Oxford E&M - Operations Essay
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
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