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The term manufacturing refers to the processing of raw materials or components into finished products through the use of tools, human labor, machinery, and chemical processing.

Business Production Meaning

Manufacturing allows businesses to sell finished goods at a higher cost than the value of the raw materials used. Large-scale manufacturing enables the mass production of goods using assembly-line processes and advanced technologies as key assets. Efficient manufacturing techniques allow manufacturers to take advantage of economies of scale, producing more units at lower costs.

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Manufacturing is an integral and huge part of the economy. It involves the processing and refining of raw materials such as ore, wood and food into finished products such as metal goods, furniture and processed food.

Transforming these raw materials into something more useful adds value. This added value increases the price of finished products, making manufacturing a very profitable part of the business chain. Some people specialize in the skills needed to make goods, while others provide the funds businesses need to buy the tools and materials.

As noted above, efficiencies in manufacturing can lead to higher productivity and cost savings. Manufacturers are able to achieve this if they are able to:

The way products are produced has changed over time. Humans have historically made goods using raw materials. And in some cases, they still do. Manual manufacturing involves the use of basic tools through more traditional processes. This form of construction is often associated with decorative art, textile production, leatherwork, carpentry and some metalwork.

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Handmade products are labor intensive and time consuming. In some cases, they may have a high price, depending on the supplier and the type of goods. For example, unique handmade fashion items can sell for a higher price compared to something mass produced. There are cases, however, where people who make products using these techniques can be exploited, especially where labor laws are lax and the demand for jobs is high.

Larger businesses use mechanization to mass produce items on a much larger scale. This process involves the use of machines, which means that manual handling of the materials is not necessarily required. Very little human capital is required in the production process, although highly skilled people may be required to operate and ensure that the machinery is working properly.

This type of manufacturing is commonly referred to as 3D printing. It involves using layers built on top of each other to create shapes and patterns in a 3D process using special equipment such as a 3D printer.

This method involves new forms of technology to improve the production process. Companies can add even more value to the raw materials they use to better serve their target markets. Newer technologies also help bring new products to market faster while increasing production.

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This is common in the manufacturing industry. Companies will enter into partnerships and business relationships with other companies to outsource certain production processes. For example, an automobile manufacturer may hire a third party to manufacture parts that it will use on its assembly lines to manufacture cars.

The traditional production technique is make-to-stock, making a standard product based on forecasted demand. A company estimates how many units will be sold in a given time period and then plans ahead to manufacture that many goods. Goods are often held as a stock which leads to the release and wide distribution of the goods.

A company must have sufficient information before product launch to understand how many products it will need to manufacture. This includes using historical data from similar goods, understanding macroeconomic conditions and looking at customer expectations for specific product features.

The advantage of MTS is that companies can often take advantage of economies of scale. Because a company sets a target production level, it can plan in advance how much raw materials, labor, or equipment it will need and can often create the most robust production plans. The downside is that not meeting expectations leaves a company with unusable product, excess inventory, and committed but underutilized fixed costs.

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Unlike MTS, custom manufacturing involves working directly with a customer to understand their needs and desired product specifications. Production usually only begins after a signed contract or letter of intent. Additionally, manufacturers may create lightweight prototypes, but often delay starting manufacturing until full product specifications are delivered.

MTO is more common in industries where specialized products are produced for a very specific purpose. Aerospace, construction, or technology (to a lesser extent) are examples of industries where manufacturers often do not build a good until a government entity has agreed to purchase the aircraft or a lessee has signed a long-term lease agreement.

On the one hand, MTO manufacturers can often charge a premium for their products, as the good may not be easily obtained in a market. This is especially true for high-end products. In addition, MTO manufacturers often only pay if there is a series of discounts. Therefore, it often never carries inventory. On the downside, MTO manufacturing often comes with uneven product demand that can lead to slower operating periods.

The third type of manufacturing technique is a manufacturing process for assembly. Companies are trying to get a head start by starting parts production. Then, as customers begin to place orders, companies assemble previously manufactured parts.

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Because the company had partially completed the manufacturing process, the good can often be delivered to customers faster than under MTO processes. However, the company still runs the risk of being stuck with a forecasted demand inventory that doesn’t materialize. In addition, the company risks losing the benefits of MTO and MTS by trying to balance each type of process.

Finally, manufacturing can be divided into different production methods. Each method leads to a uniquely different end product.

Discrete manufacturing is aptly named because each product manufactured can be specifically identified. The manufacturing process leverages a bill of materials to track which raw materials or components go into each specific unit. In discrete manufacturing processes, units are often manufactured on a production line where assembly line workers follow a production schedule and record material usage.

There are two main types of production process. First, batch production involves manufacturing a product to a specific standard using a recipe or formula. Batch production is often used in the food and beverage industry to make goods that can easily be reproduced in a specific quantity (i.e. a specific container of teriyaki sauce).

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Alternatively, the continuous manufacturing process implies consistent, ongoing operations that often produce a good around the click over a long period of time. Production is then halted for a period of time before restarting. The continuous production process is widely used in the oil and gas industry when drilling for natural resources.

Some products may involve a combination of discrete and manufacturing processes. This is often the case for products manufactured in the batch process before these standardized products are converted into more specific individual packaging. The initial stage for creating a product uses the manufacturing process, while the unique specifics of the delivery method (including any customer customizations) are added in the second half.

An even more specific type of production process, goods can be manufactured using workshop manufacturing. This procedure is most often used when there is a batch to be processed, but the batch is different from a company’s normal product. For this specialized, customized good, a company must often perform unique installation and process steps, including converting existing equipment to a more user-friendly structure.

A potential subset of other manufacturing processes, repetitive manufacturing often breaks long-term manufacturing processes into smaller parts. Each component, often called a dedicated assembly line or manufacturing cell, is dedicated to manufacturing only that specific part of the unit. The units are then continuously transferred to the next dedicated assembly line. Any work on hardware is inside the production line as buffers are often not used.

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Handmade products dominated the market before the Industrial Revolution. This period ushered in the industrial process, where raw materials were transformed into finished products in large volumes. The development of steam engines and newer technologies allowed companies to use machines in the manufacturing process. This reduced the need for human capital while increasing the sheer volume of goods that could be produced.

Mass production and assembly line manufacturing allowed companies to create parts that could be used interchangeably and allowed for easy manufacturing of finished products by reducing the need to customize parts. Ford popularized mass production techniques in the early 20th century.

Computers and precision electronic equipment have allowed companies to pioneer high-tech production methods. Companies using these methods typically command a higher price, but also require a more skilled workforce and higher capital investment.

The skills required to operate machines and develop production processes have changed drastically over time. Many low-skilled manufacturing jobs have shifted from developed to developing countries because labor in developing countries tends to be less expensive. Therefore, high-quality products that require precision and specialized manufacturing are usually produced in developed

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