Manufacturing is the making of goods by hand or by machine that upon completion the business sells to a customer. Items used in manufacture may be raw materials or component parts of a larger product. The manufacturing usually happens on a large-scale production line of machinery and skilled labor.
Manufacturing is a very simple business; the owner buys the raw material or component parts to manufacture a finished product. To function as a business the manufacturer needs to cover costs, meet demand and make a product to supply the market.
A factory operates one of three types of manufacturing production:
With all three types of manufacturing there are risks. Supply too much and you flood the market, causing a drop in price and a drop in profits. By not meeting demand, the customer may go elsewhere with a drop in sales for the manufacturer. Quality control is also a big factor in successful manufacturing. The manufacturer will need to keep a close eye on quality of product from beginning to end, with many tests along the way. If mistakes happen, the long-term consequences may be serious.
A manufacturing business may need many parts for the complicated assembly of a quality product or just the few for making a simple good. Keeping production costs to a minimum, having good quality control and excellent sales management are key to reducing the risk in any type of manufacturing.