As someone who is new to the business, you might know if there are manufacturing companies (which produce goods) and service companies (offering services) that are the focus of business today. Even though they have various differences, Manufacturing and Services have the same thing, which requires competent human resources in their fields, requires a working environment for operations and of course also the desired end result, which is looking for profit. There is also a company incorporation singapore that offers assistance to entrepreneurs who will set up a company in Singapore.
The following are the 5 main differences between Manufacturing and Service Company companies.
1. Physical Goods
The main difference between a Manufacturing company and a Service company is the tangibility of the output produced. Output or output from manufacturing companies is producing physical goods that can be seen and touched by customers. While the output or output from service companies such as consulting, maintenance and training are intangible.
2. Inventory Level
Service companies are not like Manufacturing companies that require inventory. Service companies only create services when needed by their customers. Manufacturing companies, in general, will produce goods in advance, causing the availability of inventory with different levels depending on estimated market demand. The producer will keep inventory levels to a minimum. Inventory level or inventory level is very dependent on the accuracy of demand and production capacity to meet demand based on the right time. Inventories are basically costs for manufacturing companies.
3. Customer Requests
Service companies will not produce services or services unless needed by the customer. Service companies generally produce services that are tailored to customer needs. Whereas manufacturing companies can produce goods without customer orders or customer demand estimates. However, producing goods that do not meet market needs is a bad strategy and must be avoided by every manufacturing company.
4. Labor Requirements
Service companies need people who have special skills and knowledge and disciplines in the fields according to the services they offer. The delivery of services is labor-intensive and cannot be easily automated. Whereas factories in manufacturing companies can automate many of their production processes so that they can reduce the need for labor or can also move production facilities to countries with lower labor costs.
5. Physical Location
Service companies do not need a physical location. People who work in service companies can provide services anywhere. Whereas a manufacturing company or factory must have a physical location to operate its production and storage of its inventory.