Production vs Manufacturing – All You Need To Know

Production and manufacturing are usually understood to be the same and used interchangeably when referring to creating goods. However, production and manufacturing have minor differences among them regarding the use of tools and processes. To better understand what both these terms denote and when to use them, it is important to know the differences between Production vs Manufacturing.

What is Production?

In production, the input could be material or non-material, which is then converted into an end product. This product may be sold to the end consumers, and the cycle continues. The primary aim of production is to satisfy human wants or the creation of utility. This is what differentiates it from manufacturing.

Note that the final product could not always be a fit for the end consumer’s consumption. Sometimes, it could also be a raw material for some other industry. Another point to note is that production does not always result in creating a matter. It primarily means the creation of utility using the existing or available resources. Three common classifications of production are – Projects, Intermittent Processes, and Continuous Process.

What is Manufacturing?

Manufacturing is the process of converting physical raw material into a product. The process involves using human resources, machines, and other things, such as chemicals. Manufacturing involves the efforts of both man and machine on a very large scale. Like production, the end product of manufacturing could either be a consumable product by the end customer or raw material for other industries, such as automobiles.

You will now have some idea of what both terms mean. Now let us see the differences between Production vs Manufacturing to get more clarity.

Production vs Manufacturing – Differences

Following are the differences between Production vs Manufacturing:

Meaning

Manufacturing involves making a good by using labor, machine, raw materials, and other resources. On the other hand, production means using resources to make anything useful for consumption.

Creating Utility

While production does not always mean creating a matter, manufacturing is. Therefore, in economics, the services of doctors, lawyers, etc., come under production. The reason being they are creating some sort of utility. On the other hand, manufacturing always requires the creation of matter, which is then consumable in some way or another.

Compulsory Resources

The manufacturing process must involve the use of men and machines. For production, the compulsory resource is men.

Input Requirements

In manufacturing, the input or the raw materials are tangible, which means you can see them. In production, the input could be both tangible and intangible.

Basic Concept

In production, a company or individual has ownership of the raw material. For instance, farmers own the land to cultivate crops on it. The farmer sells these crops to the customers, thus creating utility from the raw material. Manufacturing, however, requires the procurement of raw materials from different sources. Once a company procures the raw material, it creates a final product with the help of both man and machine on a large scale.

Output of the Process

In manufacturing, the end result or the output will always be a tangible good. This could be anything from a pen to a car that we require in our daily lives. Under the production process, the end result could either be tangible or intangible, depending on the input. In the case of professionals such as lawyers and doctors, the final product is usually a service.

We can also say that the end result of manufacturing is a good that is ready to sell. On the other hand, the end result of production is ready to consume immediately or later.

Production vs Manufactuing

Which is Bigger?

Every type of manufacturing could come under the scope of production. However, every production may or may not be called manufacturing.

Difficulty

Manufacturing involves proper coordination between man, machine, and technology to come up with the output. In comparison, production may be less complex as it primarily involves the addition of utility to the consumers.

Pre-requisites

For production, there may or may not be a need for machines. Similarly, a large-scale workforce might also not be a necessity in the case of production. On the other hand, manufacturing does require large-scale usage of both machines and manpower. Further, there has to be a physical facility where all workers can come to work, and the machine could be set up. In the case of production, there is no need to have a large-scale facility.

Sale versus Utility

Since manufacturing creates only tangible goods, therefore, it can be sold to someone else. On the other hand, production may or may not create a tangible product. This means the end product cannot always be sold to the next person, but it does create utility.

Example

Creating and designing turbines is manufacturing. On the other hand, assembling different parts of the engine, which could be part of the turbine, is production.

Final Words

We can say that there is a very thin line between Production vs Manufacturing. However, by reading the above points, you will now know the subtle differences between them. But, considering the heavy usage of both these terms interchangeably, one would not be wrong to use both the terms alike.

Also, read about Computer Integrated Manufacturing to learn more.



Sanjay Borad

Sanjay Bulaki Borad

Sanjay Borad is the founder & CEO of eFinanceManagement. He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms".

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