What is Manufacturing?

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Definition:

Manufacturing is the process of transforming raw materials and other components into finished products for sale.

🤔 Understanding manufacturing

Manufacturing is the process of turning raw materials, such as metal or wood, and other components into finished products. It can be done by hand, like using wood to build a chair, or using complex machinery and mass production techniques. Through manufacturing, a person or business can create products that are worth more than the sum of the materials used to make them. Manufacturing dates back to the Stone Age and plays a major role in the modern economy. In recent decades, many manufacturing jobs have moved from Europe and the US to countries with lower wages for unskilled labor.

Example

One example of manufacturing is the production of a cell phone. Smartphones are made of metal, plastic, glass, and other raw materials and intermediate goods. If someone just gathers those supplies, they cannot use them as a phone. They first need to apply sophisticated tools and techniques to modify those materials and combine them into a working phone. That process is known as manufacturing.

Takeaway

Manufacturing is like building a house...

If you want to build a house, you need materials like bricks, mortar, wood, nails, and insulation. If you pile all of these supplies next to each other, you still don’t have a house. You need to modify them with tools, such as hammers, and apply labor to turn them into a home. Manufacturing is similar: You use tools and expertise to turn raw materials and other components into a finished product.

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What is manufacturing?

Manufacturing involves physically transforming goods or raw materials into a finished product for sale. Through this process, the manufacturer creates value, producing a good that is worth more than the sum of the materials used to make it.

Manufacturing can be as simple as turning a log into a bench or table, or as complex as combining many different materials into a product like a television or laptop.

Typically, manufacturing requires a combination of tools, equipment, expertise, and labor. For example, blacksmiths are skilled laborers that manufacture metal goods using their specialized knowledge and tools. Mass production facilities often use unskilled labor and complex machinery to manufacture goods. Manufacturing plays an important role in the modern economy.

What is the history of modern manufacturing?

Manufacturing has existed for millennia. Some of the first evidence of it comes from the Stone Age in the form of woven textiles, pottery, and equipment for grinding foods, such as corn.

As some societies began to urbanize between 3,000 B.C. and 500 B.C., technological advancements allowed them to move beyond subsistence farming and gave people the opportunity to specialize in certain skills. Craftsmen made a living through tanning, pottery, metalworking, and using other forms of skilled labor to manufacture products from raw materials.

Ancient Greece and Rome made advances in the use of machinery, including screws, pulleys, and levers. This enabled the production of pumps and wind-operated machines. Techniques and machinery continued to evolve throughout the Middle Ages and the Renaissance.

Starting in the 1700s, the invention of technology like the steam engine, windmills, electricity, and the internal combustion engine spurred industrialization and the beginning of modern manufacturing. Factories that used complex machines and unskilled labor to produce goods in mass quantities appeared in cities across Western Europe and the US. Workers migrated to cities in greater numbers to meet the labor demands of the factories. Industrialization reshaped virtually every industry, from textiles to chemicals to agriculture.

In the 1980s and 1990s, advances in transportation and communication technology made it easier to sell goods across great distances, and manufacturing began to be transformed through globalization. Companies based in more developed countries increasingly moved manufacturing to countries where labor and other inputs were cheaper.

In recent years, the tactic of reshoring has challenged the concept of outsourcing. Reshoring involves returning manufacturing from foreign countries to a business’s home country. Some manufacturers believe that reshoring can reduce certain costs while increasing the quality and availability of goods.

What are the types of manufacturing?

Manufacturing takes many forms:

Repetitive

Repetitive manufacturing involves performing the same task over and over, using the same materials to produce the same, or a similar, finished product. A factory assembly line is a good example of repetitive manufacturing.

Discrete

Discrete manufacturing involves the production of individual, countable products for sale. For example, companies use discrete manufacturing when making cell phones that are sold in individual units. Production of something such as oil, which the company cannot divide into distinct products, is not discrete manufacturing.

Job shop

Job shops often do customized, one-off orders that involve specialized machinery and skilled labor. Typically, job shop manufacturing involves high costs, long lead times, and high-quality outputs.

Batch process

Batch process manufacturing produces a good in batches. A manufacturer may produce several different goods, but rather than making them simultaneously, they make a batch of one product, then of another, then of another, and so on.

Continuous Process

Continuous process manufacturing is similar to repetitive manufacturing, but occurs with no or limited stops (beyond short maintenance breaks). For some products, this method can improve productivity and reduce waste.

What is a manufacturing organization?

A manufacturing organization is the group of people responsible for managing and enacting a manufacturing process. This includes:

  • Workers, who use their tools and training to carry out the actual work of turning materials into finished goods and report to production line supervisors.
  • Production line supervisors, who manage workers. Each supervisor is responsible for ensuring that a specific part of the production process, or production line, performs as expected.
  • Manufacturing managers, who lead the team of production supervisors. They report to executives on progress and provide input on the manufacturing process.
  • Executive management analyzes the market and makes decisions about which manufacturing strategy to use, and is ultimately responsible for outcomes.

What are raw materials in manufacturing?

In manufacturing, companies use raw materials (unprocessed resources, like iron or lumber), and intermediate goods (processed raw materials, like plastic or glass) to produce a final product. For example, manufacturers can use steel (itself produced using the raw material of iron) to make tools, weapons, or appliances. Carpenters can turn the raw material of wood into chairs, tables, and cabinets.

Once a manufacturer starts working on raw materials, they become known as works-in-progress until they go through the entire manufacturing process. Once the manufacturer finishes the process and is ready to sell the goods to a customer, the works in-progress become finished products.

What is the manufacturing process?

The manufacturing process varies with the type of product a company produces and the tools and techniques it uses. However, there are some common steps all manufacturers take.

Manufacturing starts with one or more raw materials or other goods that will be used to produce a finished product. The manufacturer can purchase these materials from vendors, or may buy unfinished works-in-process from other manufacturers to use in its own production processes.

Once the company has acquired materials, it applies a variety of tools, techniques, and machines to create a final good. Depending on the product, the process can involve few or many steps.

For example, a brewer needs to source ingredients, combine them, and store them under the proper conditions to produce beer. A company that manufactures electronics may have a process that involves multiple machines and hundreds of steps.

Once the company creates a finished good, it packages it for sale and ships it to the buyer.

What role does manufacturing play in the economy?

Manufacturing plays a vital role in the economy. Almost every product that people buy and use on a regular basis involves some level of manufacturing. Without it, people would not be able to buy many of the products they rely on.

Some economists argue that manufacturing is an essential part of a nation’s economy and development. They point out that, historically, manufacturing has allowed industrializing nations to expand their economies quickly.

They also argue that powerful nations have derived much of their influence from their manufacturing capabilities. For example, in 2002, the US was responsible for 28% of the world’s manufacturing output and still controlled 18% as of 2016 — reflecting its power on the world stage.

Manufacturing also creates jobs. Even automated production that relies heavily on machinery to manufacture goods typically requires managers, maintenance technicians, and many other workers. Manufacturing also creates many of the products that service industry workers rely on to accomplish their jobs.

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