Strategies for service systems

The service sector has increased enormously in its importance to the world economy over the last forty-five years. As global competition in manufacturing has increased in the past decade, so has global competition in services. Service organizations in finance, communications, insurance, transportation, utilities, food, and hospitality have faced extinction if they did not remain competitive. Organizations have been challenged to simultaneously increase customer satisfaction and quality, increase productivity, decrease costs, and deal with changing technology and regulation. In response to these challenges, service organizations have attempted to decrease customer contact by making some operations more ‘manufacturing-like’. At the same time, manufacturing firms are placing increasing emphasis on the ‘services’ they provide to external and internal customers, and are actually increasing points of customer contact. The authors review characteristics of service operations and strategies for management of productivity, capacity, growth, change, and competition in service systems from an operations management viewpoint.