Manufacturing

What is Manufacturing?

Manufacturing is the process of turning raw materials or parts into finished products. These products are then sold to wholesalers, retailers, or directly to consumers. Manufacturing plays a major role in the global economy-it's responsible for about 15% of the U.S. economic output.

Today, many companies exist solely to manufacture goods for other businesses. They use a mix of machines, technology, and human labor to produce everything from electronics to furniture to clothing.

Manufacturer vs. wholesaler

A manufacturer makes the product. A wholesaler buys those finished products and sells them to other businesses, usually in bulk.

Manufacturers create goods from raw materials
Wholesalers act as middlemen, reselling those goods to retailers or distributors

If you’re sourcing products for your business, you can buy from either, depending on your needs and volume.

Types of manufacturing production

Manufacturers don’t all produce goods the same way. There are three main production strategies based on how demand is handled:

1. Make to Stock (MTS)

Products are made in advance and kept in inventory based on predicted demand.

Pros: Fast delivery to customers
Cons: Risk of overproduction or unsold stock

Example: A company makes 1,000 t-shirts per month because that’s the historical average.

2. Make to Order (MTO)

Products are only made after a customer places an order.

Pros: No excess inventory
Cons: Longer lead times, possible delays

Example: A furniture brand builds each table to match the customer's size and style preferences.

3. Make to Assemble (MTA)

Components are produced in advance, but final assembly happens when an order is placed.

Pros: Faster than MTO, more flexible than MTS
Cons: Risk of excess parts if demand drops

Example: A PC company stocks components (like CPUs, RAM, cases) and builds systems to order.

Choosing a manufacturing strategy

Each strategy has trade-offs:

Too much stock ties up money and storage space
Too little stock can lead to delays and lost sales
Custom production offers flexibility but takes more time

The right approach depends on your product, customer expectations, and how much risk you're willing to take on.

Final thoughts

Manufacturing is the backbone of product-based businesses. Whether you’re launching a t-shirt brand or scaling a custom furniture company, understanding how manufacturing works-and choosing the right production model-can help you stay profitable, avoid waste, and deliver a better customer experience.

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