How to start a Manufacturing Business?

April 24, 2021 Hansie Britz

                                 

“Manufacturing” refers to a large – scale production of goods. The goods converts raw materials, parts, and components into finished merchandise using manual labor and/or machines. The finished goods can be sold directly to consumers, manufacturers or wholesalers.

A manufacturing business is any business that uses raw materials, parts and components to assemble finished goods, Manufacturing businesses often employ machines, robots, computers and humans to produce the merchandise. It typically use an assembly line, which enables a product to be put together step by step.

Manufacturing Types:

There are 3 main types of manufacturing production:

  1. Make – to – Stock (MTS).

  2. Make – to – Order (MTO).

  3. Make – to – Assemble (MTA).

Make – to – Stock – (MTS) is a traditional manufacturing strategy that relies on past sales data. The data is used to forecast consumer demand and plan the production activity in advance. The drawback of this strategy is that it uses past data to predict future demand. This increases the likelihood of the forecast being off, leaving the manufacturer with too much or not enough stock.

Make – to – order – (MTO) – This allows customers to order products that are customized and manufactured to their specifications. The manufacturing process begins only after the order is received. So, the waiting time for the customer is longer, but the risk of excessive inventory is cut out.

Make – to – Assemble – (MTA) – This is a strategy that relies on demand forecasts to stock the basic components of a product. Assembling starts after the order is received. It’s a hybrid of MTS and MTO approaches. Customers can customize the products and receive them quicker because the manufacturer has the basic components ready. However, if orders don’t come in, the manufacturer is stuck with a stock of unwanted parts.

To reduce risks, any type of manufacturing business should focus on keeping production costs low. Also, maintaining good quality control and investing in excellent sales management.

TO ENABLE YOU TO SET UP AND RUN A SUCCESSFUL MANUFACTURING BUSINESS YOU WILL NEED A PROFESSIONAL AND WELL – STRUCTURED BUSINESS PLAN CONTACT US NOW FOR HELP AT: (27) 84 583 3143 or Email US AT : money@global.co.za