MIT Sloan Management Review

Operations Management and Research, Service and Quality

 

Beefing Up Operations in Service Firms

By Richard B. Chase and Robert H. Hayes

October 15, 1991

MANY ARTICLES EXHORT SERVICE FIRM MANAGERS TO EMPOWER WORKERS AND FIRST-LINE SUPERVISORS, EXPLOIT TECHNOLOGY, focus on the customer, and, above all, provide outstanding service. This article proposes a framework to help you evaluate your company’s competitive standing in each of these areas. It discusses four types of companies on a continuum, from the company that is simply “available for service” to the firm that delivers world class service. The authors focus on operations, the function that controls the service encounter, and apply the manufacturing strategy paradigm to services as a means of implementing change.

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A national preoccupation with U.S. international industrial competitiveness, driven by our continuing enormous balance of payments deficit, has tended to focus media and political attention during the 1980s on manufacturing. A torrent of books and articles has inundated business managers, offering guidance on how to improve manufacturing performance. Terms like “world class manufacturing” and “dynamic manufacturing” sprinkle discussions in college classrooms, corporate boardrooms, and the halls of Congress. The concept of “manufacturing strategy,” considered somewhat esoteric only a few years ago, gets increasing attention from both top managers and academics.

There is, however, another battlefield of economic competitiveness where operations effectiveness is just as crucial to success as it is on the factory floor. This less visible battlefield is that huge, ill-structured arena called the “service sector,” which employs 76 percent of our workforce and accounts for 68 percent of our real GNP. It is also, unfortunately, a sector––comprising activities such as banking, engineering, transportation, communication, and myriad others––whose trade surplus went negative for the first time in mid-1989 and is now barely in the black.

We have no quarrel with the assertion that the United States needs a strong manufacturing base in order to maintain and improve its standard of living. But we have to get serious about service competitiveness as well. Just as our machine tool and semiconductor industries should have studied the successful... To read the complete article, login or sign-up using the form below.

 
 

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