What is Manufacturing Industry?
Estimated reading time: 15 minutes
Since the creation of the first tools for hunting and agriculture, manufacturing has become a part of human life. Just look around us to see manufactured finished goods, from a mobile device or computer, a chair, milk in the refrigerator, to the clothes we wear; almost every object has gone through a manufacturing process. In today’s world, manufacturing is one of the most profitable businesses.
But what exactly is the Manufacturing Industry? How does it work? What are its processes? What is the future of the industry?
What is the Manufacturing Industry?
Manufacturing Industry is any business that transforms raw materials into a final product through organized processes by manual labor, tools, chemical work, machinery, or combinations of these.
These products are then sold at a higher price than the raw material costs with the manufacturing process. Thanks to technology, the manufacturing industry can create large volumes of products or components at lower prices with machine automation.
The manufacturing field is home to numerous businesses; for example, you can find automotive, aerospace, textile, furniture, electronics, food, and many others. It is essential to emphasize that the sale of a service does not fall within this type of business.
As a whole, the manufacturing industry is dedicated to developing physical components or products in large volumes or small batches for other companies or end consumers.
The manufacturing world is quite broad. Some establishments even create specific parts that will be assembled or used to create a final product for another company, turning it into a supplier. A simple example is a company dedicated to manufacturing plastic that receives a purchase order to make a bottle design to later serve as a container for cream or juice. This means that this industry can create a tailored product with specific requirements.
Types of Manufacturing Production Methods
The manufacturing industry works using three production methods:
Make-to-stock (MTS):
This type of Manufacturing Industry analyzes market trends, current demand, and sales forecasts to calculate and decide how much product the company needs to create. This procedure is done so businesses take advantage of the presented opportunities and are ready for the increasing demand for a specific trend.
MTS uses technology that uses the company’s internal information, such as sales history, analyzing it with the current trend to create a market forecast. However, these forecasts must be as accurate as possible for this method to be successful since making too many creates overstock and losses, while producing too little leads to losing a good chance of selling and being more profitable.
A simple example is the manufacture of seasonal products. Before the December dates, the industries are dedicated to manufacturing new Christmas products, toys, and apparel, among others, to meet the demand of the time. MTS manufactures the trending product, stores it in its warehouse, or ships it directly to the distributor for sale in physical stores. Retail companies use this method a lot to keep up with consumer demand.
Make-to-order (MTO):
This kind of manufacturing industry only creates the goods requested with a purchase order. As simple as that. Unlike the Make to Stock (MTS), MTO does not take risks with trends or forecasts. MTO is more dedicated to the high-quality manufacturing of products that can be required with specifications by the customer.
Manufacturing airplane parts, cars, and specialized products uses this method. One of its advantages is that only the raw material necessary for the manufacture of an order is purchased, saving inventory costs. However, this method can present drawbacks, such as suppliers’ need for more availability of raw materials.
Make-to-assemble (MTA):
Make-to-assemble uses part of the MTS and MTO. This combination is based on having some raw material in stock but waiting for the purchase order to start manufacturing. MTA takes a little of the risks of MTS sale predictions but assures the sale of the MTO. MTA must have a skilled team for efficient assembly without sacrificing quality or neglecting customer specifications to deliver products on time.
Several industries, such manufacture of computers or cell phones, use this method. Another example is the food industry, such as pizzerias with a pre-done bottom that can be stored in freezers to prepare the orders quicker. It is important to emphasize that the MTA method does not apply to perishable products.
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Types of Manufacturing Processes
Manufacturing industries use different processes to elaborate products, including machinery, labor, and software, to automate and facilitate the transformation of raw materials or components into finished goods. Today, most companies use one of these five manufacturing processes depending on the line of business, the product to be manufactured, and the resources and equipment they have. They can even use a hybrid or several if the situation requires it.
- Repetitive manufacturing: With the repetitive manufacturing process, the production line requires minimal setup and can change the speed of its operations according to consumer demand. As its name indicates, this process is committed to creating the same product or components 24/7 throughout the year. It can also develop products of the same family or very similar.
The automotive or electronics industries use this type of process. Repetitive manufacturing is ideal for companies that need to mass-produce products and whose demand is predictable and stable. - Discrete manufacturing: Discrete manufacturing is similar to repetitive manufacturing since both use a production line; however, it is prepared for changes and various setups according to the required product designs. These finished products may have several significant differences.
One of its characteristics is that the raw material or the components of this type of production can be decomposed and recycled to be used again. An easy example is the industry of toys or smartphones. - Job shop manufacturing: This process uses work areas and workshops instead of the assembly line. This process also has a slower work rate since the product will be manufactured through different stations and with specialized labor until the product is finished.
Job shop manufacturing is frequently used to manufacture a one-of-a-kind product or in minimal quantities that are Make to Stock (MTS) or Make to Order (MTO). Managers create a discrete manufacturing work line to fulfill the orders if the demand grows.
Companies that manufacture furniture for the aerospace industry use this process. - Continuous process manufacturing: This type runs 24/7 throughout the year and creates many identical or similar products, much like repetitive manufacturing. The difference is that the raw materials used in production are gases, liquids, and powders instead of solid products. In the case of the mining industry, for example, the materials can be granular or chunky.
Pharmaceutical industries, oil refining, and paper are examples that use this manufacturing process. - Batch process manufacturing: This type of manufacturing process has similarities to discrete and job-shop processes. Batch process manufacturing is based on consumer demand and whether a production batch can be enough to meet that demand. After fulfilling it, the equipment is cleaned and prepared for the next set. Similarly, this process works with liquids, gases, and slurries instead of solid products.
Batch processes can only be achievable when raw materials and components are made to a relaxed standard. Examples of this type of manufacturing are newspapers and magazines, fast food chains, and others. This type of process runs continuously by nature.
Today and with the advancement of technology, it is considered that there is a new process that is still taking its first steps in the world of manufacturing:
- 3D Printing manufacturing: Thanks to technological growth, this manufacturing process is more available to many. 3D printing was first introduced in 1981 and is now more accessible. 3D printing creates products layer by layer according to the instructions of a three-dimensional model. Companies like Ford use this technique.
Stages of Manufacturing a Product
Creating a new product for the market sounds like an easy task; still, companies need to follow these steps to ensure that there will be demand for the product that will be designed to make the manufacturing company profitable.
- Brainstorming an idea: First, think of a problem and then brainstorm what kind of product could be the solution. Is there something similar in the market already? Who will be the target market? These questions and more will help brainstorm, a crucial step in developing a manufactured good. This process will help companies design and define a product, its unique characteristics, the target the product is aimed and study the competitors.
- Market Research: Now that there is an idea of a product, what would a company need to manufacture the product? Which raw materials are necessary? How can the product differentiate from competitors? Manufacturing is not only creating but also researching how factually a product can be and how it can be preferable and give a better solution than those currently in the market that aims to solve the same problem.
- Design the Product: With the information and knowledge obtained from market research and considering the target and problem the product aims to solve, a company can start to design the good for the customers. In this step, a company studies the costs and the product’s profitability according to the design.
- Prototype: During this step, a company decides the raw materials and components the design will need and the manufacturing process to create the merchandise. When all decisions are made, the company creates a prototype. This step will define how the final product could be.
- Testing: In this phase, a company analyzes the prototype, looking for weaknesses, if the product can be improved, or if the manufacturing processes can be optimized. The testing will also give a more accurate view of how much the manufacture of the product will cost and how profitable the production will be. This phase is the best time to make swaps before mass production, even tho in the future, there can be changes if necessary or if the market demands an improvement.
- Manufacturing: With a work schedule, equipment, and a team of workers, a company is finally ready to start production. A business can automate its processes with good ERP software to save time and optimize workflow. During this phase, the company assembles the necessary equipment and has workers ready to start production. The company also prepares to pay other costs in the manufacturing line, such as insurance and storage.
- Monitoring: Improving and optimizing are vital to a competitive company, so monitoring and analyzing the production processes and looking for growth opportunities are essential actions. In addition, you must study the market with the sales history and see the demand for the product by the consumer to make decisions about the merchandise.
What’s next in manufacturing?
Technology is advancing, so companies, including manufacturing, must adapt to these changes and challenges to stay up-to-date and be more competitive. Among the new technology trends that come with Industry 4.0 for manufacturing, there are:
- Advanced Planning Scheduling System: An APS system provides significant benefits for manufacturing companies, including minimizing expenses, enhanced efficiency, improved supply chain coordination, more flexibility, and better decision-making.
- Industrial Internet of Things: Unlike the Internet of Things (IoT), which is more dedicated to managing devices within the home and in everyday use, the Industrial Internet of Things (IIoT) is a more sophisticated and specialized tool for the manufacturing industry, such as aerospace.
“Things,” such as the machinery within a company, are interconnected through IIoT sensors and can share precise information on optimizing processes when maintenance is needed, among others. - Digital Twins: The technology of this trend creates a precise digital recreation of an object, process, or service, and then this “twin” is used to perform simulations and to analyze how it would work in the real world before manufacturing the physical product.
Digital twins can be helpful in the prototype step of designing a product and prevent failures. A computer program develops a digital twin using real-world data and operational data collected by IoT, IIoT, and AI. - The use of AI: This tool collects information from the IoT or IIoT and other data from the company and helps a company to be more competitive and efficient. AI will give a clearer view of growth opportunities, recommend or perform predictive maintenance and streamline processes around the company. The disadvantages of Excel Production Planning will be a thing of the past!
Is your company ready for the future?
Whether it is for your company to be at the forefront of new technology or to meet new consumer demands, updating your manufacturing industry will be a wise and profitable investment. Adding Skyplanner’s APS can significantly contribute to your business’s success.
We are ready to make your company more competitive. Request a consultation and find out how we can help you.
Frequently Asked Questions (FAQ)
Within this space, you can find answers about the Manufacturing Industry, its different types of production methods, future trends, and more!
What is the Manufacturing Industry?
The Manufacturing Industry is a business sector that transforms raw materials into final products. This process involves manual labor, machinery, or chemical work. Manufacturing industries include automotive, aerospace, textile, furniture, electronics, and food.
What are the different types of Manufacturing Production Methods?
There are three main types of production methods in the manufacturing industry. These are Make-to-stock (MTS), Make-to-order (MTO), and Make-to-assemble (MTA).
What is Make-to-stock (MTS) production method?
Make-to-stock (MTS) is a production method where manufacturing companies produce goods based on market trends, demand forecasts, and sales data. This is commonly used for seasonal products or trending items.
What is Make-to-order (MTO) production method?
Make-to-order (MTO) is a manufacturing method in which goods are produced only after receiving a customer’s order. This method is primarily used in high-quality manufacturing, where products are made with customer specifications.
What is Make-to-assemble (MTA) production method?
Make-to-assemble (MTA) is a hybrid production method that combines aspects of MTS and MTO. Companies using MTA keep some raw materials in stock and start manufacturing only upon receiving an order.
What are the Types of Manufacturing Processes?
Manufacturing industries use different processes to produce products. These include Repetitive manufacturing, Discrete manufacturing, Job shop manufacturing, Continuous process manufacturing, Batch process manufacturing, and 3D Printing manufacturing.
What are the Stages of Manufacturing a Product?
Manufacturing a product typically involves several stages:
- Brainstorming an idea.
- Conducting market research.
- Designing the product.
- Creating a prototype.
- Testing the product.
- Manufacturing.
- Monitoring the product’s performance and market demand.
What are the new technology trends in manufacturing?
Technology trends in manufacturing include the Advanced Planning Scheduling System (APS), the Industrial Internet of Things (IIoT), Digital Twins, and Artificial Intelligence (AI).
How can Skyplanner’s APS contribute to my business?
Skyplanner’s APS can significantly contribute to your business by minimizing expenses, enhancing efficiency, improving supply chain coordination, providing flexibility, and aiding better decision-making.
How can I request a consultation with Skyplanner?
You can request a consultation with Skyplanner to find out more about how our APS can assist your business.
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