Academic journal article Journal of Management Information and Decision Sciences

Production & Operations Quality Concepts: Deficient Diffusion into the Service Sector

Academic journal article Journal of Management Information and Decision Sciences

Production & Operations Quality Concepts: Deficient Diffusion into the Service Sector

Article excerpt

ABSTRACT

Over the past 25 years, America has migrated from an industrial economy toward information, technology and service. The shift is well documented by various statistics regarding the declining balance of manufacturing exports-to-imports, declining manufacturing employment and declining direct labor content within goods, as well as through the transformation of the Dow Jones Industrial Average components.

The production/operations management discipline has been slow to respond. Since 1992, only the smallest percentage of academic articles in the leading production/operations management journals have been devoted to service operations. Textbook content reveals only the weakest trend to alter the classic manufacturing paradigm toward services.

Accordingly, this paper hypothesizes that basic quality concepts embedded within the production/operations management body of knowledge have been slow to transfer into the service sector. The survey instrument, involving 126 service corporations across 32 industries, enjoyed a 91% response rate. The results find that the overall degree of knowledge in the service sector is very low. Many of the resulting means placed within the lowest quartile of the Likert scale. The authors hope that this paper and evidence will effectively serve as a call for production & operations management academics to more aggressively shift their discipline perspective toward services.

THE RISE OF SERVICE AND THE DISCIPLINE PERSPECTIVE

Over the past twenty-five years, America has migrated from an economy based upon industrial and manufacturing activity toward an economy, to great extent, based upon information, technology and service--in agreement with the prophetic 1980 perspective of futurist Alvin Toffler (1980). There is little doubt that the service sector has now all but replaced the dominance of the manufacturing sector within the American economy. By 1990, service accounted for 72% of U.S. Gross National Product (U.S. Bureau of Economic Analysis, 1991) and accounted for 70% of American employment (Schmenner, 1995). Employment in the manufacturing sector began a rapid decline during the late 1990s, with 3 million jobs lost between 2000 and 2003, that being one-sixth of the total manufacturing sector (Anonymous, 2003a, 2003b) , while the number of Americans employed in service continues to increase (Stevenson, 1996). The American economic shift away from manufacturing toward service is also well documented with various other economic statistics regarding the declining balance of manufacturing exports-to-imports, declining manufacturing employment and declining direct labor content within goods.

Perhaps even more persuasive evidence of the American economic shift from manufacturing toward service in the last twenty-five years is found within the composition of the thirty component corporations of the Dow Jones "Industrial" Average (DJIA); during that time, the component basis of the DJIA has steadily moved toward service. Table 1 displays a number of significant changes evidencing the trend (Dow Jones & Company, 2004; Shell, 2004).

According to a recent USA Today article (Shell, 2004), the 1999 changes represented the point at which "the stodgy index that once tracked the smokestack economy went 'new economy.'" The article also states that International Paper "was expelled because basic materials matter less in today's information-based economy." In addition, other long-standing DJIA component corporations such as IBM and Honeywell have clearly shifted a significant percentage of their core business into the service sector. With similar perspective, Fortune magazine stopped distinguishing between service and manufacturing within its Fortune 500 list during the 1990s.

The rise of service is also evidenced throughout much of the industrialized world as well, representing nearly 70% of the civilian labor force in Canada, Australia, France and the Netherlands and nearly 50% in Germany, Japan and Italy (U. …

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