Chapter Three

Introduction to Manufacturing
Industries, Services and Products:
 Introduction
 Industry is the production of goods or related
services within an economy. The major source of
revenue of a group or company is the indicator of its
relevant industry.
 It is a business activity, which is related to the raising,
producing, processing or manufacturing of products.
 A single industry is often named after its principal
product; for example, the auto industry. For
statistical purposes, industries are categorized
generally according a uniform classification code
such as Standard Industrial Classification (SIC).
 Classification of Industries
 Classification of industries based on
International Standard industrial classification
(ISIC).
 ISIC is a standard classification of economic
activities arranged so that entities can be
classified according to the activity they carry
out.
 I. Primary Industry
• Primary industry is concerned with production
of goods with the help of nature. It is a nature-
oriented industry, which requires very little
human effort.
• E.g. Agriculture, farming, forestry, fishing,
horticulture, etc.
 II. Genetic Industry
 Genetic industries are engaged in re-
production and multiplication of certain spices
of plants and animals with the object of sale.
The main aim is to earn profit from such sale.
 E.g. plant nurseries, cattle rearing, poultry,
cattle breeding, etc.
III. Extractive Industry (primary sector)
 Extractive industry is concerned with
extraction or drawing out goods from the soil,
air or water. Generally products of extractive
industries come in raw form and they are used
by manufacturing and construction industries
for producing finished products.
 E.g. mining industry, coal mineral, oil industry,
iron ore, extraction of timber and rubber from
forests, etc.
IV.Mnfctrng Industry (secondary sector)
 Manufacturing industries are engaged in
transforming raw material into finished product with
the help of machines and manpower.
 The finished goods can be either consumer goods or
producer goods. E.g. textiles, chemicals, sugar
industry, paper industry, etc.
 Manufacturing industry refers to any business that
transforms raw materials into finished or semi-
finished goods using machines, tools and labour.
 Manufacturing sectors include production of food,
chemicals, textiles, machines and equipment.
Cont.
• Manufacturing : The process of converting raw
materials, components, or parts into finished
goods that meet a customer's expectations or
specifications. Manufacturing commonly
employs a man-machine setup with division of
labour in a large scale production.
 V. Construction Industry
 Construction industries take up the work of
construction of buildings, bridges, roads,
dams, canals, etc.
 This industry is different from all other types
of industry because in case of other industries
goods can be produced at one place and sold
at another place.
 But goods produced and sold by constructive
industry are erected at one place.
VI. Service Industry (tertiary sector)

 In modern times service sector plays an

important role in the development of the
nation and therefore it is named as service
industry. The main industries, which fall under
this category, include hotel industry, tourism
industry, entertainment industry, etc.
 Types of production Systems
 Production system scan be classified as
 Job Shop
 Batch
 Mass and
 Continuous Production systems
 1. Job Shop Production:
 are characterized by manufacturing of one or few quantity of
products designed and produced as per the specification of
customers within prefixed time and cost.
 The distinguishing feature of this is low volume and high variety of
products.
Characteristics: The JSP system is followed when there is:
i. High variety of products and low volume.
ii. Use of general purpose machines and facilities.
iii. Highly skilled operators who can take up each job as a challenge
because of uniqueness.
iv. Large inventory of materials, tools, parts.
v. Detailed planning is essential for sequencing the requirements
of each product, capacities for each work center and order
priorities.
 Cont.
Advantages
1. Because of general purpose machines and facilities variety of
products can be produced.
2. Operators will become more skilled and competent, as each job
gives them learning opportunities.
3. Full potential of operators can be utilized.
4. Opportunity exists for creative methods and innovative ideas.
Limitations
5. Higher cost due to frequent set up changes.(e.g. shearing m/c)
6. Higher level of inventory at all levels and hence higher inventory
cost.
7. Production planning is complicated.4. Larger space requirements.
 2. Batch production:
 Defined as a form of manufacturing in which the job
passes through the functional departments in lots or
batches and each lot may have a different routing.
Characteristics: BPS is used when;
1. There is shorter production runs.
2. Plant and machinery are flexible.
3. Plant and machinery set up is used for the production
of item in a batch and change of set up is required for
processing the next batch.
4. Manufacturing lead time and cost are lower as
compared to job order production (J. Shop).
 Cont.
Advantages of batch production:
1. Better utilization of plant and machinery.
2. Promotes functional specialization.
3. Cost per unit is lower as compared to job order production.
4. Lower investment in plant and machinery.
5. Flexibility to accommodate and process number of products.
6. Job satisfaction exists for operators.
Limitations of batch production:
7. Complex material handling because of irregular & longer flows.
8. Production planning and control is complex.
9. WIP is higher compared to continuous production.
10. Higher set up costs due to frequent changes in set up.
 3. Mass Production:
 It is Manufacturing of separate parts or
assemblies using a continuous process.
 This production system is justified by very
large volume of production. The machines are
arranged in a line or product layout.
 Product and process standardization exists and
all outputs follow the same path.
 Cont.
Characteristics: MP is used under following circumstances:
1. Standardization of product and process sequence.
2. Dedicated special purpose machines having higher
production capacities and output rates.
3. Large volume of products.
4. Shorter cycle time of production.
5. Lower in process inventory.
6. Perfectly balanced production lines.
7. Flow of materials, components and parts is continuous and
without any back tracking.
8. Production planning and control is easy.
9. Material handling can be completely automatic.
 Cont.
Advantages of mass production:
1. Higher rate of production with reduced cycle time.
2. Higher capacity utilization due to line balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.
Limitations of mass production:
6. Breakdown of one machine will stop an entire production line.
7. Line layout needs major change with the changes in the
product design.
8. High investment in production facilities.
9. The cycle time is determined by the slowest operation.
 4. Continuous production
 Production facilities are arranged as per the sequence of
production operations. Items are made to flow through
the sequence of operations through material handling
devices such as conveyors, transfer devices, etc. E.g. Soft
drink factories
Characteristics:
1. Dedicated plant and equipment with zero flexibility
2. Material handling is fully automated.
3. Process follows a predetermined sequence of
operations.
4. Component materials cannot be readily identified with
final product.
5. Planning and scheduling is a routine action
 Cont.
Advantages
1. Standardization of product and process sequence.
2. Higher rate of production with reduced cycle time.
3. Higher capacity utilization due to line balancing.
4. Manpower is not required for material handling as it is
completely automatic.
5. Person with limited skills can be used on the production line.
6. Unit cost is lower due to high volume of production.
Limitations
7. Flexibility to accommodate and process number of products
does not exist.
8. Very high investment for setting flow lines.
9. Product differentiation is limited
 Cont.
In general the production systems of
manufacturing companies is depicted in the
figure below.
 Manufacturing , process and Assembly
operations
The main functions/ operations of an industrial
enterprise may be grouped into;
 Manufacturing,
 Engineering,
 Control and,
 Support functions/ operations.
 Manufacturing Functions
This group includes the functions directly related to
the manufacturing or movement of the product :
I. Receiving: has the responsibility for accepting raw
material from the carrier, presenting for
inspection, and getting it to the plant.
II. Warehousing (or storing): has the responsibility
for storing raw material until needed for
production, and storing finished goods until ready
to be shipped to the customers.
 Cont.
III. Transportation: has the responsibility for
moving all types of materials within the plant
area and from the suppliers.
IV. Production: has the responsibility for
transforming the raw material into an
acceptable and economical finished product.
V. Shipping: has the responsibility for packing
and delivering the finished goods to
customers.
 Engineering Functions
This group includes those functions concerned with
the engineering aspects of a manufacturing
operation.
I. Product Design: has the responsibility for the
development of new and saleable products and
preparation of product description, product
drawings and product specifications.
II. Process Design: has the responsibility for the
development of efficient processes for the
manufacture of the products developed by the
product design team.
 Cont.
III. Plant Engineering: has the responsibility for
the design and installation of new facilities
and ensuring that proper working conditions.
IV. Cost Estimation: has the responsibility for
determining costs involved in product
manufacture. This includes design and
development cost of the product prior to
manufacture.
 Control Functions
This group includes those functions concerned with the
controlling of production, cost and quality.
I. Production Control: has the responsibility for
establishing forecasts , production plans , inventory
levels and product distribution.
II. Quality control: has the responsibility for establishing
and maintaining the necessary control of quality for raw
materials, intermediate products , and finished goods .
III. Cost Control: has the responsibility for determining and
reporting the design cost, the manufacturing cost and
comparing these costs with the amounts allocated in
the budgets
 Support Functions
Includes those functions which support the activities of the
above mentioned functions.
I. Purchasing: has the responsibility of buying the necessary
materials of the proper quality and quantity at the most
favourable price and securing deliveries on time according to
schedules established.
II. Sales: have the responsibility for selling product of the
company and for liaison after material has been delivered.
III. Maintenance: has the responsibility for the execution of
preventive maintenance, repair of old equipment,
installation of new equipment and provision of facilities.
IV. Personnel: has the responsibility for hiring, administering
and training workers; and for the termination of
employments.
 Cont.
 There are certain basic activities ( operations) that
must be carried out in a factory to convert raw
materials into finished products.
 Transformation processes involve a sequence of
steps, each step bringing the materials closer to the
desired final state.
 Processing
• Processing operations include those activities
which transform work part from one state of
completion into a more advanced state of
completion.
• Energy is added (mechanical, heat,
electrochemical energy) to change the shape
of the work-part, remove material from it,
change its physical properties, etc.
 Assembly Operation
 Assembly is the fitting together of individual
parts to make up fabricated products.
 In assembly operations, two or more separate
components are joined together by
mechanical fastening operations, joining
processes and/or adhesives E.g. steel
structure and car assembly companies
 Materials Handling and Storage
 Materials handling is defined as transporting
unfinished goods , work-parts, and supplies to
and from, between and during manufacturing.
 Loading, positioning , unloading and storing
are also materials handling operations.
 The storage function can be raw material
storage , work-in-process storage, finished
goods storage , etc
 Inspection and Testing
 Inspection is the examination of a work piece,
both visually and with instruments, to determine
defects , errors, and flaws of material or
manufacturing process.
 Inspection can be based on measurements
(length, diameter, weight, etc.) or attributes
(color, appearance, freshness, etc.).
 Testing is the trial of the product by actual
functioning or operation, or by subjecting the
item to external effects.
 Control
 The control function in manufacturing includes
both individual processes as well as supervision
over the aggregate operations at the plant level.
 Control at the process level involves the
achievement of certain performance objectives
by properly manipulating the process inputs.
 Control at the plant level includes effective use of
labour , proper utilization of machines, shipping
products of good quality on schedule, and
keeping plant operating costs at a minimum
possible level.
 Cont.
The processing and assembling operations add
value to the material being processed, whereas
the other functions do not.
 Product and production relationships
 Product is a good/an item whereas, production
is an organized activity of transforming raw
materials into finished products which have
higher value.
 It is instructive to recognize that there are
certain product parameters that are influential
in determining how the products are
manufactured.
 Let us consider four key parameters;
 Cont.
1. Production Quantity And Product Variety: deals
how money units of the products are going to be
produced with respect to the demand for it in
the market place.
2. Product And Part Complexity: it is a complicated
issue & has qualitative and quantitative aspects.
3. Quantitative Aspect: the more parts an
assembled product has the more complex it is.
4. Qualitative Aspect: number of operations
required to produce a product.
 Limitations and Capabilities of a
Manufacturing Plant:
 A manufacturing plant can't do everything. It
must limit its mission only to a certain scope
of products and activities in which it can best
compete, such as products, technologies,
volumes, and markets.
End of Chapter Three
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