Difference Between Manufacturing and Service

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There is considerable interest to apply the principles of Lean Manufacturing in the Service Industry – sometimes called Lean Services. The motivation comes from the fact that the Toyota Production System – also known as Lean Manufacturing – has been very successful in transforming manufacturing. The popular thought is that those same lean principles that has transformed manufacturing could do the same for services.

I have applied the principles of Lean Manufacturing in both services and manufacturing and I’ve learned the subtle difference in both contexts and also how one might apply lean to one versus the other.

What is unwise is the blind copying of the tools of lean manufacturing, thinking that they will work in services. The fact is that manufacturing and services are very different.

Let me attempt to highlight how a service business is different from a manufacturing business.

Difference Between Service and Manufacturing

In the next several posts, I’ll cover each of the items in the above comparison chart and show how service is different from manufacturing, which should also highlight how the principles of Lean Manufacturing can be appropriately applied in the different contexts.


  1. Paolo says

    I’d like to add that “Inventory” in service not only comes in form of people. Compared to manufacturing, the equivalent of raw materials in a service industry are in a form of “information”. This information goes through a process to be transformed into service which is equivalent to the final product in a manufacturing industry. For example, requests of healthcare customers for a room are filed in a request form – this is basically information. If these information (in form of Request form or sheets) is not processed immediately into service, it piles up – therefore waiting to be processed. This is the equivalent of inventory in a service industry.

    In the example of a healthcare industry, the people are not the inventory – it is the pending request (information) filed in the Request Form that is not yet processed completely into service. It is comparable to a manufacturing business when people, for example, are waiting for the laptop computers that they have requested because the laptops have not yet been manufactured (or processed).

    I would like to hear your comments on my insights.

    Thank you,


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