Certified Production & Operations Manager (POM) Practice Exam

Why does the service sector typically have lower productivity improvements than manufacturing?

1. Services often use more technology

2. Services usually rely on automation

3. Services usually are labor-intensive

4. Services are more process-oriented

The correct answer is: Services usually are labor-intensive

The service sector typically experiences lower productivity improvements than manufacturing primarily because it is generally more labor-intensive. In service industries, tasks often require a significant amount of human interaction and personal involvement to meet customer needs and deliver value. Unlike manufacturing, where processes can be streamlined and mechanized for efficiency, many service activities depend heavily on skilled labor and human performance, which can introduce variability and limit scalability. Labor-intensive services are often characterized by personalized services, where the quality of the output heavily relies on the individual capabilities of the service provider. This dependence on human labor means that even with technological advancements, the potential for productivity gains is more restrained compared to manufacturing processes, which can readily adopt automation and improve output through mechanization. Contextually, options that suggest a greater reliance on technology or automation in the service sector are generally less accurate. While technology does play a role in improving service delivery, the inherent characteristics of many services do not lend themselves to the same level of automation achievable in manufacturing. Similarly, while process orientation may exist in services, the more critical factor contributing to lower productivity improvements remains the labor-intensive nature of the sector.