Production vs. Manufacturing: What’s the Difference?

Manufacturing and Production, are the two terms related to conversion of raw materials into finished products. But, Have you ever wondered, what makes them different. Manufacturing is the process of transforming raw materials into ready goods, with the help of machinery. On the other hand, production alludes to the processes or methods, that converts inputs like raw material or semi finished goods, to make finished product or services, which may or may not use machinery.

Manufacturing is a process that involves making something that uses raw material as input, whereas Production may or may not include raw material as input. We can also say that manufacturing is production, but production is not merely manufacturing. Take a read of this handout and clear all your doubts, with respect to the difference between manufacturing and production.

Manufacturing uses tangible raw materials to create goods, such as lumber or minerals. Production, however, uses both tangible raw materials and intangible resources, such as money or credit. Manufacturers and production companies also differ in how they purchase their resources.

Differences between Manufacturing and Production.

What is manufacturing?

Manufacturing is the process of creating tangible goods or products from raw materials by using machinery and equipment. These resources or raw materials only include physical items, such as lumber, minerals or coal. Manufacturing requires human labor, equipment or technology to create goods and products that companies can immediately sell.

There are many types of manufacturing, including:

Manufacturing companies often use a multistep process to create goods. For example, a desk manufacturer might source lumber for its desks. Once it has lumber, it can hire employees to create the desks. After the builders complete the desks, the manufacturer can sell them to wholesale companies and retailers so that customers can purchase these desks.

What is production?

Production is the process of converting different items, components or products into other goods. These items could be raw materials, money, investments or even partially finished products. A production company can specialize in creating goods like mobile devices or backpacks and services like housekeeping. These companies can also convert resources into products that they need to create other goods. Production can create both tangible objects, such as products, and intangible objects, such as services.

Companies often define production as inputs and outputs. Input is the raw materials or resources that a company uses to create a good or service, and output is the final product that the companies deliver to the customers. For example, in a car production company, the input might be the metal that the company uses to create car parts. The company can then use those parts to produce a car, which is the output.

Production vs. manufacturing

Heres a list of some ways that production and manufacturing differ:


The purpose of production is to create goods or services, both tangible and intangible, through means of materials or resources. In comparison, the purpose of manufacturing is to produce tangible goods or merchandise through raw materials, labor and other equipment or technology. The fundamental difference between these processes is that manufacturing creates goods, while production can create both goods and services.


Resources refer to the materials needed to create a good or service. Manufacturing uses tangible raw materials to create goods, such as lumber or minerals. Production, however, uses both tangible raw materials and intangible resources, such as money or credit.

Manufacturers and production companies also differ in how they purchase their resources. Production companies typically have access or ownership of their resources, while manufacturing companies have to buy their materials from other sources. For example, a desk manufacturer might create its own desks, but it likely buys its lumber from an outside seller. A clothing production company, however, might grow its own cotton or other materials to make clothing. This is because production typically specializes in creating, converting and building materials.


While both manufacturers and production companies have to create their final products before they can use or sell them, their creation processes differ. Manufacturers produce their goods using tangible processes, such as physical labor or machinery. Production companies use machinery to create goods and services, but they can also create items using human labor instead of equipment.

Manufacturers also use raw materials to create goods, while production companies transform resources into new products. For example, a desk manufacturer might use heavy machinery to cut lumber for its desks. However, a clothing production company might use machinery or manual labor to convert cotton into cloth. Farmers can grow cotton for the production company, and different equipment or laborers can use this cotton to create clothing.


Production creates utility, while manufacturing creates matter. Utility refers to the usefulness of a good or service, while matter typically refers to a physical item. The output for production can be either a tangible or intangible good or service, such as a piece of clothing or a doctors medical service. The output for manufacturing is a final, tangible good, such as a book, a television or a tractor.

For example, a tangible output for a desk manufacturer is the desk that it creates. A production company can create tangible outputs as well, such as producing shirts for a clothing company. However, production companies can also create intangible goods, which they typically call services. An example of an intangible output for production is a service that a teacher provides to students, with education being the output.

Final results

After companies complete their output, they have to sell or use their products. In manufacturing, companies often sell their tangible goods to a retailer, who sells the goods to customers. In production, the output could have a few different uses. For example, a production company could sell its products or use its goods to create other products, such as using thread to stitch clothing. The production company can also save its output and use it for a later project. The final result of an intangible good would be the service, such as receiving medical care from a doctor.

The final result of both production and manufacturing can be selling their goods, but manufacturers usually sell their products immediately, while production companies may save their goods for a later date. The desk manufacturer can immediately sell its desks to a wholesaler or retailer for customers to buy, while the production company might save its items for future uses or dates.

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