In: Economics
Explain how the inability to inventory services on the input and output sides of the technical core affects the operations efficiency of most service firms.
Answer :
A company's inventory is one of its most valuable assets. company's inputs and finished products are the core of its business, and a shortage of inventory when and where it's needed is detrimental. At the same time inventory can be thought of as a liability as large inventory carries the risk of spoilage, theft, damage or shifts in demand. Inventory Services is an integral part of the service-oriented architecture, which is an architectural pattern in Computer Software Design meant to provide various services to other components of the system with the aim of improving business processes and increasing efficiency.
Unlike, Goods based firms Service firms have a set of products that can be viewed as a bundle of goods and services. Inventory plays a very important role in services. Most of the services took goods or materials as inputs like food joints, maintenance, and repair services to provide a service bundle. Providing inadequate service or no service due to unavailability of output material may result in loss of customer forever. In service firms, there is no option of back ordering.
In service firms, there are basically two types of inventory i.e Facilitating Goods and Work Storage Based information for example of facilitating goods in the airline industry is Food and Beverages, and Work Storage Based Information is ticket database of customers before the arrival of Customers. In service firms, they have web portals which can store inventory by adding records at very small marginal cost.
The inability of Inventory management can have a damaging effect on the firm and can affect more than just the bottom line.
1)Wasted Time: Too much time and resources are wasted on tasks that can be completed easily if inventory is balanced well, time spent on fixing the issues caused by poor inventory management can be utilized by the actions that provide the return to the business.
2)Unsatisfied Customers, On-time delivery of product and services are essential of maintaining the customer base, but poor inventory leads to delay in Customer Service leading to customer dissatisfaction and decrease customer loyalty.
3)Imbalanced inventor, If inventory is not balanced then it becomes hard to maintain the balanced stocks.which will again ost money to the firm.
4)If the service industry has lengthened the service turnaround time due to inability in inventory management then it will increase the amount of work required by one firm when the customer enters the process.
5)If the inventory is not managed firms will not be able to provide customization to the customers which will affect the after sale services.
6)improper use of spreadsheets to track inventory, which leads to inaccuracies and in a result increase the expenditure of the firm.
Thus, This is how the inability to inventory services on the input and output sides of the technical core affects the operations efficiency of most service firms.