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Product Versus Service Supply Chains Comparison Paper

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Product Versus Service Supply Chains Comparison Paper

University of Phoenix

ISCOM 374/BSCV1284U0

March , 2011

Product Versus Service Supply Chains Comparison

Even though Both products and services provided need to have a planning strategy , Strategies for products and services, forecasting for products and services, and inventory practices will have their differences. There are similar and distinct issues in managing the supply chain in regards to each type of industry. In the global market competition is fierce among companies and it is very important to understand the importance of understanding the factors which influence service organizations forecasting and resourcing decisions in comparison to manufacturing organizations in regards to sales and the supply chain.

It would be difficult comparing a service versus a product because it is hard for one to visualize and to measure a service. A customer demand many times will require a service organization to personalize services in order to meet customer satisfaction. This causes an issue with the service industry in many ways this is a disadvantage. It is a disadvantage because they do not have the ability to produce a product, they do not have the ability to stock and warehouse their products, and they do not have the ability to ship a tangible product to their customers.

Manufacturers have the ability to forecast using pervious sales, cycles, trends, and customer orders from past history. Forecasting has not proven to be consistently accurate. Manufacturers either produce too much or not enough product causing overstock or stock outs. When service organizations error in forecasting this usually results in over used and wasted resources. This is because providing a service requires time and labor, and when labor is underutilized or if there is not enough labor to satisfy customers the result is unhappy customers. The value of resources can change based on the economic environment which can increase or decrease the cost of services that are provided.

Manufacturing and service companies may suffer when forecasts are inaccurate and do not match demand. Some areas of the supply chain that are impacted would be the inventory, goods and services when forecasts are inaccurate. Companies may observe the bullwhip effect when demand is constantly changing and with inaccurate forecasting. Inaccurate forecasting can cause the supply chain to maintain too much inventory and the carrying cost can be high using up unnecessary resources. Maintaining too little of inventory can cause stock outs, leading to stock out costs and



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