Manufacturing and service systems have similarities and differences. To some extent, many organizations mix manufacturing and service operations to meet customer interest, attract new consumers and succeed in the fulfillment of their economic mission and other objectives. For instance, nowadays, an increasing number of manufacturing enterprises recognize the significance of service delivery in manufacturing, and they strive to integrate physical goods production into product service systems to address customer needs and increase customer involvement (Gao et al., 2009). Nevertheless, manufacturing and service operations require different strategic approach and provoke distinct management problems related to the development of relationships with customers, delivery of products or services, and roles of products or services providers in the supply chain and product distribution.
As mentioned by Zhou, Park, and Yi (2009), a customer takes a central part in the process of service delivery, and “sometimes even the service initiation process itself” (p.139). When being directly involved in service delivery process, a customer directly impacts the quality of service operations. Moreover, face-to-face interactions with customers in service organizations facilitate differentiation of service range according to customer preferences.
In manufacturing companies, customer involvement is usually less intense, and communication with consumers is of auxiliary character. It means that manufacturers may implement multiple marketing tools to communicate brand messages to consumers or utilize surveys to collect their feedback and make some improvements and differentiate product line. However, a physical product remains a critical element of manufacturing operations.
Production and Consumption
Production and consumption of services are always immediate. Since the services are generated and consumed at the same time, flexibility is regarded as the major success factor in service supply (Zhou et al., 2009). Flexibility in service delivery system implies the effectiveness of response to both substantial environmental changes and customer differences (Buzacott & Mandelbaum, 2008). Therefore, an effective service supply chain requires smart structuring, development of supportive organizational policies, and collaboration.
In manufacturing, production and consumption are cyclic and, comparing to service delivery, are separated by a time gap. Such a time lag creates challenges in the evaluation of the direct impacts of production on consumers as it is difficult to analyze the subjective customer perceptions of purchased goods.
Supplier Relations to Supply Chain
Service delivery is associated with “customer-supplier duality” which means that service delivery process often starts when the supply of inputs is made by customers (Zhou et al., 2009, p. 140). Contrary to manufacturing supply chain in which a producer plays a role of a key supplier of physical items, a customer may be represented as a supplier in many service organizations, i.e. electronics repair service.
Manufacturing supply chain efficiency depends on organizational capacity networking and relationship development while service supply chain requires effective information management and product customization (Zhou et al., 2009). In this way, although manufacturing and service supply strategies aim to achieve highest levels of efficiency as the end results of operations, the differences in characteristics of manufacturing and service operations emphasize that their factors of success are dissimilar, and these distinctive features should be considered in supply chain management.
Delivery of Products and Services
As the suppliers of intangible services, the employees in service organizations become the main actors in customer interaction development and are thus directly involved in the process of product delivery. At the same time, manufacturing firms may develop supply chain networks, develop partnerships, and employ partners’ assistance in product distribution. In this way, although producers bear full responsibility for the delivery of goods to the final consumption point, the process of product supply in manufacturing may be mediated by business partners.
Buzacott, J. A., & Mandelbaum, M. (2008). Flexibility in manufacturing and services: Achievements, insights and challenges. Flexible Services and Manufacturing Journal, 20(1-2), 13-58. Web.
Gao, J., Yao, Y., Zhu, V. C., Sun, L., & Lin, L. (2009). Service-oriented manufacturing: A new product pattern and manufacturing paradigm. Journal of Intelligent Manufacturing, 22(3), 435-446. Web.
Zhou, M., Park, T., & Yi, J. (2009). Commonalities and differences between service and manufacturing supply chains: combining operations management studies with supply chain management. California Journal of Operations Management, 7(1), 136-141.