Operations Management: Service, Manufacturing, Trends & Productivity

Types of Service Organizations

Business are primarily divided into service and manufacturing organizations (Linton). Types of service organizations include those operations that provide business or professional services; information, real estate or finance services; food, entertainment and hotel services; and public administrative services ("Industries at a Glance"). In the professional services category, an example of this type of company would be Apple One, a workforce management and staffing company. The company provides staffing services for businesses that do not have their own human resources recruitment departments, or that have an immediate need for staff to assist on a specific project. Another professional services company might be a consultancy agency, like Booz Allen Hamilton, that provides an organization with expert advice in an area in which they need support, such as in strategy, growth or technology. In the information, real estate or finance services category, Deloitte, the top accounting firm in the world provides financial, accounting and business strategy services to its businesses (“About”). The company offers accounting and auditing services; consulting services on operations and strategies; financial advice; risk management; information, data security and privacy offerings; and of course, their tax services. Cushman and Wakefield is a real estate company that has provided services to organizations for almost 100 years. The company offers consulting, leasing, facilities and account management, investment and real estate sales services to their clients ("Services"). 

In the food, entertainment and hotel services sector, Red Lobster represents an international food service company with over seven hundred locations worldwide (Rushe). The company serves hundreds of thousands of meals per day, specializing in seafood (Pedicini). Guest are served by waiters first, and then service assistants who deliver customers’ orders, fulfill specific requests, and clean tables. Bartenders work in the background to fulfill customers' alcoholic beverage needs. The Wynn Resorts Las Vegas combines food, entertainment and lodging services to the millions of people who pass through their doors each year (Beauregard). Everything that Wynn Resorts does is geared toward providing services to their customers and ensuring that they are having the best possible time. They offer spas, stores, luxury suites, shows, nightlife and gambling to name a few. Guests are treated to musical productions with a cast of singers, dancers, an orchestra, all with amazing scenery and costumes. The main goal of Wynn is to serve its customers at every turn. In the public administration services category, federal, state, and county administrative offices fulfill this sector. State health departments, like the Maryland Department of Health and Hygiene are public administrative services departments that provide and administer a myriad of health services to the public, including immunizations, drug abuse counseling, monitoring of infectious diseases, like Zika, and dental programs ("Maryland Medical Assistance Programs").

Types of Manufacturing Organizations

Like services companies there are a number of categories within the manufacturing sector. There are pure manufacturing companies, agricultural enterprises, construction operations and mining ventures ("Industries at a Glance"). Although most of us think of Apple as a retail seller of technology devices, the company manufactures each of its device offerings and the software contained within. Apple gathers the resources needed to manufacture its technology globally, including the United States, Europe, China and other countries in Asia ("Is Apple’s Supply Chain”). Once they have accumulated their resources, they ship them primarily to Foxconn, an assembly company in China (“How & Where”). Assembly efforts are beginning to ramp up in Brazil, as well. Archer Daniels Midland (ADM) is a manufacturer of agricultural products (Roy 2). ADM primarily focuses on grains and oilseeds which are processed worldwide in production facilities and incorporated into products purchased for the food and beverage industry. Bechtel Group and Halliburton are among some of the largest construction enterprises in the United States (Roy). The companies build new structures and maintain, repair and rehab the buildings once they have been erected. Alcoa is a familiar name in the mining sector (Clark). The company makes all things aluminum, most well-known for aluminum foil, and is responsible for the latest and greatest kitchen and industrial innovations associated with the mineral.

Trends in Operation Management

Operations management is in the height of some exciting new trends that are impacting the field (Shuhab-u-Tariq). An operations manager will never become bored with the ever-changing environment and issues that arise as a result. Some important topics in operation management include its: evolving global theatre, rapid product development, mass customization, just-in-time performance, empowered employees, supply chain partnering, ethics, and environmentally sensitive production.

The Global Marketplace: Our market place has become global in nature (IBT Staff). Technology has reduced the cost of worldwide communication and transportation costs are also in decline. Countries attempting economic growth are contributing to the globalization of the marketplace as they contribute novel products on the world stage. As a result, operations managers are adjusting their playbooks and are becoming more efficient, and are utilizing resources from new geographic areas and providing products to a growing set of willing buyers. 

Rapid Product Development. As a consequence of our fast paced world, operations managers are required to respond to customer demands by forging relationships that allow for rapid product development and the ability to pivot at a moment’s notice. 

Mass Customization. As a result of globalization, mass customization is simply a required outgrowth (Shuhab-u-Tariq). Buyers in China are not the same as buyers in Ireland, and consequently, the more a company can customize according to the needs and wants of their divergent customers, while attending vigilantly to the bottom-line, the more successful they will be. 

Just-in-Time Strategy. The just-in-time inventory strategy, which allows managers to respond to the whims and rapid changes in the marketplace, requires that costly inventories, finished goods and raw materials be reduced to their lowest, most feasible levels, without negatively impacting productivity (Shuhab-u-Tariq). It is a manufacturing process where a company’s resources are received just-in-time prior to use, so that inventory costs (storage costs, the costs associated with buying more raw materials than needed) are kept to a minimum. 

Employee Empowerment. The advance of technology and information has cause the need for operations managers to delegate more responsibility to the worker (Shuhab-u-Tariq). Employee empowerment gives workers a sense of ownership for the work that they perform. Everyone wins because the worker is more invested in ensuring that the area he or she is responsible for is operating effectively and efficiently. 

Supply Chain Partnering. As a result of globalization, rapid product development, mass customization and just-in-time strategies, supply chain partnering is becoming an important component of the operations management dynamic (Shuhab-u-Tariq). Companies are building strategic relationships with critical contributors within the supply chain to ensure that their needs are met. A company’s sources need to be in tune with the needs of the customer, just as much as the primary organization does. The goal of every top enterprise is to develop strong, long-term relationships with those in its supply chain.

Ethics. There are a number of ethical issues that companies are involved in and will likely become involved in, in the near future (Grackin). Ethics is involved with doing the right thing because it is simply the right thing to do. Many companies find themselves involved in ethical issues that they did not necessarily anticipate. For example, Apple, Inc. became involved in the conflict minerals issue, where minerals that were coming out of the Congo in Africa, which were sometimes incorporated into the devices Apple and other technology companies made, were causing women and girls to be raped and beaten because armed groups were hijacking the minerals and using the money to buy guns to support their internal political struggles. Apple and other companies found ways to identify where the minerals were coming from and not buy minerals, if they were coming from places that put the local community in harms way. Ethical issues arise in many areas, such as product safety, labor relations, general ethical behavior, supporting community affairs, and occupational health and safety.

Environmentally Sensitive Production. Environmental issues arise in many operational management areas also, such as product quality, optimizing fuel consumption, proper disposal of waste, environmental pollution, and eco friendly devices and technology (Shuhab-u-Tariq). Operation managers must begin to take note of where their organization fits within the environmental continuum. 

Productivity

Jay Heizer, in his book Operations Management, 11th Edition, defines productivity as “the ratio of outputs (goods and services) divided by the inputs (resources, such as labor and capital)” (Heizer and Render). Perhaps not the clearest of definitions, but in effect, productivity is the increase of efficiency. It comprises using the least amount of resources while ensuring a minimum amount of waste. It is the operations manager’s job to make certain that the transformation of inputs creates valuable outputs that are achieved in the most efficient way. Apple ensures the company’s productivity by implementing the 10 Decisions of Operations Management (Heizer and Render). In one of its 10 Decisions: location strategy, Apple limits the number of authorized sellers and insists that those sellers are located in settings where pedestrian traffic and product exposure is highest (Rowland). The company has only about 450 retail locations around the world, yet, Apple is one of the most profitable companies globally. The strategy of controlling the quantity of sellers, residing exclusively in high access and high visibility urbanized areas, and limiting the amount of visual stimuli within each store, ie., all the company wants you to notice are their devices when you walk in the store, are operations management decisions which increase Apple’s efficiency. 

McDonald’s 10 Decisions: location strategy differs from that of Apple (Gregory). McDonald’s operation management strategy for location is to maximize the company’s exposure in as many ways as possible. Consequently, the company utilizes restaurants, McDonald’s kiosks, shared spaces within other high traffic enterprises, such as Walmart, McExpress which are limited seating restaurants inside malls, and McStops located at truck stops. Each of these McDonalds versions were created to be where the traffic is and be where hungry people are located, in every conceivable way possible. In fact, McDonalds has kosher express outlets in Jerusalem. McDonalds even views its website and apps as strategic venues for interacting with potential customers. McDonalds location strategy fulfills its productivity strategy by providing as many cost effective locations as possible so that it can serve as many customers as possible.

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