Manufacturing is the very origin of the market which many often fail to see or understand in detail. Although referred to as the single bulk of manufacturing, it had various layers and categorisation. And before venturing into manufacturing business it is absolutely critical to develop a structured understanding to figure out your relative position in the market and industry.
Primarily the industry is Bifurcated as;
Machinery / Equipment Manufacturing
This involves manufacturing the equipment required to manufacture products as well as the equipment required to manufacture equipment. Sounds confusing so let us understand with an example; to manufacture your mobile or computer you need basic solder machine, which in turn requires other manufacturing equipment.
Product Manufacturing
These are the items which fulfil consumer demand, the point from which the entire market mechanism emanates. It includes products ranging from tooth paste and shoe lace to the most advanced piece of technology on your desk and intricate form of machinery in your garage, as well as the products required to fulfil requirement of equipment manufacturers, such as industrial grade packaging!
Going Further both of these Categories can be classified in to multiple layers. Let us understand a few:
Raw Material
The origin of origin! Every manufactured product can be traced back to this position, so you can imagine the sheer volume. And to be precise there are just three sources or categories: metals and minerals, oil and coal, agriculture! All big companies across the world have had presence in at least one of these three raw material production.
Semi Finished
An semi finished state of product which required further processing or an intermediate part or chemical which becomes an ingredient for further processes required to produce the finished product. This is often the most untapped portion of the market as one requires industry and process knowledge to identify and leverage this position in the market.
Final Product
This is where you can relate your common conventional perception of an assembly line of equipment and workers. But it is far more complicated as this is where the convergence of multiple industries occurs. Even toothpaste requires combination of chemical industry for product and plastic industry for packaging. Imagine what kind of combination does manufacturing a vehicle involve!
Other two terms which you need to be familiar with while venturing into market.
Brand Label (or Original Equipment Manufacturer)
You go to the market and reach the customer under your own name for direct connect and recognition. And this has its two costs, marketing to reach the customer and service support to ensure customer satisfaction.
White Label (or Sub Contract Manufacturing)
You sell your product to a third party that sells it in the market under its own label. Although it helps your delegate or eliminate the above costs and challenges, it limits your margins and creates certain dependencies.
And before we conclude, this is just a brief summary and high level classification of the manufacturing sector. Before venturing in to manufacturing, it is very important to not know strategise your position but also have the right combinations!