The Discipline of Operations Management

Ireland posted productivity growth of 63% between 1995 and 2002, making it the best performing economy in Europe. In retail banking however, Ireland posted a 3% growth in productivity in the same period, with the other service sectors not doing much better.

Most of the productivity increase achieved came from the manufacturing sector and primarily, foreign-owned companies. By 2004, value added delivered by the industrial sectors was twice that from service sectors. So why was this the case?

One answer is that service industries have ignored (and have been ignored by) the discipline of Operations Management. This same discipline has been a major driver of improvements in productivity, customer service and quality in the industrial sectors.

The evidence of our practice (www.mclaw.ie) and our many years experience is that the key to improving the productivity, quality and service levels of an any organisation is to develop, in depth, the discipline of service operations management.

Historically this has been difficult for service organisations to do for at least four reasons.

1. Firstly the discipline itself, due mainly to its roots in engineering, developed a form of snobbery at the professional, practitioner and academic levels. This manifested
   itself in service organisations and service managers being treated as 2nd and 3rd class entities due to the lack of hard product focus.
   
2. Secondly, managers in service organisations found that traditional operations professionals had no empathy or indeed understanding of the different challenges that come from the intangibility and complexity that service organisations are faced with.
   
3. Thirdly, the traditional operations management frameworks and toolsets have been heavily product focused and failed to take into account the needs of service organisations.
   
4. Fourthly, service professionals and in particular knowledge workers, adopted a form of their own professional snobbery, ignoring the industrial and manufacturing sectors as sources of expertise and know-how, taking the view that such “hard” industries were alien to the complex and agile world of the service sectors.
   

Fortunately this is no longer the case and service operations management, although still in its relative infancy, has become a respected and highly regarded branch of management in its own right.

For many service organisations and managers however, the legacy of alienation has been hard to overcome. Those service organisations and managers who have embraced the service operations management discipline however, have been rewarded with the same dramatic improvements in productivity, quality and service levels that their colleagues in the industrial sector have enjoyed for the past 50 years.

Companies such as Toyota, General Electric and Dell Computers have invested heavily in building this operational excellence into their organisations with great success

At McLaw (www.mclaw.ie) we use the terms “operations” and “execution” interchangeably to emphasise that the historical, narrow view of traditional operations management, with its roots in manufacturing, no longer applies.

Today the discipline of Operations Management is a requirement in all areas of the business where world class execution and performance is required.