Growing Profitable Revenue - The Difference Between Manufacturing and Service Organizations


Manufacturing and service operations answer different questions and formulate different strategies when it comes to planning and managing the way in which their organizations operate and grow revenue.

Manufacturing Industries engage in the production of goods (finished products) that have value in the marketplace. These fall under either Process Industries (flow production or continuous process production industries) or Discrete Manufacturing Industries.

In manufacturing, the contact with the customer/client/actual user is rather low in terms if visibility and interactions.

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 Industries include those industries that do not produce goods and instead provide services. Often in service industries, consumption of the service takes place while it is in generation. Service operations provide certain intangible services that may not be easily identifiable. Service operations can be classified into many industries, such as banking, insurance, hospitality, advertising, logistics and consultancy.

There are more opportunities to customize the services they provide. Even in service operations where you receive a tangible product, the service you receive from workers may not always be the same.

It gets more complicated when a service based company adds products or when a manufacturing company begins to sell services. While there are potential revenue opportunities, a different sales approach and a new sales compensation plan might be required.

Other considerations occur when a service company provides services to a manufacturing company. There might be confusion with expectations as they both look at the world with a different perspective. This can also be true for a manufacturer who delivers products to a service company. Each might have a different world view and definition of “excellence”.

Consider the differences between manufacturing and service organizations as you create a revenue plan:

Service Providers:

  • Sell intangible products
  • Products can’t be inventoried
  • There is high customer contact
  • Requires a short response time
  • More labor intensive
  • More customization is possible

Manufacturing Companies:

  • Sell tangible products
  • Products can be inventoried
  • Lower customer contact is typical
  • Longer response time is acceptable
  • Capital intensive
  • Standardization – Generally have a standardized way of producing goods

What they both have in common:

  • Use of technology
  • Quality, productivity and response issues
  • The need to forecast demand
  • Capacity, layout and location issues
  • Customer, supplier, scheduling and staffing issues.

Does your organization need to change your message, and sales processes to be more effective?  Let me know, I can help you make the changes happen.

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Topics: B2B Sales Manufacturing