CAPE Industrial Services - case study Essay Example for Free

CAPE Industrial Services case study Essay 1.0 Introduction In response to the increased importance of services, numerous articles on issues related to the effective management of service operations have appeared in both academic and practitioner based publications (Chase and Hayes, 1991; Karmarker and Pitbladdo, 1995; Kellogg and Nie, 1995; Lovelock, 1992; Roth and Van Der Velde, 1991). Several of these articles present typologies of services and provide directions for improving quality, productivity and operating efficiency, however relatively little has been done to test the proposed ideas. In order to understand more of these various service management typologies, an actual business organisation that focuses on providing services will be observed and analysed. In the discussion, the design and strategies of the selected company in the Oil Industry service sector will be taken into account. Recommendations for improvement will also be provided at the end of the discussion. 2.0 Model of the Service The variety of the service sector makes it complicated to come up with useful generalisations concerning the management of service organisations. Therefore, a considerable amount of research has been focused on developing service classification schemes. For example, Judd (1964) classified services according to three categories: rented goods, owned goods and non-goods services. Similarly, Rathmell (1974) categorised services according to type of buyer, buyer motives, buying practices, type of seller, and degree of regulation. Even though these classifications show how some services are different from the others, they do not provide much useful insight into the design and management of service processes from an operational perspective. More recent classification schemes have explored the complex nature of service delivery systems with the goal of identifying differentiating characteristics, which affect quality and process improvement, as well as service design. For example, Shostack ( 1977) and Sasser, Olsen and Wyckoff (1978) developed the concept of product-service-package based on the tangible versus intangible nature of services. More recent researchers however believe in an integrated approach to service management. For example, Thomas (1978) argues that a large part of manufacturing experience is irrelevant to the management of service operations because the supply services are very different from that of manufacturing. Sullivan (1981) and Bowen and Cummings (1990) also advocate an integrated approach to service management and suggest that operations management researchers must include organisational behaviour and marketing constructs and techniques to address service operations problems adequately. The means of classifying service models are indeed varied. For this particular analysis though, the model proposed by Schmenner (1986), also known as the Service Process Matrix (SPM), will be used. The SPM expands the customer-contact model and categorises services on two dimensions. One is labour intensity, and the other is customer contact and service customisation. Schmenner (1986) proposed a two-by-two service process matrix that classifies services as service factory, service shop, mass service, and professional service. Under these models, CAPE Industrial Services can be classified under the Professional Service category. Professional service is described as the provision of services with high customer contact and or customisation and high labour intensity. Labour intensity on the other hand is defined as the ratio of the labour cost incurred to the value of the plant and equipment. A high labour intensity business involves relatively small plant and equipment investment relative to a considerable amount of worker time, effort, and cost. The second dimension in the classification scheme combines two distinct concepts: customer interaction and customisation. A service with a high level of interaction is one in which the customer can actively intervene in the service process. A service with high customisation will work to satisfy an individuals particular preferences. The joint measure has a high value when a service exhibits both a high level of interaction and a high level of customisation for the customers. In the selected business, CAPES Operations management has a high contact with customers who need to be kept informed of the service range being delivered to them. Thus, high customisation or high selection on the services occurring in this type of Industry. Also, CAPE employ a high labour intensity as the Oil Industry service sector is located globally, in short the service range offered by CAPE is readily accessible, incurring fewer costs for equipment and labour. 3.0 Service Design and Delivery The contracts that are held by CAPE require daily customer contact on a personal level, having designated Business Delivery Managers for these contracts assist the customers with what they need for their services. So as to maintain the efficiency and speed of service, there are also designated project managers. These managers have constant contact with the offshore or onshore facility, this is handled in such a way that both the customer and the CAPE Business Delivery Manager are aware of all the daily operations that are on going. The services rendered by CAPE Industrial Services are a vast range of Multi-Disciplined Fabric Maintenance and Access techniques to Oil and Gas Sector. Charges built into the contract rates cover the costs of the additional project management. At times, services are requested that are not of the norm for CAPE, to service these Third party companies are brought in under the CAPE banner. While the cost of these services may vary much from the standard contract rates, excellent service is a must. Thus, extra costs are incurred for additional time and effort put into the contract by the CAPE managers. So as to make the services offered by CAPE more affordable and viable for their customers; the company tends to work on providing innovative ideas that will improve work ethics. Typical innovative ideas are the Introduction of Industrial Rope Access; this is a benefit to the customer as it cuts out the need for Scaffold or other means of conventional access solutions. Like other service companies, one of the common strategies of CAPE is to offer a volume discount or a reduced rate if the period of the contract can be extended. 4.0 Service Strategy Service companies in the Oil and Gas Industry have numerous strategies on how their rendered services can be better than competitors. Aside from maintaining quality and safety in service, one of the aims of the CAPE Industrial Services is to provide innovative ideas to their customers that will keep them ahead of their competitors whilst at the same time providing cost savings and improvements in quality to the customer. Improvements in the equipments and materials that are available in the Oil Industry also help in achieving the quality of service. Industrial Rope Access for instance, helps in reducing time scales for accessing work sites. Hence, this reduces costs to the customer. Using the appropriate tools in the work-site also helps to improve quality and time-scales. This goal of the company does not only facilitate in serving the customer appropriately, but most importantly it shows that the Oil and Gas Industry service area prioritises its customers. This in turn results to high customer satisfaction and loyalty. 5.0 Service Encounter: People in the Service Personnel working for CAPE Operations include Operations managers, Project Managers, QA/QC and HSE Managers, Technical Clerks and Secretarys. Each of these employees has their own designated duties and responsibilities in the area. This way, efficiency of service is maintained in the Company. Of course problems might occur in any type of businesses, a company is bound to make mistakes if there are no careful observations to their businesses. One of the problems that a company like CAPE might encounter is the companys personnel or human resource mistakes. The reason for this is the lack in the training it provides for its personnel. The training and development of each employee is very significant as this does not only help in providing confidence in work performance, but it also helps in maintaining quality service. So it is advisable for CAPE Industrial Services to train their employees well to provide their customers with better satisfaction. 6.0 Managing Service Expectation and Capacity In times when demands for services increase, CAPE Industrial Services tries to cope by conducting reliable forecasts. The company so as to keep track of its activities regularly keeps records of previous business operations. This aids the managers from predicting sudden increases of service demand. In order to cope with peak months for ad-hoc services, the customers managers are advised to make their project plans ahead of time. Through this system, CAPE is able to plan ahead for availability of equipment, consumables and personnel that will be used for upcoming projects. 7.0 Recommendations One of the problems that the organisation might face is the mistake their site personnel are committing because of their lack of training and development. As previously mentioned, this is a vital factor so as to maintain efficient service in the company and lessen the number of mistakes which can be made on one of the sites. In order to remedy this problem, the managers can plan an effective and appropriate program for each employee based on their respective duties within the company. The managers can also implement a system at the sites wherein the older workers with more site experience can assist newly hired employees. This can be a more appropriate method of training as the exposure of the workers to the actual work area can help them adjust to the nature of their job. Regular evaluation of the workers can help in improving the skills of the workers and keep them up to date of their current work performance. In this way, quality of service is maintained and skills are enhanced. Overall, the performance of CAPE Industrial Services is efficient. Considering its effective strategies and significant goals for quality service, it is enough to say that the services provided by CAPE are good and successful. However, there are other factors that are to be considered in this type of service. The consideration of these factors will not only help the company in serving their customers better, but it will also help them maintain quality and service provided to existing and potential new customers. 8.0 Operational Improvement Through the Use of Technology In reality, the world of a service company in the Oil and Gas Industry is changing. The expectations of people are different than those of past generations, Safety and Quality are becoming more important features of the industry each year, cost pressures continue to mount, and new information technologies have changed operational functions (Cushman and Shanklin, 1996; Bowers, 1987). As a result, the captive market plan concept is declining and the services are being exposed to a greater amount of competition than in the past. Due to these changes, the old strategies of a service company system must also adapt. This adaptation will definitely contribute to sufficient flexibility that will meet customers needs in an ever-changing environment while retaining the beneficial aspects of a Multi-Disciplined service provider. As CAPE is focused on giving their customers a quality service, one of the possible strategies that can be employed by the company is the application of the One Stop Sh op Fabric Maintenance service provider. As information technologies have advanced, the virtual organisation concept has been promoted as an alternative too traditional, vertically integrated organisational structures (Goldman et al, 1995). In virtual organisations, a lead entity creates an alliance with a set of other organisations (Grenier Metes, 1995). The tasks performed by the virtual organisation are divided among the entities that comprise it, based upon their respective competencies. Virtual organisations can produce superior results because they harness market forces to combine competencies in ways that traditional organisations, using internal mechanisms, cannot (Chesbrough Teece, 1996). Once constituted, the lead organisation operates the virtual organisation by co-ordinating parallel tasks through the use of sophisticated information technologies and management systems, thus creating a coherent system. A virtual organisations membership changes over time as market conditions and technologies shift and the strategies and resources of the constituent organisations evolve. While virtual organisations are most often found in high technology industries such as the development of new computer systems, some characteristics of CAPE Industrial Services make it amenable to the successful operation of a company that services the needs of the Oil and gas Industry. 9.0 Conclusion While CAPES Operations may take a lot of resources to maintain the business and the quality of service provided, the benefits that it can provide outweigh the expense incurred. Aside from that, the services offered by CAPE will definitely increase in quality, hence, greatly contributing to the goals of the company. Through careful and effective planning, budgeting and implementation, CAPE Industrial Services can begin on making little changes, improving the company one step at a time. The important thing is that constant adaptation to change is being done and that the Operations management is coming up with ways on how to improve the services that are provided by the company and keeping the customer coming back. 10.0 References Bowen, D.E., and Cummings, T.G. (1990). Suppose we took service seriously. In Service Management Effectiveness, New York: Jossey-Bass Publishers, 1-4 Chase, R.B., and Hayes, R.H. (1991). Beefing-up operations in service firms. Sloan Management Review, 33 (1), 15-26 Chesbrough, H. W., and Teece D. J. (1996, January-February). When is Virtual virtuous?: Organising for innovation. Harvard Business Review, 65-73 Goldman, S. L., Nagel, R. N., and Preiss, K. (1995). Agile Competitors and Virtual Organisations: Strategies for Enriching the Customer. New York: Van Nostrand Reinhold Grenier R., and Metes, G. (1995). Going Virtual: Moving Your Organisation Into the 21st Century. Upper Saddle River, NJ: Prentice Hall PTR www.soc.napier.ac.uk/module.php3?op=getlecturecloaking=nolectureid=1935516 Karmarkar, U.S., and Pitbladdo, R. (1995). Service markets and competition. Journal of Operations Management, 12 (4), 397-411 Kellogg, D.L. and Nie, W. (1995). A framework for strategic service management. Journal of Operations Management, 13, 323-337 Lovelock, C.H. (1992). A basic toolkit for service management. In Managing services: marketing, operations, and human resources 2nd ed. Englewood Cliffs, NJ: Prentice Hall Roth, A.V., and Van Der Velde, M. (1991). Operations as marketing: A competitive service strategy. Journal of Operations Management, 10 (3), 303-328 Judd, R.C. (1964). The case for redefining services. Journal of Marketing, 28, 1 Rathmell, J.M. (1974). Marketing in the service sector, Cambridge, MA: Winthrop Schmenner, R.W. (1986). How can service businesses survive and prosper. Sloan Management Review, 27 (3), 21-32 Shostack. G.L. (1977). Breaking free from product marketing. Journal of Marketing, 41 (4) Sullivan, R.S. (1981). The service sector: Challenges and imperatives for research in operations management. Journal of Operations Management, 2 (4), 211-214 Thomas, D.R.E (1978). Strategy is different in service businesses. Harvard Business Review, 56 (4), 158-165