Producing goods and services in different industries

Production and the operations process varies depending on the industry in which the goods are created.

Syllabus

goods and/or services in different industries

Why this matters for operations

There are clear distinctions between business that produce goods (like Ford) and businesses that produce services (like Qantas). Therefore, operations management issues in each type of business will be very different. If a business produces goods it will need a range of inputs to productions processes, factories, warehouses and distribution arrangements. Whereas a business who produces services may have little inputs other than human effort and may not have the same complexities of stock and inventory management.

There are 2 types of goods (in a general sense)

Standardised

Standardised goods are mass produced, often on an assembly line. They are uniform in quality and meet a predetermined level of quality. These are generally produced with production focus.

Mass produced goods - Something that is sold in a large number of stores without much focus on customisation.

Customised

Customised goods are varied according to the needs of customers. These goods are produced with a market focus rather than a production focus.

A customer good is used to reach a specific part of a market; customers who do not want a mass produced good.

There is also... Perishable and Non-Perishable

A business producing paper plates (which are non perishable and do not require refrigeration) has very different operational processes to a tomato grower who must grow, protect, pick, wash, store, package, refrigerate, and ship in way where wastage and loss is minimised.

Services in different industries

•As with goods, services can be both standardised and customised.

•The fast-food industry is an industry that aims to standardise the service. This differs from industries that are characterised by professionally educated and trained staff which customise their service.

•When a product is standardised then costs associated with the production of the product can be minimised. Service providers achieve cost-leadership by standardising how the service is performed.

•Self-service means encouraging the customers to take the initiative to help themselves. Some industries seek to encourage self-service.

•One the other hand, services can be customised to fulfil the needs of customers. Commonly seen in the form of pre and post sale services such as when shopping at luxury and high-end stores like Louis Vuitton.

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