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Processes
This study will use an example of Boeing, a manufacturing company, against Netflix, a service industry company. With Boeing being an aeroplane-making company, its raw materials are very expensive. In addition, these parts have to be transported using complex and costly systems. Being a company that procures its equipment from India, Boeing uses a lot of shipment routine, freight transportation, and documentation (Dan et al., 2019). Developing the physical product is also very expensive because it needs assembling points and complex machines. However, in Netflix, most of the cost is used to manipulate information, including analyzing and storing data (Dan et al., 2019). The company incurs more costs in creating relationships with customers and suppliers.
Products
There is a distinct difference between manufacturing supply chain products and service supply chain products. The manufacturing supply chain products are physical and tangible products assembled and tested (Dan et al., 2019). For instance, before a Boeing jet is sold to a client, its parts are imported, assembled, and tested. In addition, the supply chain helps transform raw materials into finished products in manufacturing. However, on Netflix, the finished product is a closed file. If the company sells a service subscription, only the case files of transactions remain with the company. In a Service Company, no physical product can be touched (Collier & Evans, 2020). This enables a company like Netflix to sell its products online.
Customers
Boeing company consumers are within the geographical reach of the product because it has to be delivered physically. This implies a need for logistical arrangements for the final product to reach the consumer in the perfect form (Collier & Evans, 2020). In manufacturing, the customer is mostly the last link because the demand starts from them and then goes upstream. For instance, if a customer orders a private jet with Boeing, the customer specifies the requirements, and then that information is sent upward until it reaches the manufacturer. On the contrary, consumers of Netflix have a wider geographical freedom because the services can be sent over the internet; hence, there is no need for logistics. The consumer has to pay for their subscription, and an email link is sent to them. A consumer may play various roles in the supply chain whereby the funds go up the unit when the customer subscribes to the services (Collier & Evans, 2020). However, the first customer is the plaintiff in other service forms, such as criminal justice. If the accused is convicted, he becomes the customer because they must receive correctional services. This is an indication that customers can play double or even triple roles.
Supplier Roles
One of Boeing’s supplier roles is selling tangible products. The supplier has to have the planes and display them for the customers to come and assess them. In this case, it is easy to determine the value for money. In addition, the supplier must have inventory so that the consumer will always find the product available (Dan et al., 2019). For instance, the Boeing supplier may require different types of jets on display. In Netflix, the supplier provides their expertise by installing the Netflix software and ensuring it connects successfully so the client can enjoy the content. In this case, creating trustworthy relations with the consumers and customizing them is important (Dan et al., 2019). The supplier does not need any inventory as they are easily and remotely accessible from the producer.
Facilities
Manufacturing operations involve developing products, storing them in a warehouse, and later taking them to the display facilities. This shows that the manufacturer needs to have a large storage space depending on the size of the goods they produce (Dan et al., 2019). Boeing has a vast land where they produce, store, and display aircraft. However, the service industry does not need much storage space. Services should be produced and consumed simultaneously because, like in Netflix, when there is a live show. The users must log in and consume the show as it’s being broadcast. This shows that the company is simultaneously producing and selling the product; hence, storage space is unnecessary. This displays the nature of services, which cannot be stored for later use (Dan et al., 2019). When there is an increase in demand, the company has to hire more people to facilitate the production of the service to balance the product-supply equation.
People/Skills
In the manufacturing supply chain, the people involved have to coordinate and cooperate highly to ensure that the whole system works effectively. Information on demand has to move the chain upwards from the consumer, retailer, wholesaler, distributor, and then manufacturer. Therefore, the supply chain will result in the bullwhip chain effect without this coordination (Dan et al., 2019). In this case, since Boeing has a short distribution chain, it has to ensure that it receives clear information from its distributors on demand to ensure a surplus in production. The risks of the products produced will be passed down through the chain as the distributors have surplus inventory (Dan et al., 2019). In the manufacturing supply chain, there is always the need to increase surplus, which involves having more than the demand to enable the manufacturer to cater to uncertainties.
In the service industry, there is no need for direct coordination between the manufacturer and the supplier. This is because the supplier incentives or interests are independent of the service provider, so they do not need to cooperate entirely (Dan et al., 2019). For instance, if a Netflix distributor (broker) buys a premium subscription from the company and wants to sell it to other people, it does not need to coordinate with the company after purchasing the logins because its interest is making a profit by selling these logins. However, a manufacturing company would need close coordination because they need the manufacturer to produce specific goods. In service supply chains, there is no risk in distribution across the supply chain because the company sells the product directly to a consumer, who is, in this case, the supplier (Dan et al., 2019). A client acts as a supplier by providing information on the services they need from Netflix by choosing a monthly or yearly subscription, and then the company gives a quotation. This shows no risk distribution because the supplier is also the final consumer. Finally, there is no need to have surplus production because the producer of the services is readily available to provide the services.
Technology
In a manufacturing firm, technology is mostly used in the supply chain. This includes the use of robotics and artificial intelligence in the production process. The use of technology has been highly embraced in the manufacturing world because it helps reduce labor costs, saving on the overall cost of production (Collier & Evans, 2020). For instance, Boeing’s supply chain uses technology and robotics to ensure they make standardized goods. However, in the service industry, the use of technology is not too much because it is mostly based on the expertise of the service provided. Therefore, technology in the service industry is used as an additive to enhance user experience. For instance, in delivering healthcare services, there is a need for a healthcare provider’s expertise to provide healthcare services to the patient. However, the healthcare provider uses technology to facilitate service delivery (Collier & Evans, 2020). In Boeing Company, artificial intelligence can be completely relied on to provide various products in a standardized manner. This implies that although technology has been applied in both manufacturing and service industry supply chains, it is in the manufacturing industry.
Organizational Structure
Manufacturing companies rarely have direct contact with their consumers. This is because of the complex organizational structure and supply chain, which involves the manufacturer, distributor, wholesaler, retailer, and consumer. This makes it difficult for the consumer to interact directly with the manufacturer (Collier & Evans, 2020). This complex culture of the manufacturing industry has led to long response times because the information has to go up and down the supply chain to reach the consumer. For instance, if a customer for Boeing company needs a spare part, he will have to inform the distributor, who will then inform the Boeing company, and then feedback will flow again downwards. On the contrary, for the service company, the organizational structure of the supply chain is short, and mostly, the final consumer interacts directly with the producer (Collier & Evans, 2020). For instance, in buying Netflix services, the consumer has to log into their website to access the entertainment they need, which implies that there is direct contact. As a result, the contact time is less because intermediaries are involved.
References
Collier, D., & Evans, J. (2020). Operations and Supply Chain Management. Cengage Learning.
Dan Reid, R., & Sanders, N. (2019). Operations Management: An Integrated Approach. Production management.
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