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