Oxford E&M - Operations Essay

Topics: Customer service, Convenience store, Customer Pages: 6 (2158 words) Published: November 25, 2013

Levitt (1972) argued that companies “must think of themselves as performing manufacturing functions when it comes to their ‘so-called’ service activities”. Do you agree? Levitt (1972) argued that the idea that service industries are fundamentally different from others is incorrect and impedes progress in firms. Thus, he prescribes that firms reengineer their service functions with the same approach that had been so successfully used for manufacturing functions. That is, instead of focusing on the human-aspect of service and improving the human that delivers the service, he believes that we should be oriented toward the efficient production of results, trying to find entirely new ways of performing present tasks or even changing the tasks themselves. This essay explores the validity of his theory, presenting arguments from both sides. The first tangible manifestation of his prescription would be to replace service functions that humans perform with machines – hard substitutes. In this sense then, he suggests bringing to service industries what Ford brought to manufacturing in the early 1900s, by replacing human employees with machines that deliver more efficiency and consistency in results. As examples, Levitt (1972) cites inventions such as coffee vending machines (that replace waitresses) and cash checking machines (that replace bank tellers). Since his article, improvements in technology have also led to the mass proliferation of self-service technologies (SST) such as online shopping and self-checkout kiosks at my local Tesco and Sainsbury. Bitner, Ostrom and Meuter (2002) agree that SSTs enable better, more efficient and more customized services. From a business perspective, they also reduce costs, increase customer satisfaction and loyalty, and allow firms to reach new customer segments. However, Bitner, Ostrom and Meuter (2002) are quick to point out that customer and employee reactions to SSTs are not always positive. This could be due to reasons such as employees fearing the loss of their jobs or even simply that employees and customers feel the loss of human interactions. This is perhaps especially important for employees in repetitive jobs. In their study, Sutton and Rafaeli (1988) noted that convenience store workers tended to treat interactions with customers as entertainment because of the boring nature of their other tasks at work. Ultimately, as Brown and Duguid postulated, all IT solutions are embedded in and depend on human relationships, human actions and human institutions. Hence, managers should recognize the limits of technology – their task is not only to design and implement SSTs, but also to know when their use is inappropriate. In this sense then, when it comes to replacing humans with machines, companies cannot simply ‘think of themselves as performing manufacturing functions’. The second tangible manifestation of Levitt’s prescription – and the one he feels holds greater promise- is in the application of ‘soft technologies’. This is when a manufacturing style of thinking is applied to a people-intensive service situation, vastly limiting the discretion that service personnel possess in service provision. Service is something to be carefully planned, controlled, audited for quality control and regularly reviewed for performance improvement and customer reaction. His rationale is that thinking in humanistic rather than technocratic terms leads to idiosyncratic results. This follows a similar line of reasoning to Taylorism, which emphasizes the deskilling of workers, believing that giving workers power over the process only leads to inefficiency. Levitt brings up the example of MacDonalds, which produces a predictably standardized, customer satisfying output while minimizing the operational discretion of attendants. The entire system, from the perfectly prepacked and premeasured patties to the storage and preparation space designed expressly for the MacDonalds product mix makes it such that...
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