What is a Manufacturer?

Manufacturer

What does manufacturer mean?

A company that manufacturers good with the purpose of selling them either to the individual or to a wholesaler, distributor, or retailer. A manufacturer commonly makes goods on a large scale, using raw materials or parts that are then assembled ready for distribution to the retailer or private customer.

Known also as the producer of a product, all items that you buy either online or in brick and mortar stores will display information on them to show you where they were manufactured. The manufacture of products is generally on a large scale and will involve a production line that will include many different workers.

If the manufacturer wants to succeed it needs to cover its costs and make a profit, meet the demands of the market and consumers, and make a product that people are actually interested in buying. Factories can do this in one of the three following production types:

Made to Stock (MTS): The factory produces its goods to stock in showrooms and on shelves, either locally, or more likely across an entire nation, or even globally. In this type of production the manufacturer must be able to predict demand for the product in order to plan production in advance. If too much is produced they risk flooding the market and needing to sell at a loss, but if too little is made they risk not being able to meet demand, and potentially sending customers to their competitors.

Made to Order (MTO): The manufacturer makes orders as they come in. This makes controlling inventory easier, and the manufacturer doesn’t have to watch and forecast market demand. The downsides are that a constant stream of orders are needed to keep the factory working, and customers will have longer to wait for their completed goods.

Made to Assemble (MTA): The factory makes the basic parts needed to assemble finished products. This shortens lead times for customer orders, but the manufacturer also runs the risk of having a stock of unwanted or unneeded parts.

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