Strategic Operations Management in the Service Sector

Introduction

Operational strategy is a fundamental component of competitiveness within goods production companies.

Operations Strategy Planning in Business Services

Diagnosis of the Current Situation

The phases of this process must take into account the characteristics of the tertiary service sector and the nature of the services themselves.

• Exceptionally Rigid Exit Barriers: Companies are difficult to remove from the market and often compete using specific know-how.
• Relatively Low Entry Barriers: The fact that innovation in services is not patentable means it can be easily copied by competitors.
• Requirement of Customer Presence: The necessity for customers to travel to the facilities of the company can become a strong competitive advantage for the firm.
• Emergence of Service Substitutes: Firms must pay attention to the possible emergence of innovations in physical goods that can substitute for the services provided.
• Development of Information Technology: These technologies are dramatically changing the market; the Internet is one of the most revolutionary forces.
• Economic Impact of Market Changes: Customer demand for a company depends on the economic cycle and how it affects the domestic economy.

Long-Term Objectives and Competitive Priorities

The strategic planning process should establish a set of long-term goals, ranked in order of importance as competitive priorities.

Target Costing and Efficiency

This is especially critical in the services sector, which often faces low productivity rates and strong inflationary trends.

• Optimizing Resources and Work Processes: A reduction in labor costs, materials, and waste is essential. Many service sector companies are very sensitive to the application of time and motion studies.
• Strategic Capital Investments: Reducing unit costs through investments in more productive equipment is also a viable option for utilities and service providers.

Supply Chain Compliance and Delivery

The time factor may be more important in service businesses than in manufacturing, as services often cannot be postponed.

• Fast Delivery: Service companies must take into account consumer expectations regarding the shortest possible delivery or supply time.
• Reliable Delivery Times: Services must be provided by the date or time committed to the customer. This is usually measured as a ratio of service completion time.

Service Quality Management

The study of quality is a phenomenon explained by the boom in quality-related issues within industrial enterprises, which has now extended to all types of businesses and organizations.