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ORGANIZATIONAL THEORY AND DESIGN

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LEARNING ACTIVITY 5

Manufacturing and Service Technology

Questions:

On page 269 of the text, the author says, “In reality, it is difficult to find organizations that reflect 100 percent service or 100 percent manufacturing characteristics. Some service firms take on characteristics of manufacturers, and vice versa”.

Think about this in terms of an organization to which you belong, preferably your employer. Then, describe the services and tangible products that your organization provides. How well would you consider that your organization demonstrates the author’s statement. What products or services might they have overlooked?

Please link your answer to concepts from Week 5 class.

Page 269 in Organizational Theory and Design by Daft

In reality, it is difficult to find organizations that reflect 100 percent service or 100 percent manufacturing characteristics. Some service firms take on characteristics of manufacturers, and vice versa. Many manufacturing firms are placing a greater emphasis on customer service to differentiate themselves and be more competitive. In addition, manufacturing organizations have departments such as purchasing, HR, and marketing that are based on service technology. For example, Lo-Pel Manufac- turing, a family-owned company founded in 2001, located in Rosenort, Manitoba, not only manufactures earthmoving scrapers but also provides service support for its customers. According to Ken Rempel, designer of the scraper, “[If] anyone has a problem, we address it quickly and efficiently to reach a solution; that has built a lot of faith in our company.”67 On the other hand, organizations such as gas sta- tions, stockbrokers, retail stores, and restaurants belong to the service sector, but the provision of a product is a significant part of the transaction. The vast majority of organizations involve some combination of products and services. The important point is that all organizations can be classified along a continuum that includes both manufacturing and service characteristics, as illustrated in Exhibit 7.7.

New Directions in Services. Service firms have always tended toward providing customized output—that is, providing exactly the service each customer wants and needs. When you visit a hairstylist, you don’t automatically get the same cut the stylist gave the three previous clients. The stylist cuts your hair the way you request it. However, the trend toward mass customization that is revolutionizing manufacturing has had a significant impact on the service sector as well. Customer expectations of what constitutes good service are rising.68 Service companies such as the Ritz-Carlton Hotels and Bell Canada use new technology to keep customers coming back. All Ritz-Carlton hotels are linked to a database filled with the pref- erences of half a million guests, allowing any desk clerk or bellhop to find out what your favourite wine is, whether you’re allergic to feather pillows, and how many extra towels you want in your room.69 At Bell Canada, much of its customer service is performed online but there are customer service representatives available as well.

The expectation for better service is also pushing service firms in industries from package delivery to banking to take a lesson from manufacturing. Japan Post, under pressure to cut a $191 million loss on operations, hired Toyota’s Toshihiro Takahashi to help apply the Toyota Production System to the collection, sorting, and delivery of mail. In all, Takahashi’s team came up with 370 improvements and reduced the post office’s person-hours by 20 percent. The waste reduction is expected to cut costs by around $350 million a year.70

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