India is one of the major manufacturing economies in the world. Most of the international businesses outsource their manufacturing to India. The fastest growing sector in India over the past decade has been the food products industry; however, India also contributes significantly in other sectors such as automobiles, auto components, pharmaceuticals, engineering goods, industrial machinery and chemicals etc.

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In this article, we will talk about Manufacturing business, its types and challenges and much more. Keep on reading to find out.

 

What is Manufacturing?

 

 

Manufacturing is the process of turning raw materials into finished goods through the use of tools and multiple process.

 

• Manufacturing Processes: This process is a series of steps involved in producing a product from raw materials. It includes all stages from raw material acquisition to final distribution.
• Lean Manufacturing – Minimize waste in the business while maximising productivity.
• Additive Manufacturing – It is the process of creating an object by building it one layer at a time.

 

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Type of Manufacturing business:-

 

There are several different types of manufacturing businesses, which include:

• Manufacturers who assemble components into finished goods on an assembly line
• Manufacturers who perform chemical reactions or physical changes to convert one material into another material
• Manufacturers who create final products from basic raw materials like wood, plastic and metal

 

Some examples of small manufacturers include clothing manufacturers that make clothing from fabric, light equipment manufacturers that take metal and turn it into tools, or woodwork manufacturers that use wood to create furniture. This is why there is a heavy demand for machines like CNC Machines, Paper Plate Making Machines etc., in manufacturing companies.

 

Types of Manufacturing Processes

 

There are three types of Manufacturing process which involves everything in order to get final products.

 

MTS (Make to Stock) – Production process in which the product is manufactured according to a planned schedule of batches.
MTO (Make to Order) – Production process in which the product is made and sold as ordered by customers who order goods upon request of the manufacturer.
MTA (Make to Assemble) – Production process where products are assembled directly by suppliers themselves.

 

What are Primary Manufacturing Businesses?

 

These manufacturing businesses produce goods for sale to the final consumer. They can be classified into three types depending on their mode of operation, including:

 

1. Centralized Mode: A centralized factory which employs a large number of workers directly produces and distributes the finished goods to retailers and other distributors in the form of consignments or through its own sales outlets.

 

2. Syndicated Mode: A syndicated factory has a network of affiliated units which are responsible for manufacturing, processing, packaging and marketing the products. These affiliated units also provide technical assistance to their parent company at its various locations around the country.

 

3. Decentralized Mode: A decentralized factory is generally owned by an individual entrepreneur who produces or quotes his products directly to final consumers or through retail outlets or wholesale markets without any assistance from other employees or establishments located in different parts of India or overseas countries where he has no direct link with production process itself

 

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Challenges in Manufacturing business

 

Manufacturing business in India is one of the most attractive business sectors. However, the growth of this sector has been hampered by a number of challenges. These include Lack of skilled workforce, Cost factors such as energy and infrastructure, Inadequate supply chain management system etc in the manufacturing industries.

Head down below to learn more about the challenges in Manufacturing businesses.

 

1. Timely Delivery: Delivering products on time is a challenge for most manufacturers and this can be impacted by various reasons. The most common reason is that they are new to the business and need time to learn new skills and processes. Another reason could be that their suppliers are slow to deliver parts or components, which leads to delays in delivery of finished goods.

 

2. Quality Control: Manufacturers must ensure that all parts produced meet their quality standards before shipping them out to customers. If the customer does not receive the product with expected quality or performance, then it can cause financial losses for both parties involved.

 

3. Cost Control: One of the main challenges for manufacturers is how much they should charge for their products when selling them at different prices depending on their performance, quality and other factors related to production costs etc. This issue is more prevalent when compared with other industries such as retail, where prices are fixed regardless of cost of production or other factors involved in production process etc.

 

4. Inventory Management: Inventory management is one of the most important parts of any manufacturing company, because when you don’t manage it correctly, it can be very costly. It’s also a challenge because there are several different types of inventory that need to be managed: finished goods inventory (the amount of stock available), raw material inventory (the amount of stock needed to produce a product), and work in progress (how much work is left to be done).

 

5. Ordering and Scheduling: Ordering and scheduling is another important challenge in manufacturing, but this time around it’s about managing the flow of orders throughout the day so that products come out on time and customers get what they want when they want it. The big challenge here is keeping track of all those orders — especially if you’re an e-commerce company with hundreds or thousands of them coming in every day!

 

6. High entry cost: Manufacturing requires a lot of capital investment. The first thing to consider is whether you can afford the initial investment required to start the business or not. If you have followed the right steps, then this should not be an issue for you. You can easily find investors who will back your business for a low amount of money. Some people prefer to start their own business using their savings and borrow from family members or friends.

 

7. Low margins: Manufacturing also involves high fixed costs and low variable costs, which makes it very challenging for manufacturers to generate profits on every product sold. So manufacturers have to find ways to increase their sales volume as well as reduce their prices for customers so that they can make more money per sale.

 

8. Technology Adoption: Today from inventory management to order management, sales channels and distribution management – everything is easy to manage with the help of technology and with the need of a lot of staff members. This is the digital era and every manufacturer needs to consider digital ways to reach their distributors, customers in b2b and b2c. Sell products online with direct selling platforms or ecommerce stores, create digital storefront to reach your distributors and minimize the hussle. The SMB and MSME owners need to understand the importance of the internet and should take their business online. There are platforms which help you to create a digital store without any technical expertise in just a few simple steps. Use them and grow your sales/profits.

 

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CONCLUSION

 

These are the challenges and risks involved in manufacturing but still it’s the hottest sector growing at a massive scale in all parts of the world. Take risks, prepare a plan and adopt technology to minimize the losses. Start your business online and reach your customers directly.