Manufacturing: Definition, Types, Steps, and Example

You’ve got a brilliant product idea that’ll take the market by storm. You’ve poured your heart and soul into the design, and you can already envision your brand name on everyone’s lips. But there’s one problem: you have no idea how to bring your product to life.

Sound familiar? For many entrepreneurs and store owners, manufacturing can feel daunting and mysterious.

It’s the lifeblood of every product-based business, but navigating the complex world of factories, assembly lines, and supply chains can be overwhelming, especially in the face of recent challenges like labor shortages, economic downturns, and shipping crises.

But here’s the good news: the manufacturing industry is evolving, embracing new technologies and innovative methods that are transforming how products are created and delivered to customers.

By understanding the ins and outs of manufacturing, you can tap into these advances and bring your product ideas to life.

What Is Manufacturing?

Manufacturing is the creation of finished goods through the use of tools, human labor, machinery, and chemical processing.

Manufacturing allows businesses to sell finished products at a higher cost than the value of the raw materials used.

Large-scale manufacturing allows for goods to be mass-produced using assembly line processes and advanced technologies as core assets.

Efficient manufacturing techniques enable manufacturers to take advantage of economies of scale, producing more units at a lower cost.

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

Converting 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 required to manufacture goods, while others provide the funds that businesses need to purchase the tools and materials.

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

• Reduce redundancies
• Improve the quality of work
• Update equipment and procedures
• Set realistic goals
• Streamline intake, supply chain, and distribution channels

History of Modern Manufacturing

The history of manufacturing can be traced back to the Industrial Revolution during the 19th century, where raw materials were converted into finished goods.

The period marked the transition from human labor technology into machinery and chemical manufacturing processes, turning artisans into wage laborers. Previously, outputs of handmade goods dominated the market.

The invention and improvement of steam engines and other technologies created an early modern industrial era where companies adopted machines in the manufacturing process.

While the change increased the volume of finished products, it also reduced the number of workers needed to produce them.

For example, assembly line manufacturing and mass-production reduced the need for part customization. Instead, it allowed companies to manufacture replaceable parts while promoting the availability of goods.

One such company that popularized mass production techniques in the early 20th century is Ford Motor Company. Computer-controlled systems and electronic equipment used for precision help synchronize operations, enabling companies to adopt high-tech manufacturing processes.

Because of the specialized workforce and higher capital investment, the value added to products using the approaches usually bears a higher price.

Developed economies tend to undertake high-skill manufacturing jobs required in more advanced technology and whose finished products are intended to serve mid- and high-end consumers.

Today, rapid technological changes are boosting efficiency in the manufacturing sector. In particular, product life cycles are becoming increasingly shorter without compromising quality. Also, the flexibility and responsiveness of technology help boost employee productivity.

Types of Manufacturing

#1. Repetitive manufacturing

A manufacturer uses process types like repetitive manufacturing for repeating production to commit to a production rate.

Repetitive processing comprises dedicated production lines that produce the same or similar items, 24/7, all year round. With its requirements for setup being minimal or having little changeover, the operation speeds can be increased or decreased to meet customer demands or requirements.

Types of manufacturing like repetitive manufacturing distinguishing characteristic is its use of assembly/production lines.

#2. Discrete manufacturing

Like repetitive manufacturing, discrete manufacturing also utilizes an assembly or production line.

However, this process type is highly diverse, with a variety of setups and frequent changeovers. This is due to factors based on whether the products in production are similar or different in design.

If the items are vastly different, this will require altering the setup and a tear-down, which means production will need more time.

In theory, the types of manufacturing businesses that use discrete manufacturing produce products that can be broken down and recycled — automobiles, furniture, airplanes, toys, smartphones, etc.

#3. Job shop manufacturing

Unlike the other process types, job shop manufacturing makes use of production areas rather than assembly lines.

This production process will produce smaller batches of custom products, either make-to-order (MTO) or make-to-stock (MTS). Organizing workstations in a job shop setting allows manufacturers to make one version of a custom product or even a few dozen in batches.

If customer demand requires it, the operation can become a discrete manufacturing line with selected labor operations being, potentially, replaced by automated equipment.

It’s good to choose these manufacturing types if you’re a manufacturer handling bespoke products or work on a project-to-project basis.

#4. Continuous process manufacturing

Similar to repetitive manufacturing is the continuous manufacturing process, which runs 24/7 too.

However, continuous is a different type of manufacturing due to the state of raw materials being gases, liquids, powders, or slurries. But, in areas like mining, the products can be granule materials.

Product designs are similar unless the disciplines to create a final product or a production process are more diverse.

You can find this production process in oil refining, metal smelting, and even in food production like peanut butter.

#5. Batch process manufacturing

The final process shares similarities with discrete and job shop processes — batch process manufacturing.

Depending on consumer demand, one batch could be enough to meet that demand. After a batch production run, a manufacturer cleans the equipment to prepare the machinery for the next batch. Batch processes are continuous by nature.

Batch processes are achievable when ingredients or raw materials aren’t made to a strict standard. Like the continuous manufacturing process, the product ingredients are similar, and the production process is more diverse.

#6. 3D printing

Many in the industry now recognize 3D printing as a sixth manufacturing process with widespread use.

Developed in the 1980s, 3D printing uses various composites and materials like plastics and metals to make three-dimensional goods layer by layer based on a digital model, rather than using physical labor or mechanization.

There has been an enormous expansion in this field, with dozens of equipment manufacturers and hundreds of thousands of 3D-printed items already on the market.

While 3D printing can be expensive, it also offers the potential to reduce financial capital, raw materials and waste and lets companies create and test products before committing to them on a larger scale. This growing manufacturing process is already being used for products such as:

• Medical and dental devices
• Prosthetic limbs
• Firearms
• Shoes
• Musical instruments
• Buildings

Types of Manufacturing Techniques

Make to Stock (MTS)

A traditional production technique is make-to-stock, the manufacturing of a standard product based on forecast demand.

 A company estimates how many units will be sold over a given period of time and plans in advance to manufacture that many goods. Goods are often held as inventory leading up to the release and broad distribution of the goods.

A company must have sufficient information in advance of a product release to understand how many goods it will need to manufacture. This includes using historical data from similar goods, understanding macroeconomic conditions, and considering customer expectations for specific product features.

The advantage of MTS is companies can often capitalize on the scales of the economy. Because a company sets a target level of manufacturing, it can plan in advance how much raw materials, labor, or equipment it will need and can often build the most robust manufacturing plans.

On the downside, not meeting expectations leaves a company with unusable products, surplus inventory, and committed yet underutilized fixed costs.

Make to Order (MTO)

Opposite of MTS, make-to-order manufacturing entails working directly with a customer to understand their need and desired product specifications. Manufacturing typically only starts after a signed contract or letter of intent.

In addition, manufacturers may generate light prototypes but will often hold off on starting manufacturing until full product specifications have been delivered.

MTO is most common in industries where specialized products are being made for a very specific purpose.

Aerospace, construction, or technology (to a lesser degree) are examples of industries where manufacturers will often not manufacture a good until a government entity has agreed to purchase the aircraft or a tenant has signed a long-term lease agreement.

On one hand, MTO manufacturers can often charge a premium for their products as the goods may not be easily acquired in a marketplace. This is especially true for highly-specified goods.

In addition, MTO manufacturers often only make a good if a sale is lined up; therefore, they often never carry inventory. As a downside, MTO manufacturing often comes with uneven product demand that may result in slower periods of business.

Make to Assemble (MTA)

The third type of manufacturing technique is a make-to-assemble process. Companies try to get a head start by starting production on component parts. Then, as customers begin to place orders, companies assemble previously-manufactured components.

Because the company had partially completed the manufacturing process, the good can often be delivered faster to customers than under MTO processes.

However, there is still the risk of being stuck with an inventory of forecast demand that does not materialize. In addition, the company risks losing the benefits of MTO and MTS by trying to balance each type of process.

Steps of Manufacturing

While there are many manufacturing processes, they must all follow a shared path from idea to finished product. What are the steps that take an idea and turn it into a reality? It’s not an easy trip, but these eight steps help make it possible:

Develop the Product Vision

The product vision is the seed the finished goods will grow from. Even if you don’t have an idea, you can develop one by brainstorming with your team. Things you’ll want to discuss include:

• Who is the target audience?
• What size is the market?
• Is there a need for the product or does it solve a problem?
• Will you outsource part or the entirety of the manufacturing process?
• Are there competitors and, if so, who are they?
• Are there trends around similar products?
• Do you have the funding necessary to make the product?
• What’s your product roadmap?

Research the Vision

Once you have a product vision, you need to do some deep research before devoting the time and money necessary to manufacture your product. Part of the research is exploring the questions asked in the first step. For example, if there’s a product on the market that will compete with yours, ask yourself:

• Is my product better?
• Will consumers have a different experience with your product over the competition?
• How does your project improve what is already available?
• How do you intend to market your product?
• Should you use contract manufacturing?

Design the Product

With the idea and the research behind you, next is product development. You should always keep the end user’s needs at the forefront and make sure your product is user-friendly.

Some things to keep in mind during this step are the function of your product, such as how it’ll be used, what resources are needed to make it and its lifespan.

Along those lines, will you have a warranty, how much will it cost to manufacture while allowing you to make a profit and will it need accessories or batteries? Also, don’t forget about designing the packaging, too.

Then, you should go through the value engineering process to find the right balance between product features, cost and the value perceived by the customer to design a cost-effective product that meets the customer needs.

Finalize the Design

Once you’ve answered the questions in the previous step, you can begin to create a final design of your product. At this point, there can’t be any gray areas.

If you still have questions or user stories that have not been fully answered, then it’s here where you’ll need to come up with concrete answers to them.

At this point, you’ll also need to create a bill of materials so you can gather the resources necessary for manufacturing your project or a working prototype.

Make a Prototype

Before you can move into manufacturing the product at scale, you need to test your prototype to make sure it works and meets the needs of your target audience.

Better to find the kinks in the design and smooth them out at this point than when you’re in mass production of the final product.

Be thorough, the worst thing is to have to stop production to fix an issue that you could have resolved during the test stage.

Manufacture the Product

Once testing has been completed to your satisfaction, you can begin the manufacturing process planning stage.

This is when you’ll develop a plan to start manufacturing the product, which will include all the details about the raw materials, parts and components as well as the assembly process that will be followed.

Get Feedback and Do More Testing

Before you release your product on the marketplace, you need to get feedback or do further testing to ensure that you’re delivering the best possible product from a quality control perspective. Feedback can come from focus groups, but also from your team, friends and family.

The more, the better. If you can improve the product, do so before the official release. Be sure to listen and ask questions without leading people to get the most honest responses.

Official Release

After all that work, you’re ready to release the product on the market. This should be done with a product marketing campaign to let your customers know about your product and why they will want one.

This can be done through various channels, from press releases to public launches, social media and more traditional media platforms.

Manage Your Manufacturing Operations

Congratulations, you’ve manufactured a product and are ready to begin its commercialization. However, the manufacturing process doesn’t end there.

Now it’s time to make sure you can keep producing it over time. This involves managing your suppliers, your production facilities, employees, inventories and much more.

The process of managing all these areas is known as manufacturing operations management.  Quality control is one of such areas that need to be permanently monitored. To do so, create a control plan to monitor the production processes and identify any quality issues.

Examples of Manufacturing

Known for its efficient manufacturing process, Toyota Motor Corporation is a historically well-known and successful manufacturer. The company uses a lean manufacturing system to produce customer vehicle orders in the quickest and most efficient way possible.

The company’s manufacturing process is based on two core concepts:

• Jidoka: When there is a production issue, the equipment stops immediately to prevent future defective products.
• Just-in-Time: Each process manufactures only what is essential for the current process. This includes sourcing just enough material without carrying excessive amounts of reserves.

Under jidoka, engineers design and build systems by hand to intricately understand the manufacturing process. Then, they carefully simplify operations and transition to leveraging machines.

The goal is for the manufacturing process to leverage repetitive processes that make the manufacturing process more simple and less expensive.

Under just-in-time, Toyota strives to eliminate “waste, inconsistencies, and unreasonable requirements on the production line.”

When an order is received, the production instructions must go to the manufacturing line immediately. The manufacturing line must have the required materials and parts available. Any deficiencies are quickly resolved by swapping similar parts.

Manufacturing Risks

Manufacturing is a complex and often capital-intensive business that’s vulnerable to many risks. Factors that can derail manufacturing operations range from supply chain interruptions to forecasting errors.

• Fluctuating raw materials prices: Prices of raw materials and components can fluctuate rapidly and unpredictably due to factors such as changes in global supply and demand. Even when manufacturers lock in the price of the materials themselves, they may be vulnerable to fluctuating global shipping costs.
• Supply chain woes: Supply-chain problems can cause delays in obtaining critical components. The unavailability of components can hold up an entire manufacturing process.
• Product recalls: Product defects can lead to expensive recalls, lawsuits and reputational damage. It’s important to maintain strict and consistent quality control efforts throughout the production process, including a final inspection before products are shipped.
• Regulatory compliance: Strict local regulations determine whether many products can be sold in markets worldwide. It’s vital for manufacturers to analyze the regulatory requirements in their target markets before selling their products or risk being forced to pay costly fines.
• Forecasting errors: Inaccurate forecasting can result in making more products than can be sold or not enough to meet demand. Manufacturers can minimize the risk by using software that takes into account historical and seasonal sales patterns, as well as external factors.
• Cyber risks: Hackers routinely target manufacturing systems with ransomware and other malicious attacks. Focusing on cybersecurity is critical for manufacturing companies.

Future Manufacturing

Manufacturing processes are changing along with the skills required to undertake them. With more cost-effective methods being sought out and increasing automation in manufacturing, the number of jobs in this sector are expected to decline. However, those that remain are likely to be more specialised and highly paid.

Increasingly sophisticated technology means that manufacturing will require staff skills and training to manage, while new materials and processes are changing particular industries.

Nanotechnology is changing electronics production while lighter materials like aluminium and carbon fibre has changed the automotive industry.

Elsewhere, pharmaceuticals are being revolutionised by bio-engineering and 3D printing allows for the creation of bespoke specialised components for industries like aerospace and medical.

As robots become more sophisticated many manufacturing processes are being automated while big data allows manufacturers to analyse and target customer needs to guide product development.

Why it is Important?

Manufacturing is not only important in producing and delivering goods to the marketplace, but it is also important for economic reasons. In the United States, for example, manufacturing makes up 15% of the economic output.

The mass production of items can provide a real boost to an economy, which can be measured by ‘manufacturing value added (MVA)’ indicators. These compare the manufacturing output to the size of the overall economy to create a percentage of gross domestic product (GDP). 

The figures for manufacturing employment, inventories and orders are examined by manufacturing institutes, such as The Institute for Supply Management (ISM), whose reports inform financial analysts and researchers.

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