Goods and service design
According to Henzer (2004), design of goods and design defines much of
the transformation process. The factors of cost, quality and human
resources must be made during the stage. Operation management of
product and services is also different because due to different characteristic
and tangible / intangible feature.
Quality. Customer
has a very high quality standard nowadays and operation management
decision in quality must be clear and strict for its members to understand
and comply. It must set a quality, standard and operating procedure to
meet customers’ high expectation.
III. Process and capacity design. Manufacturing of physical products may
have higher importance on process and capacity design than services
operation. Operation management (product) should decide what process it,
what type of technology and to what extent, human resources, quality and
maintenance that determines its basic cost structure. Services operation
decision on this area is much simpler and it can determine by customers
who directly involved in the process. For example, customer will ask tailor
to design specific fashion clothes. Capacity design issue is critical for
services because it will try to reduce waiting time and avoid lost of sales due
to insufficient capacity. For manufacturing capacity design is based on
firms financial capability, forecast for future and market demand.
IV. Location can be an area for operation management to decide and with
globalization of business, operation managers too must think global. For
physical goods, location selection can be determined by pools of qualified
human resources, technology, raw material, access to market and
government policy. For services as it is direct to customers, the location is
determined by market accessibility or near to customer as possible.
V. Layout design. Material flow, process selection technology used, capacity
needs, workers needs, inventory requirement, and capital will influence the
decision for layout design. For services such as hotels, beside capacity
needs layout also will enhance its attributes and features to the customers.
VI. Human Resources and Job Design
Employees is the integral part in the total system design. Operation
management must set a policy to set labor standards to ease transition of
skills, improvement of knowledge, skills and abilities (KSA), build a balance
work and life quality in an effective cost target. For services one extra area
operation management should touch, which is customers relationship that
they are dealing directly.
VII. Supply Chain Management
Decisions that have to take place of what to produce, what material to buy,
from where, how is the cost and how is the delivery from supplier to the
final end customers in on-time delivery and minimum cost possible. It is
more critical in production of goods than services.
VIII. Inventory
Decisions on how and where the inventory level to keep long term
customers satisfaction, suppliers, material availability for not to disrupt the
production, human resources needed for this purpose and important the
holding cost from financial perspective. Goods production are more
concern because manufacturer may kept raw material, in progress work
order and final goods while services is not critical as it is directly produce
and consume simultaneously.
IX. Scheduling
Efficient way of allocation, control and management of materials, capital
goods and human resources to efficiently produce the final goods from the
input available. Schedules are more formal in goods production with short,
medium and long term planning to accommodate customers demand. For
services the demand is more direct and volatile and often concern on
human resources and KSA availability to meet current customers needs.
X. Maintenance
Decision must be made regarding the desired level of reliability, stability
and systems must be established by management to maintain that
reliability and stability.
