Operations Management is applicable to both goods and service industries
Creation of goods and services is called production.
Goods are physical products which can be touched, seen and consumed.Goods can be classified as
- Durable goods: which last minimum three years; non-perishable
- Non-durable goods: which last less than three years; perishable
Service is an action carried out to satisfy a requirement; it does not directly produce a physical product.
Examples – goods and services
In manufacturing firms tangible products or goods such as automobiles or cell phones are produced.
In service sector no tangible products are produced. Service firms deliver services which are intangible. Examples are a hair cutting saloon or income tax filing consultant.
Similarities – goods and services
- Provides value as well as satisfaction to customers
- Can be standardized or customized
Differences- goods and services
- Goods are tangible; services are not
- Goods can be stored as inventory; services are not
- Customers participate in service creation activities whereas they are not involved in production of goods
- As a result service locations should be near the customer; Goods manufacturing factories need not be near the customer
- Patents can protect goods not services
Customer Benefit Package (CBP)
Goods and services combined as a package to provide value to customer is called Customer Benefit Package. It consists of a primary good or service packaged with other/ secondary goods and/or services.
Whether it is goods or services, the production activities are called operations.
