Operations management in the service sector
Chapter 1: Defining the scope
1.1 Operations management
The operations function is the systematically organised body of resources dedicated to the creation
and delivery of goods and services. The operations function cannot exist independently and
therefore has numerous relationships with other functions within the organisation. Both the
operations function and other function are known as management functions. Organisations are
usually designed so that these management functions have their own departments.
Successful service organisations make sure that both employees in ‘front-of-stage’ functions and
‘back-of-stage’ functions are driven by the delivery of the best possible service. It is becoming
increasingly difficult for a service organisation to differentiate themselves from the competition.
Services are becoming more similar and opportunities for customers to compare services are
growing. Customers are no longer limited by geographical boundaries. Knowing the customer’s
values and ensuring the service you offer matches the way the customer wants to be treated is the
biggest challenge for service providers in this day and age.
1.2 What is the service sector?
Services cannot be stored. Unsold services cannot be saved for another day and more service cannot
be created. The fact that the customers are present during the production process means you have
to take into account your customer’s wishes, capabilities and common sense. Service sector
employees are of the utmost importance, as services are consumed and produced simultaneously
and interaction takes place between the customer and the service provider. The success of the
operations function often relies upon the cooperation of the client. Because of all of this,
organisation must structure these processes in such a way that the customers can easily find their
way around them and know what is expected of them.
Even within the service sector the level of interaction between employees and customers differ.
1.3 What is included in the service sector?
Each of the industries named in this section are industries that are part of the service sector.
Leisure industry
The leisure industry exists out of theme parks, zoos, museums, theatres, concert halls, cinemas and
sporting facilities. Even campsites, bungalow parks and other accommodation are included in the
leisure industry.
Hospitality & related industries
The hospitality industry includes all businesses that focus on the provision of food, beverages and
accommodation to people that are away from home. These can include cafés, restaurants, hotels and
catering services.
Tourism industry
The tourism industry is a combination of leisure activities and travel. In order to get away from home,
the customer will need transportation. To stay alive, the customer will need accommodation and
,food in the form of hotels, apartments, hostels or campsites that either offer meals or will allow
customers to prepare their own.
Retail industry
The retail industry includes businesses that focus on selling goods directly to consumers. These
businesses have a very diverse range of goods to meet the consumer’s varying needs. These can
include shops of all shapes and sizes.
Artisan and technical service industry
Examples of these can be hairdressers, beauty salons, nail studios, gyms and funeral homes. Also
painters, plumbers, contractors and cleaners. Another examples are veterinarians, groomers,
catteries, dry cleaners and tailors. Lastly, you might also consider vehicle services such as garages and
repair shops.
All of the artisan and technical service organisations are small to medium-sized businesses and so the
service demands a combination of expertise and specific skillset.
Real estate industry
Some consumers enlist the help of real estate agents or of housing corporations.
Utilities industry
These are businesses focus on services that are ‘generally useful’, like distribution of mail, water and
gas.
Media industry
Media provides experiences and is supplied from a distance. During the provision of media, there is
no personal interaction between the service provider and the consumer. The production of media
does not occur simultaneously with the consumption.
Health care industry
This industry includes general practitioners, dentists and a lot of other workers. Also, nursing homes
and hospitals.
Financial services industry
This industry included financial services that are offered to customers, such as a bank or financial
advisers.
Business consultancy and other professional services industry
This industry includes consultancy and accounting firms such as market research agencies,
advertising agencies, recruitment agencies, temporary employment agencies, tax law practitioners,
lawyers and notaries.
Government service industry
The government is a very important service provider. Their main tasks are to fall into the safety and
public order category and include the police and justice departments, the defence department and
protection from natural disasters. They also ensure that public areas are maintained.
, Educational industry
The government provides an important part of the education system. In addition, private
organisation and associations also provide education.
Public transport industry
Public transport is run by the private market, but strictly controlled by the government. The goal is to
make sure customers an travel according to schedule and for an affordable price.
Freight transport and logistics industry
Airfreight is generally used for anything that needs to be delivered quickly and is easily carried as air
freight.
1.4 From strategy to operations: every link counts
All departments within an organisation work together to meet one core goal: servicing the customer
to the best of their ability. This collaboration becomes visible to the customer in the operations
phase. Optimal collaboration and a well-designed operations team are the key to success.
Management means planning, organising, leading and controlling people that work in an
organisation in order to reach the organisation’s goals. This also holds true for those involved with
other management function such as HR, finance and marketing.
Operations and strategy
The foundation of the strategic lies in having a clear goal that everyone agrees on and that each
member of staff can help obtain within their position. When formulating the goal, the organisation
should ask themselves: ‘why are we here?’. This statement is known as the mission statement.
If the organisation wants to achieve their mission statement, they must actively focus on the public –
their customers. What do the customers want? It is also important for all employees to agree with
the mission statement.
There is a very strong relationship between the operations and strategy of a business. The strategy
describes how a business plans to achieve its mission statement and the operations forms the
tangible translation of this to the customers. Strategy also gives direction to the choices made by
other departments. These management functions are designed to ensure the operations department
is able to function to the best of its ability.
Operations and marketing
The organisation cannot be the only one that thinks their business is a valuable contribution. The
customers must agree as well. If the two parties are in agreement, customers will make use of the
service.
Therefore, knowing the market is of great importance. Knowledge can be obtained by performing
research through formal market research or informal market research. The customer’s wishes must
the constantly monitored to ensured that the organisation is meeting them.
It is also important to influence the market trough publicity and promotion. The organisation must
also inform potential customers of their services.
Chapter 1: Defining the scope
1.1 Operations management
The operations function is the systematically organised body of resources dedicated to the creation
and delivery of goods and services. The operations function cannot exist independently and
therefore has numerous relationships with other functions within the organisation. Both the
operations function and other function are known as management functions. Organisations are
usually designed so that these management functions have their own departments.
Successful service organisations make sure that both employees in ‘front-of-stage’ functions and
‘back-of-stage’ functions are driven by the delivery of the best possible service. It is becoming
increasingly difficult for a service organisation to differentiate themselves from the competition.
Services are becoming more similar and opportunities for customers to compare services are
growing. Customers are no longer limited by geographical boundaries. Knowing the customer’s
values and ensuring the service you offer matches the way the customer wants to be treated is the
biggest challenge for service providers in this day and age.
1.2 What is the service sector?
Services cannot be stored. Unsold services cannot be saved for another day and more service cannot
be created. The fact that the customers are present during the production process means you have
to take into account your customer’s wishes, capabilities and common sense. Service sector
employees are of the utmost importance, as services are consumed and produced simultaneously
and interaction takes place between the customer and the service provider. The success of the
operations function often relies upon the cooperation of the client. Because of all of this,
organisation must structure these processes in such a way that the customers can easily find their
way around them and know what is expected of them.
Even within the service sector the level of interaction between employees and customers differ.
1.3 What is included in the service sector?
Each of the industries named in this section are industries that are part of the service sector.
Leisure industry
The leisure industry exists out of theme parks, zoos, museums, theatres, concert halls, cinemas and
sporting facilities. Even campsites, bungalow parks and other accommodation are included in the
leisure industry.
Hospitality & related industries
The hospitality industry includes all businesses that focus on the provision of food, beverages and
accommodation to people that are away from home. These can include cafés, restaurants, hotels and
catering services.
Tourism industry
The tourism industry is a combination of leisure activities and travel. In order to get away from home,
the customer will need transportation. To stay alive, the customer will need accommodation and
,food in the form of hotels, apartments, hostels or campsites that either offer meals or will allow
customers to prepare their own.
Retail industry
The retail industry includes businesses that focus on selling goods directly to consumers. These
businesses have a very diverse range of goods to meet the consumer’s varying needs. These can
include shops of all shapes and sizes.
Artisan and technical service industry
Examples of these can be hairdressers, beauty salons, nail studios, gyms and funeral homes. Also
painters, plumbers, contractors and cleaners. Another examples are veterinarians, groomers,
catteries, dry cleaners and tailors. Lastly, you might also consider vehicle services such as garages and
repair shops.
All of the artisan and technical service organisations are small to medium-sized businesses and so the
service demands a combination of expertise and specific skillset.
Real estate industry
Some consumers enlist the help of real estate agents or of housing corporations.
Utilities industry
These are businesses focus on services that are ‘generally useful’, like distribution of mail, water and
gas.
Media industry
Media provides experiences and is supplied from a distance. During the provision of media, there is
no personal interaction between the service provider and the consumer. The production of media
does not occur simultaneously with the consumption.
Health care industry
This industry includes general practitioners, dentists and a lot of other workers. Also, nursing homes
and hospitals.
Financial services industry
This industry included financial services that are offered to customers, such as a bank or financial
advisers.
Business consultancy and other professional services industry
This industry includes consultancy and accounting firms such as market research agencies,
advertising agencies, recruitment agencies, temporary employment agencies, tax law practitioners,
lawyers and notaries.
Government service industry
The government is a very important service provider. Their main tasks are to fall into the safety and
public order category and include the police and justice departments, the defence department and
protection from natural disasters. They also ensure that public areas are maintained.
, Educational industry
The government provides an important part of the education system. In addition, private
organisation and associations also provide education.
Public transport industry
Public transport is run by the private market, but strictly controlled by the government. The goal is to
make sure customers an travel according to schedule and for an affordable price.
Freight transport and logistics industry
Airfreight is generally used for anything that needs to be delivered quickly and is easily carried as air
freight.
1.4 From strategy to operations: every link counts
All departments within an organisation work together to meet one core goal: servicing the customer
to the best of their ability. This collaboration becomes visible to the customer in the operations
phase. Optimal collaboration and a well-designed operations team are the key to success.
Management means planning, organising, leading and controlling people that work in an
organisation in order to reach the organisation’s goals. This also holds true for those involved with
other management function such as HR, finance and marketing.
Operations and strategy
The foundation of the strategic lies in having a clear goal that everyone agrees on and that each
member of staff can help obtain within their position. When formulating the goal, the organisation
should ask themselves: ‘why are we here?’. This statement is known as the mission statement.
If the organisation wants to achieve their mission statement, they must actively focus on the public –
their customers. What do the customers want? It is also important for all employees to agree with
the mission statement.
There is a very strong relationship between the operations and strategy of a business. The strategy
describes how a business plans to achieve its mission statement and the operations forms the
tangible translation of this to the customers. Strategy also gives direction to the choices made by
other departments. These management functions are designed to ensure the operations department
is able to function to the best of its ability.
Operations and marketing
The organisation cannot be the only one that thinks their business is a valuable contribution. The
customers must agree as well. If the two parties are in agreement, customers will make use of the
service.
Therefore, knowing the market is of great importance. Knowledge can be obtained by performing
research through formal market research or informal market research. The customer’s wishes must
the constantly monitored to ensured that the organisation is meeting them.
It is also important to influence the market trough publicity and promotion. The organisation must
also inform potential customers of their services.
