Production vs. Manufacturing: What’s the Difference?

The easiest way to bake a cake is to use a boxed mix and premade frosting: Buy the mix, preheat the oven, combine the necessary ingredients, bake as directed, cool the cake and frost away. But the genesis of the cake begins long before the boxed mix enters your kitchen. The journey starts with an array of farmers who cultivate wheat, harvest sugarcane, collect eggs and churn cream into butter. Extra ingredients, like vanilla or cocoa, may be sourced from overseas, while leavening agents are industrially processed. Based on these materials, companies develop recipes. And when the perfect cake mix is crafted, its packaging is carefully designed to gain notice on store shelves and make it to a consumer’s kitchen.

Just as the creation of a cake involves a series of interconnected steps, the business world relies on a complex network of processes to bring products to market. Two key processes are manufacturing (i.e., baking the cake) and production (i.e., everything from sourcing ingredients to getting the cake mix onto store shelves). Though manufacturing and production are two terms often used interchangeably, understanding the differences — and the intimate relationship between the two — can help businesses master the processes that govern the creation of goods and services, improve supply chain management and even help boost the economy.

What Is Manufacturing?

Manufacturing is the process of creating tangible products from raw materials or components. It relies on a combination of machinery and human labor to carry out various steps, including design, fabrication and assembly, that usually take place in specialized facilities, such as factories or plants. Manufacturing plays a critical role in the economy by providing jobs and supplying the goods that consumers and businesses rely on.

The primary goal of manufacturing is to produce items on a large scale, ranging from everyday household and food products to complex machinery and electronics. Ongoing advancements in manufacturing technologies continue to pave the way for more efficient methods of product assembly, higher product quality and innovative solutions to consumer and business problems.

What Is Production?

Production is the broad term for the complete process of creating goods or services. It encompasses a wide range of activities, from ideation, design and testing to manufacturing and packaging (if applicable) to final distribution. These activities can take place in a variety of settings, including manufacturing facilities, offices and service-oriented business locations. Key stages in the production process include not only the manufacturing of goods but also comprehensive planning, rigorous quality control and logistics management.

The overarching goal of production is to orchestrate various elements — people, processes, materials, financial resources and technology — to meet market demand. Whether the end product is a physical object or an intangible service, like an entertainment streaming service, production entails the use of strategies to optimize resource utilization, minimize costs and maximize output and quality. Technological advancements continue to shape production processes, keeping it a dynamic field that’s generally able to quickly adapt to evolving needs. Production is also a fundamental driver of economic activity, contributing significantly to countries’ gross domestic product (GDP). It also plays a key role in generating employment opportunities and ensuring that essential products and services can meet demand.

Key Takeaways

• Manufacturing focuses on creating physical goods, whereas production orchestrates the entire process of creating goods or services.
• Manufacturing cannot exist without production, but production doesn’t always include manufacturing.
• While manufacturing outputs are tangible products, production’s outputs can be intangible, such as the expertise provided by a consulting firm.
• Both manufacturing and production strongly influence economic development and technological progress.
• Tech advancements, such as automation and artificial intelligence, can revolutionize the relationship between manufacturing and production, especially when tools enable a dynamic feedback loop between the two disciplines.

Production vs. Manufacturing Explained

Put simply, manufacturing is a subset of production. Manufacturing is focused solely on creating physical products, often using complex machinery and labor-intensive techniques. It’s a phase within the broader spectrum of production, which encompasses the planning, development, logistics and distribution of tangible and intangible goods. In other words, production captures the entire life cycle of a product or service. It begins with a concept and moves through various stages of development, including product/service creation, marketing, sales and customer support.

Take, for example, a canned soup company. The manufacturing process includes cooking, canning and labeling the end product within a specialized manufacturing facility, while the production process includes recipe development, ingredient sourcing, marketing and distributing the canned soup to retailers — in addition to the previously mentioned manufacturing process.

Note that manufacturing is always a part of the wider production process, but production doesn’t always include manufacturing (in the case of intangible services, for example). Good production practices demand a holistic view of resource management, whereas good manufacturing practices zero in on the efficiency of transforming materials into tangible goods. Together, they represent the interplay of various elements that drive the economy, each with its distinct focus, requirements and contributions to the market.

Key Differences Between Production vs. Manufacturing

The main distinctions between production and manufacturing lie in the scope, inputs, outputs, requirements, overall function and resources needed to fulfill their respective operations. Costs also differ: Manufacturing costs are often limited to the direct expenses for creating the product; production costs encompass a wider range of both direct and indirect expenses.

• Scope

  Understanding the scope of production and manufacturing is essential for businesses to effectively strategize and manage their operations. Manufacturing is dedicated to the conversion of raw materials into finished goods. It involves a series of steps that requires machinery, labor and technology in specialized facilities, focusing on efficiency and quality control in the creation of tangible products.

  In contrast, production encompasses a broader range of activities that extends beyond manufacturing. It includes not only the physical creation of goods but also idea generation, design, planning, procurement, assembly, testing, packaging, distribution and customer service. Production is concerned with the entire life cycle of a product, from the initial idea to its delivery to the end user. This holistic view enables businesses to identify opportunities for innovation, efficiency and customer satisfaction across the entire value chain.

• Input

  Manufacturing and production inputs represent the assorted materials, components and resources necessary to complete their respective processes. Manufacturing inputs are tangible, with exact inputs dependent upon the end product. For instance, steel and plastics are essential inputs for creating a wide range of physical products, as are components like circuit boards. Some inputs, notably energy (electricity, etc.) and skilled human labor, are necessary to power and use manufacturing machinery, regardless of the goods being made. Securing a reliable supply of raw materials and optimizing equipment and labor are critical for controlling costs and maintaining quality.

  Production inputs, by contrast, are more varied because they can be both tangible and intangible. These inputs rely on a diverse mix of creative ideas, skilled labor, technology, raw materials, time and capital investment. Companies must carefully manage these diverse inputs to balance creative resources with practical restraints.

  In the pharmaceutical industry, for instance, inputs for the manufacturing process include the medicine’s active ingredients and the additional inactive substances used to carry those active ingredients. Inputs for the broader pharmaceutical production process might include scientific research, clinical trial testing to ensure safety and effectiveness, and regulatory compliance knowledge.

• Output

  Output is the final stage in both manufacturing and production — the stage at which the finished goods and services enter the market. Manufacturing, by its very nature, always results in products that can be seen and touched: electronics, food products, vehicles, furniture, pharmaceuticals, etc.

  Production outputs span a wider spectrum to include the tangible goods of manufacturing, as well as intangible services like software development and customer support. Even new ideas or blueprints can be considered production outputs. In engineering, for example, the creation of detailed plans, designs and blueprints is a critical output that precedes the manufacturing of the actual physical product. These outputs represent the intellectual labor and creativity that are involved in transforming a concept into a format that can be communicated, shared and eventually turned into a physical product or implemented as a service.

• Requirements

  The set of requirements for manufacturing is technical and precise: Specifications, production targets, quality standards, safety regulations and the need for consistent equipment maintenance are all a must. Rigorous attention to detail ensures a consistent, high-quality output that adheres to specific business, industry and compliance standards. This level of diligence is imperative, as it upholds the manufacturer’s reputation and prevents costly errors.

  On the other hand, production demands a broader combination of market insights, innovation capabilities, logistics management and regulatory compliance. It requires a holistic understanding of what customers want and how to deliver it. In fact, effective production not only meets but anticipates customer needs.

• Function

  Manufacturing and production each serve specific functions with defined goals within the economic ecosystem. The function of manufacturing is to convert raw materials into finished goods through a series of operations designed to generate tangible value by optimizing the use of resources, ensuring product quality and prioritizing market preferences. This involves using reliable materials and adhering to strict quality control standards, while streamlining operations, optimizing supply chains and reducing waste. As a result, the business can improve its margins and reduce production times, while delivering products that satisfy customers.

  Production, with its wider scope, also functions to provide the highest possible value to the end user or customer and to the business itself. But, unlike manufacturing, production does so by coordinating and managing the entire journey of a product or service from conception to delivery. This includes aligning various processes and resources, such as human capital, materials, technology, design, manufacturing, marketing and logistics, to form a cohesive and streamlined workflow. Its goals are to ensure effective resource use and to minimize costs while maximizing market reception, customer satisfaction and user experience.

• Resources

  Different from inputs, which are the materials and components consumed to create a product, resources represent the overarching capabilities and assets employed to orchestrate and execute the processes of manufacturing and production. This includes the workforce and technology assets that enable the operation.

  As would be expected, manufacturing largely focuses on physical resources, such as manufacturing facilities, specialized machinery and tools. Quality-control systems are also key, as are the skilled technicians and operators who manage, use and maintain machinery. In general, technological resources center around equipment that enhances efficiency and product quality, such as automation and precision tools.

  Production necessitates a wide range of human, technological, material and informational resources to bring ideas to life. This also means that production requires more comprehensive orchestration and organizational coordination to effectively manage resources to get the job done. For example, a software company’s production resources likely include skilled programmers, a robust development environment and a reliable customer support system. Similarly, an educational institution that produces courses and training programs will rely on skilled educators, curriculum developers and digital learning platforms to facilitate service delivery.

• Costs/Financial Analysis

  Manufacturing costs tend to be more directly tied to the expenses related to creating the product itself: direct raw materials associated with manufacturing, direct labor associated with manufacturing and indirect manufacturing overhead, such as equipment maintenance and depreciation. These costs often have a direct relationship with production volume, increasing as production needs increase. Understanding and managing manufacturing costs — for example, identifying and changing wasteful practices, minimizing under- or overproduction and scheduling the right number of workers to meet demands — is essential for making smart business decisions that maximize profitability.

  Although manufacturing costs are substantial, they are typically more straightforward to measure and manage than production costs, which include all of the costs a company incurs from producing its revenue-generating product or service. Like manufacturing costs, production costs include labor, raw materials and overhead, but each of these encompasses nearly every other cost associated with producing the product or service, from the work hours spent on ideation to customer support worker salaries.

• Example of Production vs. Manufacturing

  In the automotive industry, a car manufacturing plant focuses strictly on the assembly of vehicles. Here, raw materials like steel and rubber are transformed into cars through processes such as stamping, welding and painting. The plant’s output is the tangible, finished automobile, ready for sale.

  By contrast, the automobile company’s production process encompasses not just manufacturing but also design, marketing, sales and after-sales service. The design team conceptualizes the vehicle, marketing creates demand, sales converts that demand into purchases and after-sales service promotes customer satisfaction. The broad production process creates the car, as well as the customer experience around it.

The Relationship Between Production and Manufacturing

Together, production and manufacturing form the backbone of how goods and services come to life. From the hierarchical relationship that positions manufacturing within the broader scope of production to the synergy of technological advancements and innovation, the two concepts work in tandem.

• Hierarchical Relationship

  Manufacturing is a specialized stage within the production process — a critical link in the chain, yet only a part of the whole. A product’s ideation, design, marketing and distribution are all equally as vital to bringing a product to market.

  Understanding this hierarchical relationship can help businesses plan strategically. For example, consider a clothing manufacturer that is planning to launch an eco-friendly line of clothing. By taking a holistic view, the company ensures that it’s not only using sustainable materials, but that the manufacturing process itself prioritizes low waste and nontoxic by-products, and that all of this aligns with the larger business objective to appeal to environment-conscious consumers. This comprehensive view can, in turn, prompt the company to reevaluate how innovation is fostered within each stage of production and how these stages interact to enhance market responsiveness and competitiveness. For example, perhaps a business notices its supply chain involves excessive transportation, leading to a high carbon footprint, and decides to source materials more locally or invest in renewable energy sources for its factories.

  This holistic perspective can also inform the way resources are allocated, how processes are optimized and how various departments within an organization collaborate — all of which supports a company’s ability to navigate market complexities and improve strategic agility by, for example, adapting to the growing cohort of consumers making strides toward sustainability.

• Complementary Nature

  Production and manufacturing are not just sequential stages in the life cycle of a product; they are interconnected processes that, when harmonized, can significantly enhance organizational efficiency and innovation. At the center of this complementary relationship is the seamless flow of ideas and feedback across stages.

  Perhaps most obviously, early production processes, like ideation and the creation of blueprints, are key to providing manufacturing teams with the tools they need to create high-quality, replicable products. Here, production’s role is to confirm that these specs align with market research, customer demand and the company’s overall business strategy. Then, insights from the manufacturing floor, such as material choices and process efficiencies, feed back into the design phase. This information can enhance product feasibility, reduce time to market and verify that the final product is realistically aligned with customer needs.

  The complementary nature of production and manufacturing is also evident in supply chain management. Part of the production process is to select materials and suppliers, a choice that is often decided by factors such as manufacturing capabilities and sustainability goals. In turn, chosen materials and suppliers can directly affect manufacturing efficiency and product quality, because poor-quality materials or suppliers with slow lead times, for instance, can severely hinder a company’s ability to produce as much as it needs, when it’s needed.

  Similarly, ongoing quality control in manufacturing provides continuous feedback for the production process. This can facilitate a company’s ability to adapt to both internal efficiencies and market demands, ultimately supporting a more responsive, dynamic organizational strategy where each phase complements the other.

• Process Integration

  In the life cycle of a product, the transition from initial idea, design and testing to manufacture, packaging and other stages of production should be seamless. With so many moving parts, constant coordination and optimization of resources is mandatory. Companies can align their manufacturing processes within the larger production workflow via a combination of organizational best practices and technological tools. One core best practice is for cross-departmental teams to work collaboratively to share insights and goals. Consider the interplay between manufacturing teams and customer service departments. If customer service team members receive an influx of negative feedback about product quality, they should quickly communicate this information to the manufacturing team to prompt investigations into the process or material quality. Similarly, collaboration between production forecasters and manufacturers can help enhance production planning and inventory management.

  Technological advancements, such as enterprise resource planning (ERP) systems, offer a foundation for this level of integration by providing real-time data and analytics that can be used to facilitate communication across different production areas. Better decision-making results, allowing for manufacturing teams to adjust operations in response to feedback from other stages of production.

• Value Addition

  Both production and manufacturing contribute value and elevate product quality, functionality and customer satisfaction, albeit in slightly different ways. For one, manufacturing adds significant value by transforming raw materials into usable products. But it’s more than that. Through precise, controlled processes that leverage advanced technologies, companies can be confident that their products are reliable, durable and perform exceptionally, directly enhancing customer satisfaction. Companies that tailor products to individual customer preferences can further add value.

  Production also adds a significant amount of value. One way is by offering secure and innovative packaging that protects the product and sharpens its appeal. Depending on the product, good packaging can potentially extend shelf life and/or improve marketability. Production’s role in providing top-notch customer support, from presale inquiries to after-sale services, adds additional layers of value that can amplify customer loyalty and satisfaction.

  Logistical efficiency is another core value-add arena for production. It’s no question that making sure products reach customers quickly and in optimal condition adds value, but there are other ways production can do so. Fostering strong supplier relationships — especially ones that prioritize ethical sourcing — can contribute to a positive brand reputation, for instance.

  Together, these efforts in manufacturing and production create a synergism that boosts the overall value chain, resulting in products that meet, and ideally exceed, consumer expectations in terms of quality, function and ethical standards.

• Supply Chain Interdependence

  Sourcing raw materials and selecting reliable suppliers are pivotal steps for the manufacturing process and, ultimately, the quality of the end product. This highlights the necessity for a well-coordinated approach that manages these relationships for the sake of supply chain efficiency. Here, the role of production comes into play by making sure that the design, planning and execution stages align with supply chain inputs, thereby supporting manufacturing operations.

  Supply chain visibility practices that prioritize transparency and open communication channels can help production teams make informed decisions regarding scheduling, capacity planning and quality control. It also supports their ability to confirm that they’re continually sourcing quality materials from suppliers that reinforce the organization’s wider business objectives — like sustainability — while helping manufacturing teams maintain quality standards.

  For companies relying on just-in-time (JIT) manufacturing — which aims to create just enough goods to meet demand — producing, understanding and respecting the relationship between production and manufacturing is significant. JIT requires precise coordination when procuring, receiving and seamlessly transitioning materials into the manufacturing process so that orders go out on time. For example, production teams must work closely with both suppliers and manufacturing units to ensure that materials arrive to meet production schedules, effectively bridging the gap between supply chain inputs and manufacturing needs.

• Economic and Industrial Impact

  Manufacturing, often hailed as a cornerstone of economic development, is a pivotal engine for job creation, technological progress and the expansion of export markets. It directly influences a nation’s GDP, as well as its standing in the global economy. In 2022, for instance, manufacturing contributed to 11.4% of total U.S. GDP.

  Manufacturing can drive innovation and technological advancement when companies adopt cutting-edge technologies that improve production processes and industrywide productivity. Robotics, artificial intelligence (AI) and 3D printing, for example, are all helping companies increase production speeds while minimizing errors and material waste.

  And, as manufacturing processes become more competitive and complex, the need for bespoke solutions incentivizes research and development (R&D) activities that explore new materials, manufacturing techniques and more. This investment in R&D can lead to groundbreaking processes and products, such as lighter, stronger materials for automotive manufacturing, or using AI to predict and prevent equipment failures before they occur. While these innovations can heighten efficiency and productivity within the manufacturing sector, they also have the potential to revolutionize how other products are designed, produced and delivered across various industries. For example, carbon fibers were used first in lightbulbs but have since been applied to the automotive and aerospace industries.

  The broader production processes extend the economic impact beyond manufacturing itself. Services related to manufactured goods, such as marketing, logistics and after-sales support, contribute significantly to economic diversity and resilience. For example, marketing and logistics enable manufacturers to reach global markets more effectively, while also improving supply chain efficiency. Meanwhile, robust global after-sales support can help companies build long-term customer relationships that support business success.

• Technological and Innovation Synergy

  Tech advancements in manufacturing, such as automation, and the integration of artificial intelligence (AI) and the Internet of Things (IoT) have fundamentally transformed the production landscape. Automation and robotics streamline manufacturing processes by taking over repetitive tasks, reducing manufacturing and production costs while improving workplace safety. And, thanks to less manual intervention, the workforce can concentrate on more strategic and innovative tasks that contribute to the creative potential within the production process.

  AI and machine learning offer predictive insights for a variety of business processes that support manufacturing and production. For example, tools that automatically analyze consumer behavior and market trends can be used to align manufacturing schedules to optimize the timing of new product launches that are also synced with marketing campaigns and distribution efforts. And with IoT technology, more and more companies are creating interconnected smart factories where machines communicate in real time. This seamless integration strengthens the manufacturing and production relationship by making sure manufacturing processes are responsive to production requirements, such as changes in market dynamics.

  Together, these technological innovations support a dynamic feedback loop between manufacturing and production processes, where every advancement in technology catalyzes further innovation across the entire production spectrum. For example, a business might leverage AI to analyze customer feedback and IoT data to identify trends in product usage. This information could lead to adjustments in product design and marketing strategies, which can then inform future marketing efforts to make sure they’re aligned with consumer expectations.

Manage and Scale Your Manufacturing Business With NetSuite

To truly thrive amid countless moving parts, many manufacturing businesses — especially those with rich production processes — benefit from modern, cloud-based ERPs. These tools can provide a strong foundation to support the relationship between manufacturing and production, for example, by providing real-time data and analytics that can be used to facilitate communication and coordination across different production areas, from procurement to manufacturing and, ultimately, to customer relationship management (CRM).

NetSuite for Manufacturing is one such solution. This scalable platform allows companies to not only plan and schedule manufacturing cycles but also manage key production-related processes, including procurement, marketing, inventory management and CRM. With real-time communication and insights shared among all pieces of the manufacturing and production puzzle, companies of all sizes have access to the data necessary to make smart decisions that cut operating costs, increase revenue and better manage their business — and supply chain — as a whole.

Whether it’s a box of cake mix or a life-saving drug, manufacturing is the key to turning a concept into a physical reality. Production, on the other hand, encompasses the entire process, from the initial idea to manufacturing to the final delivery to consumers. In other words, manufacturing focuses on the creation of tangible products, while production encompasses a broader spectrum that includes design, logistics, distribution and customer support. Together, they can form a comprehensive process that drives the modern economy — but only if an organization can successfully support seamless interaction and teamwork between each phase of production and manufacturing.

Production vs. Manufacturing FAQs

Is manufacturing a type of production?

In a sense, yes. Manufacturing is a specialized process within the broader scope of production, which includes the creation of both goods and services. Manufacturing cannot exist without production, but production does not have to include manufacturing. Production of software services, for example, does not leverage manufacturing unless a physical product is also being produced.

Does production count as manufacturing?

Not always. Production encompasses the entire process of bringing goods and services to market, which includes, but is not limited to, manufacturing.

What is the difference between a producer and a manufacturer?

A producer oversees the entire creation process of goods and services, while a manufacturer specifically creates tangible products from raw materials.

What is the difference between production and manufacturing lines?

Manufacturing lines refer to the sequence of operations used to assemble products — usually physical goods — in a factory setting. Production lines cover a broader scope, including both the assembly of products and the provision of intangible services.

What is the difference between manufacturing and fabrication?

Manufacturing is the process of making products on a large scale using machinery, often with automation, to efficiently produce a high volume of products. Fabrication is a subset of manufacturing that involves assembling parts to create a product. While fabrication can involve machinery, it usually includes a significant degree of manual labor or specialized craftsmanship. Fabrication is often inherent in industries like metalworking and carpentry.