resources and integrating them with the existing processes

Service Operations Vs. Manufacturing Operations

Service operations involve a direct contact of the customer and service processes whereas manufacturing operations do not require the presence of the customer.

Some key differences between service and manufacturing operations are described in Table:

Manufacturing OperationsService Operations
Output of manufacturing operations is tangible in nature.Output of service operations is intangible in nature.Asmentioned earlier, the services must be consumed at the point of sale itself.
Ambience or the conditions where products are manufactured does not affect the future prospects of the sale of products because customers do not consume products at the siteof manufacturing.Ambience or the conditions where the services are provided matter a lot. Nocustomer would like to consume a service at an unattractive and negative ambience. Can you imagine taking a head wash in a parlour with stinking or unclear water? Most people would not.
Manufacturing operations are usually highly automated. It means that manufacturing operations are capital intensive.Service operations are usually labour intensive and the success of business and different business centres depends majorly on the skills and performance of its employees.
Manufacturing operations are carried out on the basis of the expected demand. Manufacturing operations may also be carried out in the absence of any demand (when the business is set up).Service operations cannot be carried out in the absence of demand from customers.
Customisation and changes can be made in products only after it is necessary and approved by major stakeholders.

For example, assume that a cold drink manufacturer conducts a survey and finds that consumers find the amount ofsugar bit high and would engage in repeat purchase only if sugar content is lowered. This involves making changes to the cold drinks’ syrup formula which needs to be approved by the management team, R&D team and eventually the new formula needs to be trademarked.
Customisation and changes can be made in the service for each service being rendered without any delay.

For example, when you visit a beauty parlour, you can customise your services as per your wish. You may get a facial done after telling the practitioner about the way you want it. You may add or delete certain steps.
Value perceived by the customer depends on the performance of the product.Value perceived by the customer depends on the performance of the service process.
Manufacturing operations usually require maintaining optimum levels of inventory.Service processes usually do not require maintaining large amounts of inventory.
Differences Between Service and Manufacturing Operations
Article Source
  • Johnston, R., Clark, G., & Shulver, M. (2012). Service Operations Management (2nd ed.). Harlow, England: Pearson.

  • Parker, D. (2012). Service Operations Management (1st ed.). Cheltenham: Edward Elgar Publishing.

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