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Tips for Successful Inventory Management

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How to Find a Manufacturer for Your Product Idea



What is manufacturing?

Manufacturing is the process of creating goods either by hand or by machine. These goods are then sold for profit as part of a larger business model. Manufacturing can involve either raw materials being built up into a finished product, or pre-made materials being bound together to form something larger. Businesses manufacture goods on both a small and large scale. That said, the term manufacturing often implies a large operation including machinery.

Types of manufacturing

There are several types of manufacturing processes, which are based on different strategies. Depending on the business model, specific companies will find a manufacturing process that fits their needs.

  1. Make-to-Stock (MTS): Make-to-Stock is the most traditional form of manufacturing in which factories produce goods that are stocked and sold in stores. The manufacturer uses historical data to predict the trends for their goods and decides how much to produce accordingly. This process is a great way to stay ahead of the curve and make sure that you are producing enough goods. However, if predictions are off, that could leave the manufacturer with too much stock at their own cost.

  2. Make-to-Order (MTO): Make-to-Order describes the process in which the manufacturer only produces goods once it receives an order. This gives the producer much more control over their inventory and ensures that they do not overproduce. However, since the manufacturing process can only begin once the company receives the orders, the customer waiting time is longer. This also detracts from the possibility of streamlining a production process that enables manufacturers to produce on a larger scale. Both of these factors contribute to the manufacturer’s reliance on having a steady flow of orders.

  3. Make-to-Assemble (MTA): Make-to-Assemble is a combination of the two strategies listed above. It works similarly to Make-to-Stock in that it relies on demand forecasts, however, instead of manufacturing finished products, this strategy calls for the creation of product parts. This enables the manufacturer to easily finish the production process once the order is received simply by assembling those pre-produced parts.

While this method allows for faster delivery time than Make-to-Order, it also leaves the manufacturer with a similar problem as Make-to-Stock - the possibility of having produced too much inventory. The additional advantage of Make-to-Assemble, however, is that if those individual parts are versatile and can be used in multiple products then the likelihood of being stuck with too much inventory is lower.


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How to start manufacturing

You might be looking to start manufacturing products for your company, or to start manufacturing products as a business. Either way, the first step is to create an eCommerce website to house your offerings. This way, consumers can find you online and you can more easily have a handle on any order.

If you’re looking to produce merchandise for your company, you can read more on how to find a manufacturer. Alternatively, if you’d like to start a manufacturing business, you’ll need to first understand your resources as well as the market needs. Then you can start producing on a small scale. Once you see the amount of orders coming through your website, you can choose any of the manufacturing processes listed above and grow your business.


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Related Term


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