What Is Manufacturing?
Manufacturing is the production of goods through the use of labor, machinery, equipment, and biological or chemical processing or formulation. Manufacturing can involve transforming raw materials into finished goods on a large scale, or creating more complex goods by supplying basic materials to manufacturers for the production of items such as cars, airplanes, or household appliances.
Raw materials are transformed into finished products through manufacturing engineering or manufacturing processes. This process begins with product design and material selection. Materials are modified during various manufacturing processes to create the finished product.
Modern advanced manufacturing often involves several intermediate processes to create various components for finished goods, with some manufacturers using the term “fabrication.” Manufacturing is closely related to the engineering sector and industrial process design.
History of Manufacturing
Manufacturing has existed for centuries and was initially carried out by skilled artisans, sometimes working with assistants, with skills passed down through apprenticeships. Manufacturers may have joined guilds that protected the trade secrets and privileges of these artisans.
Alternatively, manufacturing could take place on a less organized scale, often in rural areas, where artisans would supplement their agricultural livelihoods through home-based manufacturing. These manufacturing households were sometimes organized into cooperative enterprises through the put-out system.
However, this early manufacturing system changed with the introduction of the factory system in England at the start of the Industrial Revolution in the late 18th century. This system leveraged technological advancements and utilized machines powered by water, steam, and, later, electricity, enabling large-scale production.
The assembly-line method was described by Adam Smith in *The Wealth of Nations*, which introduced the concept of the division of labor. This meant that different people would each take on only one part of the manufacturing process—for example, cutting wire for pins—to create a more efficient and cost-effective process. Mechanization and automation later built upon this concept to create highly repetitive manufacturing.
Rather than a single artisan producing an entire product—as had been the case for centuries in the past—manufacturing was broken down into separate parts to lay the foundation for modern manufacturing as we know it today.
What Are the Types of Manufacturing?
At its core, manufacturing is a simple process: raw materials or component parts are purchased and then transformed into finished products. However, to be successful, manufacturers must be able to cover the costs of producing the goods, meet demand, and create products that the market wants.
There are three types of manufacturing production processes: make-to-stock (MTS), make-to-order (MTO), and make-to-assemble (MTA). These three types of manufacturing work as follows:
- Make-to-Stock (MTS)
In this system, a factory produces goods that are stored in inventory at stores and showrooms. This means that market demand for these goods must be predicted so that they can be produced in advance and made ready for consumers. However, producing too much can result in excess inventory that must be sold at a loss, while producing too little can mean missing market opportunities and costs not being covered by sales. - Make-To-Order (MTO)
The make-to-order method allows manufacturers to wait until an order is received before production begins. This makes it easier to manage inventory and respond to market demand. However, customers must wait for their products to be manufactured, and the manufacturer will need a steady flow of orders to keep the factory running and remain profitable. - Make-To-Assemble (MTA)
This method is similar to make-to-stock, except that the factory produces parts in anticipation of assembly orders. This means the manufacturer is ready to fulfill customer orders as they arrive, but it can leave the manufacturer with unwanted inventory of parts if there is no demand.
As shown above, all of these manufacturing types carry their own risks related to supply and demand. Produce too much, and the market will be flooded, leading to lower prices and profits. Produce too little, and customers will go elsewhere, resulting in lost profit potential. Quality control is also a critical aspect of every manufacturing process to protect your brand and product reputation.
A successful manufacturing business requires a good balance between sales management, inventory management, quality control, and production cost management.
Examples of Manufacturing Products
Manufacturing is defined as the creation of new products, whether from raw materials or components. Examples of manufacturing include automotive companies, bakeries, shoe manufacturers, and tailors, as they all create products rather than provide services.
However, for example, logging or mining is not considered manufacturing, as it does not transform raw materials into new products. Construction, although it may appear to be a manufacturing process, is actually its own category and is also not considered part of manufacturing.
Manufacturing jobs can encompass a wide range of skills, including assemblers, bakers, dental and medical equipment technicians, food processors, jewelers, metalworkers, machinists, printers, quality control inspectors, tailors, upholsterers, welders, cutters, and woodworkers.