Question

Identify major differences between a service and manufacturing operation. Find an example of a service and manufacturing company you are familiar with and compare them.

Answer 1

Differences between a service and manufacturing operation can be classified in four major categories:-

1. Tangibility of output produced.

Manufacturing firms produce tangible products which are used by the consumers, they are in physical form. For example Apple Inc. manufactures Mobile phones, these are tangible in nature.
Whereas service operations produces intangible products. For example Uber cab service gives the service of connecting the customer to the cab driver, but this service or produce has no tangible form.

2. Stock or Inventory maintenance.

Manufacturing firms at all the times main some inventory according to the predicted demand in a particular period of time. For ex Apple Inc. will always hold an inventory of a specified no. of phones to fulfill the requirements of customers on continuous basis and without time lag.
Whereas service industry produces after getting the demand from the customer. Uber will look for a ride in a particular location only after it gets a request. Although it will have process and systems for fulfilling the requirements in a set time period.

3. Physical location of manufacture.

Physical location of manufacture of a manufacturing unit must be made keeping in mind the places where the supply is needed and the cost of taking the produce to the place of demand.
Whereas services can be produced anywhere as it can be transmitted through any communication media. For example Uber may operate from any location if it has its software in place as it has to assist the customer only through phone or app.

4. Manpower requirements:-

Manufacturing firms requires labour but many processes can be automated, so counteries where labour cost is high a lot of processes are automated and vice versa. Both options are open as the automation is easier.
Services requires persons with related specific skills as services are specific in nature and automation is difficult.