The main difference between works and services is that as a result of the work, the subject receives a material object. Services are intangible. They are confirmed exclusively by documents. Services can be very different, and from this article you will learn about the types of production services.
General information
Production services - a set of measures aimed at meeting the needs of organizations. All of them are provided on a contractual basis. Simply put, the provision of production services is the execution of transactions, the nature and type of which depends on the specific needs of the enterprise.
Engineering
It is a complex of commercial activities for the preparation and maintenance of the production process. The services of engineering companies are very diverse. Firms offer security for the release of goods necessary for the public. They can also deal with the sale of goods and services, production equipment, preparation for the construction and operation of infrastructure, industrial, agricultural and other facilities.
The whole range of engineering services provided in the domestic and foreign markets can be divided into two groups. The first includes activities for the preparation of production activities. The services of engineering companies are associated with pre-design, design work, solving problems when creating an object (conducting economic research, legal and other procedures).
The second group consists of services aimed at ensuring the process of production and sale of products. Among them:
- Optimization of money management system.
- Coordination of the enterprise.
- Optimization of sales of goods.
- Inspection and testing of equipment.
- Selection, training, staff development.
- Assistance in assessing income and expenses.
- Development of recommendations on marketing research, financial policy.
- Implementation of information support systems, computer technology.
Engineering production services is a complex activity that requires certain knowledge. Therefore, they are provided only by specialized companies, industrial and construction enterprises that supply equipment and carry out installation works.
Rental relationship
Not every company has sufficient funds to purchase the necessary equipment. Expensive machine tools, cars can be rented. In the production services market, this type of activity is in high demand.
The company can obtain the necessary equipment by concluding an agreement with the owner. It fixes the operating conditions, size of payment, term and other essential conditions. Depending on the period for which the agreement is concluded, the lease can be long-term (more than five years), medium-term (from one to 5 years), short-term (from several hours to 1 year).
Lease relations also differ in subject and conditions.
Leasing
It is a type of long-term lease. In the international market, leasing is very popular. Today, this type of lease is considered as a specific way of financing.
The essence of leasing is the provision of long-term rental construction equipment, production equipment, other means and materials. It can be of two types: financial and production.
In the framework of the first type, a leasing company (lessor), on behalf of an economic entity who wishes to obtain the right to operate any property, acquires the corresponding objects from the manufacturer at its own expense. After that, the company leases them, as a rule, with subsequent redemption. Thus, there are two transactions: purchase and sale and long-term lease.
Term of use
The lease duration for leasing is usually determined taking into account the depreciation period of the property. Depending on the type and purpose of the objects, it can be from 5 to 20 years or more.
The rules for depreciation are taken into account when forming the rent for equipment. Payments cover most or all of its cost.
Production services of a leasing company can be paid at the same time as rent. The amount will include the costs of the company for the purchase of equipment and the amount of remuneration prescribed in the contract with the tenant.
The fate of the property
The landlord (leasing company) and the user (tenant) can agree on further actions with the property. So, after the expiration of the contract, the tenant may:
- conclude a new lease agreement;
- return the subject of the transaction to the leasing company;
- acquire property at residual value;
- by agreement of the leasing company, sell the property (at the residual value) and settle accounts with it.
Operational (production) leasing
In this case, an agreement is concluded for a period shorter than the depreciation period of the object. After this time, the lessee may return the property to the leasing company or enter into a new agreement.
With operational leasing, as a rule, rates are higher than with financial. This is due to the fact that the landlord does not fully recoup his costs and is forced to take into account possible commercial risks; accordingly, he increases the prices of his production and technical services.
International leasing
It is imported and exported. In the latter case, the company acquires property from a domestic manufacturer and leases it to a foreign counterparty. When buying an object from a foreign enterprise and providing it to a domestic counterparty, they are talking about import leasing.
Speaking about the international long-term lease of production assets, it is necessary to mention one caveat. In accordance with the requirements of the IMF, the obligations arising from such leasing are not included in the amount of the external debt of the state. In this regard, international leasing is supported by many countries.
Contract
This form of production services involves technical and economic cooperation, in the framework of which the creation of an object by order of the enterprise.
The contractor is the contractor. He concludes a contract with the customer. The Contractor bears full responsibility for the quality of the facility, compliance with the deadlines and volumes of work, the provision of other services provided by the contract.
The contract is quite widespread in international practice. At the time of creation of the object, the ownership right to all material and technical resources is held by the foreign contractor. He controls the whole process. The customer, in turn, provides all the source data, allocates a construction site, provides the laying of engineering communications, pays the bills.
The subject of the contract may be installation, exploration, design, survey and other works, as well as reconstruction and re-equipment of facilities. Very often, the services of contractors are used in R&D, as well as in the field of engineering and consulting activities.
General contractor
It is an organization that bears all responsibility for the fulfillment of the conditions stipulated by the contract. The general contractor has the right to involve other entities in the process of creating the object. Depending on the nature of the functions assigned to them, they may be referred to as sub-suppliers or sub-contractors.
Franchising
This is a relatively new variety of manufacturing services. At enterprises operating in the franchising system, the rules developed by the main office (parent company) apply. Such a company enters into agreements with small organizations (subsidiaries), private individuals. In accordance with such agreements, subsidiaries are entitled to act on behalf of the franchisor (head office). At the same time, they are obliged to work in the form established by the parent company for a specified period and in a specific territory.
The franchisor is obliged, in turn, to provide enterprises with technology, equipment, and to facilitate business development. The most popular franchising companies include McDonald's, Volvo's network of service centers, etc.
Intellectual Labor Products
As a rule, all kinds of know-how, patents, technology transfer licenses are used within domestic markets. If some results of intellectual activity fall on the foreign market, then they become objects of world trade, objects of foreign trade transactions.
Each product of intellectual labor has its own specific features. So, know-how is characterized by confidentiality of production, scientific, technical, organizational, commercial and other transmitted information. No patents are provided for know-how. Methods of payment for its provision may be different. The main ones are:
- Royalty. These are gradual payments, the amount of which is proportional to certain indicators obtained during use. Royalty is calculated taking into account the economic effect that the acquirer receives: increase in the volume of output of goods, growth in profits, etc. Payments are made at the end of each year of the agreement from the moment the finished goods are released. If the contract is concluded for a long period, rates differentiated by year are applied.
- Lump sum payment. This is a simultaneous payment, the amount of which is agreed in advance. Payment is applied if it is difficult to predict the result of the use of know-how or at a low license cost.
