Finally, because human beings are one of the primary resources of the service sector, employee attrition is always a problem. Poor employee training results in poor customer service, and a loss of critical demand. In manufacturing, a behind-the-scenes employee can be retrained with greater alacrity, and his or her personality and ability to provide good customer service is less critical to the survival of the business.
From an operation manager's perspective, the most frustrating difference between the two sectors lies in the fourth area of expense, the greater overhead costs of the service sector. It is often more difficult to pinpoint where needless waste is occurring, in the service industry, because it is often due to human factors, or incorrect use of the equipment by employees. In the manufacturing sector, a manager can quantitatively track how raw materials are used to make the final product, and target inefficient methods of production or overly expensive raw materials, or critical areas of lag in the production line. But in the service sector, personnel who demoralize the operation, come in late, or otherwise result in a less clearly quantifiable lag time of production speed and loss of consumer demand, can go unnoticed. A manager must keep careful track of employee hours, and ensure that regular performance reviews demand that employees follow the regulations of the company regarding employee duties and...
Cutting costs in areas such as employee methods, perhaps encouraging cleaning staff to clean with better efficiency, by using different cleaning techniques when approaching a home can allow the company to take on more houses, and reduce the costs of production. Finding cheaper raw materials that allows the company to pass on this lessened expense to the consumer can generate more consumer demand, and thus more profits overall as a whole for the service, and can act against the greater instability of demand.
One final, third area that cannot be overlooked by operations managers in the service sector is that, no matter how tempting it may be to cut costs, the manager cannot lose sight of the fact that the customer is always right, and that customers can often very easily eliminate services from their weekly budget. Although using an inferior cleaning product might save money, if the customers do not like the way that it makes their homes smell, and thus they refuse to renew their contracts and begin cleaning their houses themselves, or use a different company, little has been gained. Operations managers must strive to create a balance between efficiency and staying true to the mission of the business.
