Production Procedure: Description, Illustrations, and Classifications
Getting Down to Business: Manufacturing Processes Uncovered
Manufacturing is a fascinating world, full of transformative work steps that convert resources into goods. These resources can be raw materials, semi-finished goods, or components. The manufactured outputs may be finished or semi-finished goods. The processes can vary dramatically depending on the product.
Manufacturing isn't just about raw materials, though. Other essentials include labor, machinery, equipment, and chemical or biological processing. The proportions of these factors depend on the specific manufacturing process, whether labor-intensive or capital-intensive. For instance, capital-intensive manufacturing heavily relies on machinery, equipment, and automation, while labor-intensive manufacturing focuses more on human labor.
Does Manufacturing Boost Value?
Absolutely! Manufacturing adds value by enabling firms to sell outputs at higher prices than the initial inputs. By processing raw materials or assembling components into something more valuable, manufacturers create increased value.
This uptick in value means higher prices, making manufacturing a lucrative business venture. For example, turning iron ore into steel bars and then various equipment such as vehicles or converting cotton into clothing can shoot value up significantly.
The Face of Manufacturing
The primary distinction tells us whether the manufacturing process relies more on machines or physical capital such as machinery. This categorization results in two types:
- Capital-intensive manufacturing
- Labor-intensive manufacturing
Each category has differences in aspects such as capital investment requirements, operating flexibility, economies of scale, and customization.
Capital-intensive Manufacturing
Modern manufacturing often falls under the capital-intensive umbrella, with some industries leaning heavily on automated processes that require minimal human intervention. In such cases, the cost structure leans more towards costs for capital (such as machinery) rather than labor costs.
Capital-intensive manufacturing necessitates substantial initial investment in machinery, plants, and equipment. To reach the break-even point and profit, manufacturers aim to ramp up production as quickly as possible to achieve economies of scale. Higher economies of scale allow for reduced costs.
Standardized products are typically the focus for capital-intensive manufacturing, and they cater to the mass market's substantial potential demand to justify the capital investment. Although profit margins are relatively low, they benefit from cost savings via economies of scale.
Labor-intensive Manufacturing
Labor-intensive manufacturing is all about employment, focusing significantly more on labor than on machines. Textile manufacturing is a popular example. The industry is very dependent on wage levels to maintain operating costs and competitiveness. Sometimes, this leads manufacturers to relocate their factories to countries where wages are lower, like China or Bangladesh.
Labor-intensive manufacturing is also commonly applied to customizable products. It enables manufacturers to offer personalized products and charge higher prices. However, it comes with certain drawbacks, such as low economies of scale and complex human resource management.
Manufacturing Methodology
Manufacturing processes vary between companies based on the products they produce and their manufacturing system setups. The five primary manufacturing methods include molding, forming, machining, joining, and machining.
Molding
Molding involves liquid or pliable raw materials, shaping them with a rigid frame. Commonly, manufacturers use it to create products made from raw materials like plastic, metal, or glass. The term "molding" is often interchangeable with "casting," with the former traditionally used for plastic and the latter for metals.
First, manufacturers heat the raw material until it liquefies. Next, they pour the liquid into a mold and allow it to solidify, adopting the shape of the mold used. In expendable mold casting, the manufacturers must destroy the mold to withdraw the part. In contrast, permanent mold casting allows the manufacturer to reuse the mold.
Forming
Forming uses compression or other stresses to shape a workpiece without adding or removing material. As a result, the mass remains unchanged. This technique is most often applied to metals, although it's also utilized for plastics.
Machining
Machining cuts material into a desired shape based on precise specifications. Various tools, such as saws, shears, and spinning wheels, are utilized. Laser machines can also be employed to cut metals. Chemical processes are even used at times to produce intricate metal pieces with complex designs.
Machining is prevalent in the creation of metal products and is also commonly employed in furniture production. Modern machining often utilizes computers and Computer Numerical Control (CNC) to boost efficiency while minimizing labor costs.
Joining
Joining combines several parts or components to create a single unit. Welding, soldering, mechanical fastening, and brazing can be used to join materials or components together. For example, in automobile production, mechanical and thermal joining procedures are often used to construct a car body.
Shearing
Sheet metal shearing uses a cutting machine to fashion smaller parts. This technique is often employed with aluminum, brass, or paper and plastic inputs. The resulting pieces then proceed to the next manufacturing process, such as the forming or drawing process.
Manufacturing Organized
Now we dig deeper into how the manufacturing process is structured, forming a manufacturing system. The chosen system usually depends on the available capital, facilities, staff, and information systems. The four primary manufacturing systems are:
- Flexible Manufacturing System
- Continuous Manufacturing System
- Intermittent Manufacturing System
- Custom Manufacturing System
Flexible Manufacturing System
A flexible manufacturing system can handle batches like an intermittent manufacturing system while relying more on machines than labor. Manufacturers can produce goods in high volumes through robots and automation that minimize human intervention.
In addition to producing items at higher volumes, the system is also easy to reconfigure to produce other goods. However, flexible manufacturing requires significant capital investment.
Continuous Manufacturing System
A continuous manufacturing system organizes the production line into sections, with a workstation in each section. Finished materials move through the line sequentially, with each workstation performing further processing until the final output is produced.
Continuous manufacturing systems are suitable for producing standard goods in high volumes, reducing unit costs through economies of scale. However, the system requires a large initial investment and offers low flexibility and differentiation.
Intermittent Manufacturing System
Intermittent manufacturing systems produce identical outputs in limited quantities (batches). Each batch goes through one stage of production before moving on to the next stage. Compared to custom manufacturing, intermittent manufacturing systems provide advantages such as higher economies of scale and the ability to produce more diverse goods using the same production line.
Custom Manufacturing System
Under this system, manufacturers produce goods specifically designed for customers. The items are often unique for each customer, with production occurring only after an order has been placed. This method is flexible, but it can be very expensive and time-consuming due to its highly customized nature. It often relies on human labor and is less automated compared to other systems.
Additional Insights:
The differences between capital-intensive and labor-intensive manufacturing processes have significant consequences for economies and societies, shaping employment dynamics and productivity patterns.
- Key Differences:
- Resource Utilization: Capital-intensive manufacturing leans more on machinery and technology, while labor-intensive manufacturing relies mainly on human labor.
- Productivity: Capital-intensive manufacturing offers higher productivity due to advanced technology and automation, while labor-intensive manufacturing is less efficient.
- Cost Structure: Capital-intensive manufacturing carries a higher initial investment but lower per-unit costs once ramped up, whereas labor-intensive manufacturing has more variable costs based on labor costs.
- Job Creation and Displacement: Capital-intensive manufacturing often leads to job displacement, while labor-intensive manufacturing creates more jobs, albeit with potentially lower wages and job stability.
- Geographical Distribution: Capital-intensive manufacturing is typically found in developed countries with high labor costs, while labor-intensive manufacturing moves to countries with cheaper labor.
- Impact on the Economy and Society:
- Economic Growth: Capital-intensive manufacturing contributes to higher productivity and economic growth due to advanced technology and increased output efficiency.
- Employment and Inequality: The shift towards capital-intensive industries can increase inequality if not managed properly, leading to job displacement and economic dislocation for workers in labor-intensive sectors.
- The growth of the manufacturing industry is closely tied to the finance sector, as investments in machinery, equipment, and automation are essential for capital-intensive manufacturing processes.
- Given the variation in manufacturing processes dependent on factors such as labor-intensiveness versus capital-intensiveness, business opportunities in the industry can be diverse, from standardized mass-market products to customized, high-end creations.
