Executive Briefings

Manufacturing, Services Companies More Alike Than Not

While manufacturing and services processes are different, the boundary between the two types of businesses is vanishing. Manufacturing and services are complementary, for two basic reasons. The first is that most businesses include both products and services in their offerings. Manufacturing companies provide a service package to go with their product--a computer company must provide a 24/7 help line, for example. Services companies often include a tangible product as part of their business--a restaurant is measured as much for its food as for its level of service. As a result of these perceptions, the composition of other companies is also changing. Some companies are becoming hybrids of manufacturing and services (for example, both General Electric and IBM have substantial service components, and Nike is an e-commerce and retail company with a substantial manufacturing element). The second reason manufacturing and services companies are complementary is that increased competition requires them to be more efficient and customer-oriented. Manufacturing companies have long concentrated on cost reduction and quality improvement; today, services companies are finding that they, too, must focus on reducing costs and improving quality. Consequently, services companies are learning from manufacturing companies. They have traditionally been good at customer service, providing fast and flexible response to customers. Manufacturing companies are learning they must be more receptive to customers in designing products and managing more responsive supply chains. As a result, they are learning from services companies.
Source: Inside Supply Management

While manufacturing and services processes are different, the boundary between the two types of businesses is vanishing. Manufacturing and services are complementary, for two basic reasons. The first is that most businesses include both products and services in their offerings. Manufacturing companies provide a service package to go with their product--a computer company must provide a 24/7 help line, for example. Services companies often include a tangible product as part of their business--a restaurant is measured as much for its food as for its level of service. As a result of these perceptions, the composition of other companies is also changing. Some companies are becoming hybrids of manufacturing and services (for example, both General Electric and IBM have substantial service components, and Nike is an e-commerce and retail company with a substantial manufacturing element). The second reason manufacturing and services companies are complementary is that increased competition requires them to be more efficient and customer-oriented. Manufacturing companies have long concentrated on cost reduction and quality improvement; today, services companies are finding that they, too, must focus on reducing costs and improving quality. Consequently, services companies are learning from manufacturing companies. They have traditionally been good at customer service, providing fast and flexible response to customers. Manufacturing companies are learning they must be more receptive to customers in designing products and managing more responsive supply chains. As a result, they are learning from services companies.
Source: Inside Supply Management