Syllabus Reference:
Role of Operations Management
goods and/or services in different industries
interdependence with other key business functions
Goods and/or Services in Different Industries
There are significant differences between manufacturing and service-based businesses.
Goods (manufacturing outputs) are tangible, that is, they physically exist and can be touched
and felt. Therefore, the outputs can be stored before distributed to customers, however, once
made, they cannot be changed or customised. The productivity of the business making the goods
is easy to measure as physical goods can be counted.
Services, in contrast, are not tangible. For example, services like financial advice, a doctor’s
consultation or being represented in court by a barrister are real but do not exist in a physical
sense. While manufactured goods use a lot of equipment – that is, they are very capital intensive
– services are much more labour intensive.
Services require a lot of interaction with customers who consume the service
where it is provided; for example, at a hair salon. The advantage of services
over manufacturing is that it is easy to modify and customise the service to
suit the desires of the customer. However, productivity is much harder to
measure due to each service being different for different customers.
A business can provide a physical good or a service, and very often provides
both. There are also similarities between serviced-based and manufacturing operations. They both:
use technology
must make predictions about consumer demand
deal with customers and suppliers
make decisions about capacity, location and physical layout of the business.
There are a number of ways of classifying different types of businesses in Australia. Grouping different businesses by
industry type gives a good indication of the range of goods and services in different industries.
Recap: What are the different industries?
• Primary Industry: produces raw materials, e.g. agriculture, mining
• Secondary Industry: turns raw materials into finished or semi-finished products, e.g. manufacturing, steel
production
• Tertiary Industry: provide a service, e.g. retailers, dentists, solicitors
• Quaternary Industry: service industries involved in the transfer and processing of information and
knowledge, e.g. telecommunications, education
• Quinary Industry: domestic services that used to be done at home, e.g. cleaning services, hospitality,
childcare
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Role of Operations Management
goods and/or services in different industries
interdependence with other key business functions
Goods and/or Services in Different Industries
There are significant differences between manufacturing and service-based businesses.
Goods (manufacturing outputs) are tangible, that is, they physically exist and can be touched
and felt. Therefore, the outputs can be stored before distributed to customers, however, once
made, they cannot be changed or customised. The productivity of the business making the goods
is easy to measure as physical goods can be counted.
Services, in contrast, are not tangible. For example, services like financial advice, a doctor’s
consultation or being represented in court by a barrister are real but do not exist in a physical
sense. While manufactured goods use a lot of equipment – that is, they are very capital intensive
– services are much more labour intensive.
Services require a lot of interaction with customers who consume the service
where it is provided; for example, at a hair salon. The advantage of services
over manufacturing is that it is easy to modify and customise the service to
suit the desires of the customer. However, productivity is much harder to
measure due to each service being different for different customers.
A business can provide a physical good or a service, and very often provides
both. There are also similarities between serviced-based and manufacturing operations. They both:
use technology
must make predictions about consumer demand
deal with customers and suppliers
make decisions about capacity, location and physical layout of the business.
There are a number of ways of classifying different types of businesses in Australia. Grouping different businesses by
industry type gives a good indication of the range of goods and services in different industries.
Recap: What are the different industries?
• Primary Industry: produces raw materials, e.g. agriculture, mining
• Secondary Industry: turns raw materials into finished or semi-finished products, e.g. manufacturing, steel
production
• Tertiary Industry: provide a service, e.g. retailers, dentists, solicitors
• Quaternary Industry: service industries involved in the transfer and processing of information and
knowledge, e.g. telecommunications, education
• Quinary Industry: domestic services that used to be done at home, e.g. cleaning services, hospitality,
childcare
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