San Jose State University SJSU ScholarWorks Faculty Publications, School of Management School of Management 2009 Commonalities and differences between service and manufacturing supply chains: Combining operations management studies with supply chain management Ming Zhou San Jose State University, [email protected] Taeho Park San Jose State University, [email protected] John Yi Saint Joseph's University Follow this and additional works at: https://scholarworks.sjsu.edu/org_mgmt_pub Part of the Business Administration, Management, and Operations Commons, Operations and Supply Chain Management Commons, and the Organizational Behavior and Theory Commons Recommended Citation Ming Zhou, Taeho Park, and John Yi. "Commonalities and differences between service and manufacturing supply chains: Combining operations management studies with supply chain management" California Journal of Operations Management (2009): 136-143. This Article is brought to you for free and open access by the School of Management at SJSU ScholarWorks. It has been accepted for inclusion in Faculty Publications, School of Management by an authorized administrator of SJSU ScholarWorks. For more information, please contact [email protected]. Commonalities and Differences between Service and Manufacturing Supply Chains: Combining Operations Management Studies with Supply Chain Management Ming Zhou • Taeho Park San Jose State University, San Jose, CA John Yi Saint Joseph's University, Philadelphia, PA The service sector of the US economy has been gaining importance. As the service sector evolves, the study of service supply chain starts to gain attention. In this study, we conduct an exploratory review on the studies of manufacturing and service supply chains. We focus on the studies that explore the differences and commonalities between manufacturing and service supply chains. We combine operations management literature with supply chain studies in order to provide an inter­ disciplinary framework that brings up both the operational and strategic views on the management commonalities and differences between the two types of supply chains. I. INTRODUCTION (Sampson, 2000; Frohlich and Westbrook, 2002; Ellram et al., 2004). Service firms also transact The study of services has lagged the with their suppliers and serve their downstream study of manufacturing. When Fred Harvey customers. This very much resembles the classic proposed that services can be standardized and manufacturing supply chain structure. In managed systematically, standardization and addition, service outsourcing becomes systematic management had been applied in the increasingly common a practice (Allen and manufacturing sector by pioneers such as Eli Chandrashekar, 2000; Adler, 2003; Crockett and Whitney and Frederick Taylor. The first Ante, 2004). Hence, service supply chain is of business school course that focused on service great strategic importance in today’s business. management was not introduced until 1973 Despite the large amount of research on (Heineke and Davis, 2006). Despite the lag of service supply chains, studies that academic attention, the service sector has been comprehensively elaborate the commonalities gaining importance as the US economy becomes and differences between manufacturing supply more and more service-centric. According to the chains and service supply chains are still scant. US Census Bureau, the service sector accounts Furthermore, the success of any supply chain for fifty five percent of the US economic management tightly hinges on the operational activities in 2007 (Services Annual Survey, efficiency of supply chain partners. Although a 2007). Along with the evolvement of service couple of extant studies already attempted to industries, service research starts to catch up and identify the commonalities or differences from a variety of aspects of service management are conventional supply chain management identified and explored. In recent years, one perspective, insights from operations aspect of service management, the service management are yet to be integrated. In another supply chain, has attracted research attention words, an inter-disciplinary perspective is not Volume 7, Number 1, pp 136-143 California Journal of Operations Management © 2009 CSU-POM Zhou, Park and Yi Commonalities and Differences between Service and Manufacturing Supply Chains: Combining Operations Management Studies with Supply Chain Management witnessed in existing literature. In this study, an people’s belongings, act on people’s information exploratory review is conducted in order to etc. bridge the above gaps and provide a preliminary In the next section, the commonalities of framework that better enhances our manufacturing and service supply chains are understanding of the service supply chain. summarized and discussed. In section three, the Please note that we are making no attempt to particularities of service supply chains are exhaust the existing literature relevant to service identified and analyzed. In the last section, we supply chains. Instead, the purpose of this paper conclude the article and discuss future research. is to identify and discuss major findings that contrast service and manufacturing supply II. SERVICING AND MANUFACTURING chains as well as adding an operations COMMONALITIES management perspective to existing understandings. The commonalities between manufacturing Before we can proceed to compare supply chain and service supply chain have not service supply chains with manufacturing supply been discussed much in extant literature. This is chains, a definition of services should be natural given that servicing and manufacturing provided. Frohlich and Westbrook (2002) used share so much similar processes and the ultimate the standard industry classification (SIC) system goals are both operational and/or financial to define service industries. As defined by the success. A survey by Nie and Kellogg (1999) US Census Bureau, the US economy can be shows that many operations management segmented into good-producing industries and educators who are manufacturing operations non-good producing industries, where retail researchers are unwilling to accept the idea that trade, wholesale trade and service industries all service should be studied “in different ways, fall under the non-good producing sector. Such a using different theories, skills, competencies, classification is constructive in understanding and language…” One reason for the denial to the structure of the US economy and where the have service studies as a new field is that service industry is positioned. Unfortunately, it manufacturing and servicing businesses really does not provide much meaningful information have a lot in common. The set of commonalities as to what service is. Sampson (2000) are very likely much larger than the set of specifically discussed what service is. One set of differences. Hence, we will not and can not definitions focuses on the intangibility of exhaust the commonalities in this section. We services. However, intangibility is only an highlight some of the studies that identified important characteristic of services. Sampson commonalities between manufacturing and (2000) argues that services have tangible part as service settings. Since commonalities often well. A second definition describes services as a suggest transferability of techniques and solitary unit that fails to reveal the dynamic managerial insights developed under aspect of services. For instance, Levitt (1972) manufacturing, we believe the commonalities defines services as a personal performance. are worth discussing. These definitions over-amplify one or more Some manufacturing supply chain elements of the whole service supply chain. The insights have been documented to fit the service definition that Sampson (2000) supported took supply chains. For instance, Hurkens et al. the process view and included the whole (2006) documented a case where a service firm, process, which certainly better fits the study of Carglass, needed to procure physical goods. The service supply chains. Hence, we use Sampson’s authors showed that many aspects and definition of services where services act on evaluation processes are very similar to the people’s mind, on people’s bodies, and on procurement decisions under manufacturing California Journal of Operations Management, Volume 7, Number 1, February 2009 137 Zhou, Park and Yi Commonalities and Differences between Service and Manufacturing Supply Chains: Combining Operations Management Studies with Supply Chain Management settings. As a result, the idea of total cost of Information sharing here is a classic ownership (TCO) that is traditionally used in countermeasure developed in the manufacturing manufacturing settings (Degraeve and supply chain. Sengupta et al. (2006) compared Roodhooft, 1999) can be applied here as well. effects of strategic practices on the performance The case served as documented evidence to of supply chains. Their correlation analysis show there are many decisions that exist both in suggested that information sharing positively service industries and manufacturing industries. correlates with the financial performance in both Such commonalities imply that manufacturing service and manufacturing supply chain. techniques can be easily transferred to service Akkermans and Vos (2003) specifically studied settings, such as TCO. Another research that can the bullwhip effect in a service supply chain. attest to this point is the study by Stewart and Using