There is no doubt in anyone’s mind that the world is changing. Industrial customers are demanding their manufactured goods faster, less expensive and more precise.
As the United States becomes primarily a service driven economy, the expectations surrounding manufacturing transactions are changing. The US has more people employed in services today, than in manufacturing, and subsequently we consume more services than any time in history.
Customer expectations are evolving with this change. As information has become more easily accessible with devices such as our smart phones, our customers expect to receive the data they need, quickly and at their convenience. They expect manufacturers to deliver complex business services along with their manufactured deliverables.
But manufacturing and service industries are two completely different animals – there are many significant differences between service and manufacturing organizations:
• the tangibility of their output
• the need to maintain inventory
• customer-specific production
• labor-intensive or automated operations
• the need for a physical production location
But, in practice, service and manufacturing organizations share many characteristics. Some manufacturers offer their own service operations and both require skilled people to create a profitable business. These common characteristics offer the astute manufacturer the opportunity to create a unique service experience – mainly through increasing the visibility within the process to the customer.
The key difference between service firms and manufacturers is the tangibility of their output. The output of a service firm, such as consultancy, training or maintenance, for example, is intangible. Manufacturers produce physical goods that customers can see and touch. Consider offering your customers touch points along the production cycle that increase the visibility of the tangibility. This can be accomplished through the use of technology enhanced production systems.
Service firms, unlike manufacturers, do not hold inventory; they create a service when a client requires it. Manufacturers produce goods on order, for stock, or with inventory levels aligned to forecasts of market demand. Consider offering your customers visibility to your inventory, or in the case of customer produced inventory, their specific inventory levels. This is easily accomplished with interactive technologies.
Service firms do not produce a service unless a customer requires it, although they design and develop the scope and content of services in advance of any orders. Service firms generally produce a service tailored to customers’ needs. Manufacturers produce goods on customer order or forecast based on customer demand. A manufacturer can exceed customer expectations and greatly increase customer satisfaction by accurately forecasting customer demand.
A service firm recruits people with specific knowledge and skills in the service disciplines that it offers. Service delivery is labor intensive and cannot be easily automated. Manufacturers can automate many of their production processes to reduce their labor requirements, although some manufacturing organizations are labor intensive. A manufacturer can exceed customer expectations by providing access to professionals such as engineers, artists or quality personnel. This can be accomplished through many different mediums, online conferencing, Skype, or a simple email.
Service firms do not require a physical production site. The people creating and delivering the service can be located anywhere. Manufacturers must have a physical location for their production and stock holding operations. This has always been a challenge for manufacturers – where to locate key facilities to exceed customer expectations. But with the enhanced distribution systems that are available today, manufacturers can exceed expectations by offering services such as next day delivery.
In the 21st century, customer expectations are changing. Information is becoming much more valuable, more easily accessible, and our customers expect to receive the data they need, quickly and at their convenience. The astute manufacturers can exceed customer expectations and drive customer satisfaction by delivering complex business services along with their manufactured deliverables.