Operations Management is a crucial function of both manufacturing and service organisations.
A manufacturing organisation is defined as one that produces an easily identifiable, tangible physical product or good. Whereas, a service organisation is one which provides or produces a non-physical output that cannot be kept as inventory and involves the customer in the actual production process.
The essential differences between manufacturing and service organisations (which must be considered by management when designing their operations management system) include the facts that:
the customer of a service organisation is directly involved in the production process of the service being purchased
the end products of a manufacturing organisation may be stored or held as inventory
However, both types of organisations face similar operational problems:
both must obtain suitable and sufficient materials to be used in the production process
both must determine suitable scheduling tasks
both should be concerned with both the quality of their end products and with their productivity levels