What is manufacturing? With five manufacturing processes

By Indeed Editorial Team

Updated 22 June 2022

Published 3 January 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Manufacturing is the production of finished goods through the use of human labour, machinery, tools, chemical processing or formulation. Manufacturing is essential for producing and delivering goods to the marketplace, but it is also important for economic reasons. To understand this crucial aspect across many industries, it's useful to understand what manufacturing is and to learn about the different manufacturing processes. In this article, we explain what manufacturing is, explore five types of manufacturing and explain the difference between manufacturers and wholesalers.

What is manufacturing?

The answer to, 'What is manufacturing?', is that it's taking raw materials or components like wood and foodstuffs, and turning them into one or more finished goods such as electronics, furniture and processed foods. This finished product can then be used to meet the needs or desires of consumers.

Businesses profit from manufacturing by selling their products at a higher cost than the value of the raw materials they use. Efficient manufacturing techniques allow companies to take advantage of economies of scale, which is when they produce more units of a good or service on a large scale, allowing them to accumulate fewer input costs. In large-scale manufacturing, companies can accomplish this through mass production of goods using assembly line processes and advanced technologies. Companies can also achieve economies of scale by:

  • limiting redundancies

  • improving the quality of work

  • imposing realistic goals

  • keeping equipment and procedures up-to-date

  • streamlining intake

Related: What is a production schedule? (With stages and benefits)

Why is manufacturing important for the economy?

Manufacturing is also an integral part of the economy because of its role in processing and refining raw materials into something more potentially useful and of higher value. This higher value increases the price of the finished product and makes manufacturing a very profitable aspect of the business chain. Mass producing goods can also provide an economic boost by increasing productivity and thereby increasing levels of capital.

5 types of manufacturing processes

Typically, manufacturing exists in five different categories, which are defined by the environments or product lines they use in their processes. Depending on your type of business, one manufacturing process may work better than another for your specific operations. Here's a closer look at the five types of manufacturing processes:

1. Repetitive

Repetitive manufacturing can be helpful when a company is making the same or similar items at a committed production rate. With repetitive manufacturing, dedicated production lines work on the same components all day, year-round. There is often little to no change-over times because, at most, a manufacturer only has to add a product line if demand increases beyond what they can provide with their current production lines.

If the manufacturer cannot match their operation speeds to meet customer demands, they may experience a decline in demand. This change in demand is often predictable and so, it's important that the manufacturer plans to close or slow operations if necessary. The change in demand also may be unpredictable, which can make it difficult to maintain a steady revenue stream with repetitive manufacturing.

Related: What is product engineering (and how you can get into it)

2. Discrete

Often understood as the opposite of repetitive manufacturing, discrete manufacturing uses a highly adaptable and diverse production line that allows for frequent product changeovers. Manufacturers can adjust their processes so they can produce a wide variety of items, even if those items are completely unrelated to each other. Examples of distinct items produced through discrete manufacturing can include toys, pharmaceuticals, mobile phones and furniture. One major advantage of this process is its adaptability. As demands inevitably shift over time, manufacturers can adjust their production line to meet new demands and follow the most profitable courses of action.

While there are many benefits to having increased flexibility, running costs and change over time can increase the costs to the businesses. Altering an established process to produce a new or particular product can cost businesses time and money. The greater the difference between the products being manufactured, the greater length of time it can take to reestablish the product line. This time spent adapting the product line means a gap in the profitable production of goods. To make a profit, it's crucial that the added revenue from creating distinct items exceeds the loss of productivity during setup and changeover.

3. Job shop

Typically, smaller manufacturers or sellers making small batches of custom products use job shop manufacturing. The process may focus more on one particular product or several of them, like a custom dressmaker. Often, job shop manufacturing relies more on human labour. Because orders can be custom and made slower, the final product is typically high in quality and unique. Similar to discrete manufacturing, a job shop produces a wide variety of distinct items. Job shop manufacturing can differ from discrete manufacturing because usually little or no change over time since they don't perform manufacturing on fixed production lines.

The major benefits of the job shop environment are low cost and adaptability. By making products to order, there is less risk of overproduction and by organising product areas rather than product lines, they reduce the need to adapt a product line to each order. The disadvantage of job shop manufacturing is scale, as it doesn't have the resources or scope to fill orders above a certain size. The relative lack of automation also reduces efficiency to a degree.

Related: How to become an assembly operative: a useful guide

4. Continuous process

As the name suggests, continuous process manufacturing involves running production all the time, like repetitive manufacturing. The difference is this process focuses on raw materials such as gases, powders, liquids, paper production, metal smelting and some food products like sauces. The manufacturer may adjust the quantity produced to suit specific demands, but it never fully stops operating.

This is a good option for industries that experience a relatively constant demand. Even if the demand sees some fluctuation, the net profitability over the years makes it worthwhile to produce the goods continuously. The disadvantages of this process include the high running costs of continuous operations and the chance of overproduction. If the demand experiences an unpredicted dip, it may be difficult for manufacturers to unload finished goods.

5. Batch process

Batch process manufacturing shares similarities with discreet and job shop manufacturing because, as both those manufacturing types, it's demand-driven. With batch processing manufacturing, manufacturers produce individual batches of items. This might be single orders or they might produce periodic batches to fulfil orders on a fixed schedule. Companies focus on creating specific product batches to meet a client's needs, finishing production, cleaning equipment and then resuming when another batch order comes through. Food production, bookbinding, pharmaceuticals and newspaper printing are common examples of batch process manufacturing.

Batch processing can be helpful for industries with irregular demand. In between batches, manufacturers can keep running costs quite low, which works to increase the profit margin on the products they produce. The process can come with challenges. It's important for companies to have the resources to meet spikes in demand if they occur.

Manufacturer vs wholesale

There are a few key differences between manufacturing and wholesaling that can help you differentiate between the two. Here are some areas where the two categories differ:

Who sells the goods

Retailers can buy finished products from either a manufacturer or a wholesaler. The primary difference is that the manufacturer produces the goods, while the wholesaler simply sells whichever finished goods they purchased. In this way, wholesalers can sometimes act as the intermediary between the manufacturer and the end-user.

How much goods cost

Another important aspect of differentiating between wholesalers and manufacturers is the price they charge for completed goods. For companies trying to work out the cost of their own products, this factor can be especially important. When buying directly from the manufacturer, the price purchasers pay is often cheaper than what they would pay to a wholesaler. Buying from a wholesaler is still cheaper than buying from a distributor or retailer because wholesalers often buy in bulk to reduce overall costs.

Although buying directly from a manufacturer is often cheaper, it's not always possible to do so. One way manufacturers optimise profitability is by unloading their products to the wholesaler as quickly as possible. Manufacturers and wholesalers often form agreements with one another so that they can agree upon prices and logistical details before the product completes production. This is an economically viable model for manufactures because it means they don't have to invest in direct sales or hold large amounts of inventory for extended periods of time. It can also help make their earnings more predictable.

Where buyers get their goods

The manufacturer-wholesaler relationship began to alter with the rise of the Internet, which can now make direct sales easier and more affordable. As a result, some manufactures choose to sell directly to online consumers, which allows them to offer a lower price tag than a retail or wholesale price. Direct sales are still not always practical for manufactures as some only produce parts of the final product. For example, a manufacturing plant may produce a single computer part, which has little to no consumer demand on its own. Here, the manufacturer relies on wholesalers to help generate their profit.

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