Operations Notes – Service Factory


Notes from core MBA Operations class, these focused on service factories.
Subject: Operations

People don’t think of service as related to manufacturing because:

  • service doesn’t start with a planned design
  • service is often haphazard
  • there is a lack of rigor in service

A factory approach to services includes:

  • uniform, systematic, process-oriented tasks
  • planned design
  • measurements and monitoring

Levitt’s Principles

  • Limit discretionary action of personnel (reduces variability)
  • Limit service provided (standardize)
  • Engineer entire service process
  • Encourage customer involvement
  • Develop employee pride and involvement (remove un-pleasant tasks or free up time for pleasant tasks)
  • Substitute systems for people
  • Stay focused (limit range of activities and specialize in a few – core competence)
    • market segment focus
    • process focus
    • product/service focus
    • hybrid focus

Benefits of Focus

  • expertise → lower cost position
  • higher quality
  • speed
  • better reputation → barrier to entry

Risks of Focus

  • lack ability to do other things
  • non-responsive
  • boredom

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