Answered Essay: What are the similarities and differences between product providers and service providers?

What are the similarities and differences between product providers and service providers? How does this impact Operations Management in each environment?

Expert Answer


1. They both work for earning profits. Both have a motive of earning more profits.

2.Profits in both the organisations calculate their profit on the basis of cost. Service provider ascertains the cost of maufacturing and product provider ascertain the cost of production or purchasing the goods.

3.They both focuses the isuue of cost control. As stated above that their motive is to earn more profit. Hence cost control leads to earn more profits by enhancing thr profit margin.

4.They both suffers from the competitive issue. that is they both have to form a strategy which helps them to gain competitive advantage.

5. They both get influenced by some factors such as internal ( employees) or external ( environment, customers, suppliers, government etc).3.

6.They both create misiion and vision statement for how the organisation will run and percieved by the customers.


1. Tangibility- This is one of the key difference between the service provider and product provider. The output of the service firm such as training, teaching, consultancy is intangible. And the output of the product provider are tangible,as they provide physical goods.

2.Productivity- productivity is easily measured in product provider operations because of the tangibility.And because of intangibility, the productivity is not easily measured.

3.Inventory- Service firms do not required to hold inventory. But the product provider is required to hold the inventory

4.Expenses- Expenses required for material handling is more in product opertions.

5.Production- Service firms does not produce service unless it is required by a specific customer. But manufacturing firm do produced the product even it is not required by the specific customer.

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