MMPC 009 - Services vs Products

Manufacturing operations excellence focuses on producing uniform, reliable, and high-quality products. In general, manufacturers have a standardized way of producing goods. Goods are produced en masse in a factory or warehouse-type environment. One finished product is generally the same as the next. Service Operations, on the other hand, refer to the provision of intangible services to customers.

Basis of comparison

Goods

Services

Nature

Tangible

Intangible

Ownership

Transferable

Non transferable

Separability

Can be separated from provider

Cannot be separated from the provider

Storage

Can be stored for later use

Cannot be stored

Perishability

Not all goods are perishable

Perishable

Production & Consumption

Consumed after production

Production and consumption happen together


It is difficult to increase productivity of services because -

  • Its difficult to measure the productivity of services due to its intangible nature.
  • An increase in the number of customers served doesn't translate to improved service quality. In fact, it might even lead to deteriorated quality.
  • Being a labor intensive industry, productivity cannot be improved by decreasing the input (service providers)
  • Using machine technology and other labor saving devices is also difficult
  • Most service organizations are small scale and operate in local markets as well.

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These notes are intended to give you a quick summary and recap of Services vs Products and help you answer questions such as -

  1. Why is it more difficult to increase the productivity of a service system as compared to a production system ?
  2. Explain the differences between services and goods production.
  3. What are the major distinctions between a manufacturing organization and a service organization? Discuss with suitable examples.

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