The end goal of any company is a satisfied customer. The process of locating, obtaining and transporting the inputs needed to do this is the core function of supply chain management. Supply chain design in the manufacturing industry requires a great deal of focus on physical product and a broader supplier base, while service firms typically have little need for physical inputs other than office supplies, and often work with a much smaller group of suppliers. Inputs
Both the service and the manufacturing industries require an input of labor to complete the processing necessary to satisfy their promise to the end customer. Additionally, companies in both industries require inputs from suppliers of various types. Finally, both industries require capital investment in equipment that allows their employees to do their work. The primary difference is that most of the cost of manufacturing labor is involved in procuring, transporting and manipulating physical material, while almost all service industry labor is expended on manipulating information and developing relationships. Because of this difference, capital investments in machinery and equipment are typically much higher in the manufacturing industry. Logistics
Traditional manufacturing supply chain management focuses on logistics in terms of moving physical material from one location to another. The size and weight of objects being shipped and the distance from the supplier to the manufacturing facility can play a major role in the cost of the product. In service organizations, particularly in the financial sectors, these factors are irrelevant because no physical product is moving except perhaps a few sheets of paper. While the manufacturing industry tries to negotiate better shipping rates and fill containers with product to reduce unit cost, the service industry upgrades servers and installs new software to speed the flow of communication, thereby reducing the labor costs necessary to produce a finished...
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