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OM5 Chapter 1: Goods, Services, and Operations Management
Discussion Questions
1. Explain how operations management activities affect the customer experiences described in the
Museum of Science + Technology anecdote at the beginning of this chapter. What “moments of
truth” would a customer at Chicago’s Museum of Science + Technology encounter?
The anecdote at Chicago’s Museum of Science + Technology focuses on the role of goods,
services, and processes in creating customer experiences and satisfaction. Students will have
many great examples of their museum experiences. Moments of truth might include (a) buying
Whatever the student describes make sure you lead them into a discussion of key lessons that
focus on the role of OM such as (1) process and job design and customer flows, (2) service
encounter design and employee training, (3) integrating goods and services into a
2. Explain why a bank teller, nurse, or flight attendant must have service management skills. How
do the required skills differ for someone working in a factory? What are the implications for
hiring criteria and training?
Service-providers need technical/operations skills plus human interaction and marketing skills
(i.e., service management skills). A bank teller, for example, must be able to complete many
3. Why is process thinking important in operations management? Thinking of yourself as an
“operations manager” for your education, how could process thinking improve your
performance as a student?
Process thinking is important since processes describe “how work gets done and performance
objectives are achieved” in all functional areas such as finance and human resource
At this early point in the course students know only a little bit about primary, support, and
4. Do you think you will be working in manufacturing or services when you graduate? What do
you think will be the role of manufacturing in the U.S. economy in the future?
This question is designed to get students to explore job opportunities and industries as
documented in Exhibit 1.5. Use the exhibit of “where are the jobs in the USA?” to enhance this
discussion. The location of your institution may have some bearing on the answers, as some
Another issue is that the average U.S. college graduate will change industries and/or jobs about
seven times during their careers. Thus, it is very important to be flexible and develop a good set
5. Select one of the OM challenges and investigate it in more detail. Be ready to present to the
class in a less than 10-minute class presentation what you found.
Technology has been one of the most important influences on the growth and development of
Globalization has changed the way companies do business and must manage their operations.
With advances in communications and transportation, we have passed from the era of huge
Consumers’ expectations continually rise. They demand an increasing variety of high-quality
Today’s workers demand increasing levels of empowerment and more meaningful work than in
Despite more than a half-century of intense focus on quality, it continues to be a challenge, even
To compete in today’s environment, manufacturers must stay ahead of consumers’ needs by
increasing product innovation, speeding up time-to-market, and operating highly effective
Problems and Activities
1. Describe a customer experience you have personally encountered where the good or service or
both were unsatisfactory (for example, defective product, errors, mistakes, poor service, service
upsets, and so on). How might the organization have handled it better and how could operations
management have helped?
The objective of this type of question is for the student to describe what they know and you, the
instructor, help put it into the OM framework. This question is also designed to help students
internalize the concept of customer satisfaction and dissatisfaction, and potential operations
2. Interview a manager at a local company about the work he or she performs. Identify (a) the
aspects of the job that relate to OM (like the OM activities in the box “What Do Operations
Managers Do?”) and (b) example primary, support, and general management processes.
Some of the key activities that operations managers perform include
Forecasting: Predict the future demand for raw materials, finished goods, and services.
Facility Layout and Design: Determine the best configuration of machines, storage, offices,
Quality Management: Ensure that goods, services, and processes will meet customer
Resource and Capacity Management: Ensure that the right amount of resources (labor,
Process Design: Select the right equipment, information, and work methods to produce high
Service Encounter Design: Determine the best types of interactions between service providers
work.
Sustainability: Decide the best way to manage the risks associated with products and
Try to help students identify primary, support, and general management processes in their
example(s). The Human Resource Management functions, for example, are good situations to
3. Evaluate how the activities described in the box “What Do Operations Managers Do?” can be
4. Review the box for Pal’s Sudden Service and find Pal’s Web site. Based on this information,
Pal’s has an interesting Web site (www. pals web.com) that students would probably enjoy.
The instructor might note that Pal’s was a recipient of the Baldrige Award and might briefly
5. Interview a working friend or family member as to how they use operations management
principles in their job and write a short paper summarizing your findings (maximum two pages).
6. Choose one of the following services and explain, using specific examples, how each of the
ways that services differ from manufactured goods apply.
a. a family practice medical office
Goods are tangible while services are intangible.
Customers participate in many service processes, activities, and transactions.
Services especially in the “front office” (at points of contact with the customer) require different
skills than producing physical goods, and therefore, it is difficult for firms to do both well. Yes,
for example, physical inventory can compensate for poor demand forecast accuracy while
7. Provide some examples similar to those in Exhibit 1.3, and explain the degree of goods and
services content for these examples.
Students should provide a variety of practical examples. One example is watching a sporting
event on television; this is close to a pure service with no goods content but very high service
8. Draw the customer benefit package (CBP) for one of the items in the following list and explain
how your CBP provides value to the customer. Make a list of a few example processes that you
think would be necessary to create and deliver “each good or service” in the CBP you selected
and briefly describe issues that must be considered in designing these processes.
a trip to Disney World
The objectives of this exercise are for the student to define a CBP (a bundle of goods and
services a customer buys) and its features (like in Exhibit 1.2 and then recognize and define the
process that creates and delivers each good or service to customers. How are these goods and
9. One of our students, who had worked for Taco Bell, related a story of how his particular store
developed a “60-second, 10-pack club” as an improvement initiative and training tool. The goal
was to make a 10-pack of tacos in a minute or less, each made and wrapped correctly, and the
total within one ounce of the correct weight. Employees received recognition and free meals for
a day. Employees strove to become a part of this club, and more importantly, service times
dropped dramatically. Techniques similar to those used to improve the taco-making process
were used to improve other products. Explain how this anecdote relates to process thinking.
What would the employees have to do to become a part of the club?
At a business like Taco Bell, consistency in food quality and service are vital to customer
satisfaction. By focusing on a goal such as this, employees were forced to think in terms of the
10. Research and write a short one-page paper that describes two new examples of how
organizations are using biztainment to gain competitive advantage.
Biztainment is adding entertainment content to a bundle of goods and services (called a
customer benefit package) to gain competitive advantage. The objectives of this article are to
(1) document and define the phenomenon of using entertainment in a wide variety of businesses
Biztainment initiatives must be carefully designed and executed using service management
concepts and methods (Collier, 1994, 2006). Exhibit 4 provides examples of the economic
Examples of the Economics of Biztainment
Examples of Biztainment Example Economics
Agriculture - farm tours, hay rides, horseback rides, camp
Bateson Farms of Ohio, for example, offers concession
Manufacturing - old and new factory tours, showroom,
In 2004, Ford Rouge Factory tour operating at sold-out
Retail – shopping malls, simulators, product demonstrations,
Libby Lu’s sales per foot are substantially higher than Sak’s
Restaurants – toys, themes, wildlife, contests, games, videos,
Hard Rock Café operating at 11.4% net profit margin in 2004
Hotels – kid’s spas, health clubs, dances, casinos, cable T.V.,
Holiday Inns found that hotel with holidomes have a 20
Telecommunications – cell phones, download songs,
text and video messaging, cool ringer tones and voice
Fantasy-football, for example, illustrates intangible outcomes that are controlled by the
customer. Eight million customers played fantasy-football in 2004 and Fantasy Sports Trade
Holiday Inn has resurrected the hotel holidome that it invented in the early 1970s. The
new holidomes create a huge indoor space for indoor pools, water parks, spas, mini-geysers,
11. Search the Web for either (a) an organization that has defined its sustainability strategy and
policy, and give examples of how they are implementing it, or (b) an organization that has
received negative or controversial media coverage for its ethical or sustainability practices.
Write a paper describing what you found (maximum of two typed pages).
Almost all organizations are now on the sustainability bandwagon so students will find a rich
discussion of sustainability focused on everything ranging from setting carbon standards to
On the flip side, there have been many reports that deal with issues such as unsafe
clothing factories (e.g. the case of Nike) or manufacturing facilities (particularly in foreign
12. Describe new ways for how your college or university can apply the sustainability practices in
Exhibit 1.6. Summarize your results in a short paper.
Exhibit 1.6 Examples of Sustainability Practices
Environmental Sustainability
Waste management: Reduce waste and manage recycling efforts
Energy optimization: Reduce consumption during peak energy demand times
Social Sustainability
Product safety: Ensure consumer safety in using goods and services
Workforce health and safety: Ensure a healthy and safe work environment
Economic Sustainability
Performance excellence: Build a high-performing organization with a capable leadership and
workforce
Operations management plays an important role in all three of these sustainability perspectives.
13. Discuss how the three perspectives of sustainability influence (or perhaps, should influence)
your personal purchasing decisions. For example, do you consider whether apparel is made in
safe and ethical factories? Should companies exploit their sustainability efforts for marketing
purposes? Why or why not?
Environmental responsibility is often conveyed in packaging (for example, “made from 100%
recycled materials…”). However, social responsibility is not that easy to identify. As one news
14. Research and write a short paper describing how business analytics have been applied to
problems and decisions in operations management. Use the information in the box “What do
Operations Managers Do?” to help your search process.
There are many examples for students to write a paper on such as
sports analytics (Moneyball, etc.)
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Sourcing decisions (Procter & Gamble, Nike, Victoria Secrets)
15. Search recent articles in your local newspaper and business magazines such as Fortune,
Business Week, Fast Company, and so on and identify OM concepts and issues that are
discussed. How do these fit into the classification in the box “What Do Operations Managers
Do?” in this chapter?
Please see Discussion Question #2 for generic OM topics. The objective of this question is
simply to show how OM ties to company success and problems and/or begin to identify key
