The differences between manufacturing and service organisations

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This essay will briefly describe the development of services thinking within the Operations Management paradigm. The discussion will subsequently identify differences between manufacturing and service organisations. The first part of the discussion will draw to a close with a brief mention of hybrid manufacturing/service organisations. The second part of the essay will outline the unique challenges involved in marketing and managing services, borrowing from the academic literature belonging to the field of service marketing. The key characteristics that derive the unique challenges in marketing and managing services will be described and suggestions that ameliorate these challenges will be brought into the discussion. The conversation will be brought to a close with a short review of the field of service marketing, reflecting upon the role of the key service characteristics. Johnston (2005) describes the evolution of services thinking through three stages encompassing a period including the 1980s and 1990s. Conventional wisdom began to embrace a distinct role for services within an Operations management paradigm in the 1980s (Johnston, 2005: 1278). Early academic efforts were restricted to the description of services juxtaposed with manufacturing in an attempt to confirm the importance of services and promote theory building (Johnston, 2005: 1280-1281). Having established the role of services within the field of Operations Management, academics focused upon theory development and empirical testing (Johnston, 2005: 1281-1285). Debate surrounding the emerging role of services within the field of Operations management will have inevitably produced contradictions. Perceptions of the differences between manufacturing and service organisations varied from no discernible differences (Lawrence, 1989) to rigid dichotomies based upon types of organisational behaviour and characteristic outputs (McDonald, 1994: 6; Troy and Schein, 1995). McDonald (1994) describes the theoretical differences between manufacturing and service organisations from internal organisational and output perspectives. The distinction between the two types of organisation based upon differences in internal organisational arrangements focuses upon the transformation process, employee skills/knowledge and the status of results (see Table (1) below). Table (1): Internal Contrasts between Manufacturing and Service

Manufacturing Service
  • Production is capital- or equipment-oriented
  • Technical skills dominate
  • Training will dominate
  • Production results are variable
  • Production is people-oriented
  • Interpersonal skills dominate
  • Education will dominate
  • Service results are subject to more variation

(McDonald, 1994: 6) McDonald’s (1994: 6) theoretical comparison of the output of the two types of organisation further develops the notion of two separate operational systems (see Table (2) below). Table (2): Differences between products and services

Product Service
The customer receives a tangible product in the form of goods which can be seen and touched The customer receives an intangible service, which may or may not satisfy
The goods remain with the customer Services are consumed at the moment of delivery
The production and delivery of goods are usually separated Production,

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