The Different Operations Strategy Planning Process for Service Operations

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.