Materials and Machine

Management
Origin of the Discipline
Production vs Operations
Management
 Service – Manufacturing
Continuum
Pure Product Pure Service

Ayurvedic Healing Treatment

Legal/Tax Consulting
Cyber Café – Telephone Booths
Emergency Maintenance Services
Facilities Maintenance
High quality restaurant meal
Fast food in a eat out joint
Customised durable goods
Fast moving commodities
Vending Machines
Adopted from Hill, T. (2005), Operations Management (Palgrave Macmillan), 2nd Edition, pp 14.
 Service Operations
Salient Features
• Tangibility: Services are performances and
actions rather than objects, therefore having
poor tangibility
• Heterogeneity: High variability in the operation
system performance
• Simultaneous Production & Consumption:
Degree of customer contact is very high
• Perishability: Services cannot be inventoried as
in the case of manufactured products.
 Manufacturing & Service
Similarities & Differences
Manufacturing Organisations Service Organisations
Differences
Physical durable product Intangible, perishable product
Output can be inventoried Output can’t be inventoried
Low customer contact High customer contact
Long response time Short response time
Regional, national, Intl. markets Local markets
Large facilities Small facilities
Capital intensive Labour intensive
Quality easily measured Quality not easily measured
Similarities
Is concerned about quality, productivity & timely response to its customers
Must make choices about capacity, location, layout
Has suppliers to deal with
Has to plan its operations, schedules and resources
Balance capacity with demand by a careful choice of resources
Has to make an estimate of demand
 Characteristics of Systems to produce Products versus Systems to produce Services
Products Services
TangibleIntangible and perishable; consumed in the process of their
production
Can be produced to inventory for ‘off-the-shelf’ availabilityAvailability achieved by keeping the productive system open
for services
Minimal contact with ultimate consumerHigh contact with clients or customers
Complex and interrelated processingSimple processing
Demand on system variable on weekly, monthly andDemand commonly variable on hourly, daily and weekly
seasonal basisbasis
Markets served by production system are regional, national andMarkets served by production system are usually local
international
Large units that can take advantage of economies of scaleRelatively small units to serve local markets
Location of system is in relation to regional, national andLocation, dependent on location of local customers, clients and
international marketsusers
Long lead timesShort lead times
Capital intensiveLabour intensive
Quality determined easilyQuality determined with difficulty
Productivity more easily measuredProductivity not easily measurable
The proportion of expenses required for material handlingThe proportion of expenses required for material handling
is more.is relatively less.
Investments in assets such as facilities, equipment andInvestment in assets is less
inventory are higher
Operations depend heavily on maintenance and repairMaintenance and repair work does not have that much
worksignificance
 Characteristics of Systems to produce Products versus Systems to
produce Services
Products Services
Complex and interrelated processing Simple processing

Demand on system variable on Demand commonly variable on

weekly, monthly and seasonal basis hourly, daily and weekly basis
Productivity more easily measured Productivity not easily measurable
The proportion of expenses required The proportion of expenses required
for material handling is more. for material handling is relatively
less.
Operations depend heavily on Maintenance and repair work does
maintenance and repair work not have that much significance
 Operations
A key functional area in an
Organisation

Finance

Operations

Marketing HRM
 Operations Management
A systems Perspective

Forecasting

PROCESSING
Labour Process & Purchasing & Goods

OUTPUT
Product Inventory
INPUT

Design Control
Material

Capital Operations Material & Services

Planning & Capacity
Control Planning

Feedback
Quality Maintenance Process
Management Management Improvement