From phones to clothing to vehicles, manufacturing transforms raw materials into products using machinery. Different styles of manufacturing serve different needs, whether custom small-batch production or fully automated factories that run around the clock. Today’s manufacturing was made possible by advances in technology—and technology continues to transform manufacturing operations worldwide.

What Is Manufacturing?

Manufacturing is the process of turning raw materials and components into tangible products using machinery, usually in volume.

Manufacturing makes it possible for an inventor’s brainchild to complete the journey to becoming a consumer’s favorite gadget. An optimized manufacturing process can mean the difference between success and failure for any product.

What Is a Manufacturing Business?

A manufacturing business is any company that uses raw materials or components to create finished goods. Manufacturing businesses make most of the products we use, including electronic devices, furniture, medical equipment, and aircraft. Those products can be distributed either directly to customers or through intermediaries, such as retail stores. Some manufacturers make components that are incorporated into other companies’ products.

Key Takeaways

  • Manufacturing is the process of assembling raw materials into products using machinery, typically on a large scale.
  • Manufacturing generates nearly 10% of total US GDP—and manufactured products account for the bulk of worldwide trade in goods.
  • Three key types of manufacturing are make to stock (MTS), make to order (MTO), and make to assemble (MTA).
  • Manufacturing systems are tailored to different product volumes and customer requirements, from systems for custom small-batch products to fully automated, high-volume factories.
  • Technologies poised to transform manufacturing include the Internet of Things (IoT), artificial intelligence, blockchain, and robotics.

Manufacturing Explained

Manufacturing aims to create as many products as the market will purchase at the lowest cost. This is only possible through the use of machines and automation.

Manufacturing can be classified into two broad categories: discrete and process manufacturing. Discrete manufacturing converts raw materials and components into items ranging from cars to cell phones and clothing. Process manufacturing, in contrast, combines ingredients according to formulas or recipes to generate bulk quantities of goods, such as beverages, chemicals, and pharmaceuticals.

Manufacturing involves multiple steps to turn raw materials into finished products, including product planning and design, prototyping, commercial production, inspection, and delivery. Manufacturers often use assembly lines to produce goods faster with lower labor costs and skill requirements. With this approach, products are manufactured in stages as they move along successive workstations along an assembly line.

Manufacturing vs. Wholesaling

Wholesalers serve as intermediaries between manufacturers and retailers. They buy products in bulk from manufacturers, then store and resell them to retailers and other businesses in smaller quantities at a higher per-unit price.

  • Key differences: While manufacturers design and build products, wholesalers focus on distributing those products. Using wholesalers to handle distribution allows manufacturers to reach customers with less investment and helps them direct their energies into design and manufacture. Wholesalers may also add value by helping to market and support products.

Manufacturing vs. Production

The terms manufacturing and production are often used interchangeably. However, manufacturing is just one type of production. While manufacturing refers to the process of making products from raw materials with machinery, production is a broader term that can be applied to the creation of many different products and services using manual as well as automated processes.

  • Key differences: While manufacturing results in physical, tangible products, the term production can apply to less-tangible outputs as well. These include the outputs of service businesses, such as stock market analysts, house cleaners, dentists, and authors.

Why Is Manufacturing Important?

Manufacturing remains an extremely important part of the economy in the US and worldwide. Manufacturing accounted for almost 10% of value-added output ($2.9 trillion) in the US and employed nearly 13 million people in 2025, according to the National Association of Manufacturers. Most of those companies are small: Of the nearly 240,000 firms in the US manufacturing sector, three-quarters have fewer than 20 employees.

Manufactured goods also account for the bulk of global trade. They comprised almost 60% of total merchandise exports in 2023, with a total value of $18 trillion, according to a 2024 report by the United Nations Conference on Trade and Development. Worldwide, manufacturing is “increasingly recognized for providing critical goods (such as food, medicines, or strategic inputs), creating decent jobs and driving technological change and innovation,” according to a May 2025 report by the United Nations Industrial Development Organization (UNIDO). The report adds that industrialization impacts poverty in two ways—directly by increasing jobs, incomes, and consumption, and indirectly through broader economic growth, with the latter representing one-third of the total impact on poverty reduction.

History of Manufacturing

Though production innovations such as printing appeared during the Middle Ages, the history of contemporary manufacturing began in earnest with the Industrial Revolution. In the late 1700s, many artisan-based industries were revolutionized by the introduction of machines. Those industries included textile making, which was transformed by three machines: the spinning jenny, the power loom, and the cotton gin.

For centuries, textile manufacturing had relied on the conversion of wool and, later, cotton into yarn using manually operated spinning wheels. Spinners operated a spindle to generate a single thread that was then delivered to a weaver.

In the late 1700s, James Hargreaves invented the spinning jenny, which combined a steam engine with other innovations to allow a single operator to spin eight spindles of thread at one time. Subsequent improvements increased this to 80 spindles. Meanwhile, Edmund Cartwright’s power loom mechanized the slow, manual process of converting thread into fabric. Across the Atlantic, Eli Whitney developed the cotton gin to accelerate the slow process of separating cotton from its seeds.

The advent of these machines transformed textile manufacturing from an artisan-based craft to a factory-based industry—and the increased productivity made clothing more affordable for many more people.

Automation similarly transformed how many other products were made, and new techniques and technologies continued to spur further advances. Mass production was popularized in the early 20th century by Henry Ford, who applied assembly-line techniques to build cars at low cost. Lean manufacturing, pioneered by Toyota in Japan during the 1970s, aimed to make manufacturing faster and more efficient while reducing defects. Today, robotics and process automation continue to transform manufacturing, increase productivity, and reduce production costs.

Types of Manufacturing

Manufacturing strategies can be categorized into three types, each designed to support different business requirements: make to stock, make to order, and make to assemble.

  • Make to stock (MTS): Make to stock (MTS) is a widely used manufacturing strategy in which the manufacturer determines how much of a product to make based on demand forecasts. Products are then stored as inventory by the company or at the distributor or retailer until they are sold. MTS benefits are twofold: Customers can take immediate delivery of products, while manufacturers benefit from economies of scale. Accurately predicting demand is critical to the success of this method. Producing too few items results in unmet customer needs and missed revenue opportunities, while producing too many results in surplus stock that may go unsold.
  • Make to order (MTO): With make to order (MTO), a manufacturer makes goods only after it receives an order for them. This means the company doesn’t risk creating unsold products and can customize products to customer specifications. MTO is commonly used for labor-intensive, high-value manufactured goods and in situations where stocking products would be impractical. Commercial aircraft, for example, are MTO products.
  • Make to assemble (MTA): Sometimes called assemble-to-order, the make-to-assemble (MTA) method is a combination of MTS and MTO. The manufacturer builds an inventory of components in advance of receiving customer orders but only assembles them into products based on orders it receives. This strategy is often used in situations where it takes significant effort and cost to make the components, but it’s relatively quick and easy to assemble them into final products. The benefit of MTA is that manufacturers can offer customers a broader selection of options while not risking final assembly until they receive a firm order.

Manufacturing Processes

Manufacturers typically rely on five primary manufacturing processes—repetitive, discrete, process, job shop, and mixed mode—each suited to various inputs, product types, production volumes, and customization requirements. Many manufacturers use a combination of methods across their operations, investing in diverse machinery or recalibrating equipment between batches to suit different tasks.

Repetitive

Repetitive manufacturing produces identical products using dedicated production lines for specific items that don’t require changeovers between runs. This approach best suits mass-produced goods with minimal variation and exact specifications, such as automotive parts, electronics, household appliances, or packaged consumer goods. It also allows for highly automated operations—often through continuously running assembly or production lines—and economies of scale but typically comes with limited flexibility for product variations.

Discrete

Discrete manufacturing involves assembling distinct components into finished products that can be easily identified and disassembled back into their parts. Unlike repetitive manufacturing, discrete manufacturers can alter or adjust operations to vary output between production runs within the same production system, rather than relying on dedicated lines for each item. This distinction makes discrete manufacturing more suitable for industries with diverse product offerings and fluctuating production volume and design, such as toys or aircraft components. While offering greater adaptability, this approach often requires investment in inventory management tools, as well as higher setup and changeover costs.

Process

Process manufacturing relies on formulas or recipes to convert raw materials—typically liquids, gases, powders, or granules—into finished products through blending, chemical reactions, heating, or other processes. This type of manufacturing specializes in products with irreversible transformations, such as gasoline from crude oil or juice from fruit. Common in chemical, food and beverage, and pharmaceutical industries, process manufacturing often uses automated, large-scale production processes that operate continuously to produce in bulk. However, it usually offers limited customization options, as varying products require developing new formulas and modifying each production process individually. In addition, switching between production lines often calls for thorough cleaning and equipment reconfiguration to prevent cross-contamination.

Job Shop

Job-shop manufacturing produces custom products with unique specifications, such as made-to-order or small-batch products. Manufacturers often organize facilities by process type—cutting, drilling, welding, and painting, for example—routing goods across specialized departments based on each production step’s requirements. Job shop manufacturing is highly flexible and can accommodate a wide variety of products, from bespoke furniture to custom prototype development, making it ideal when customization matters more than production speed or cost efficiency. However, because each order is treated as a distinct project with its own needs, job shop manufacturing requires specialized labor and equipment, which often results in longer production times and higher per-unit costs, especially when combined with multistep production schedules.

Mixed Mode

Mixed-mode, or hybrid, manufacturing combines multiple manufacturing processes within a single facility or system. Selection is dependent on each product’s requirements, specifications, and order quantities. For instance, a beverage manufacturer might use process manufacturing to produce the beverage but employ discrete manufacturing for bottling and packaging. This flexible approach helps companies satisfy diverse customer needs and market segments without outsourcing, though it can add operational complexity requiring integrated planning, scheduling, and management systems.

Manufacturing Systems

Manufacturing systems are generally divided into four main types, ranging from systems designed to handle small-batch, low-volume products to fully automated factories that can produce enormous volumes of products cheaply.

  • Custom manufacturing system: In a custom manufacturing system, products are made to order for each customer. A single skilled craftsperson or small group of workers produces individual, high-value items largely by hand or with specialized machines. Because custom manufacturing focuses on quality rather than volume, this system has the highest per-unit costs.
  • Intermittent manufacturing system: In this approach, a single production line is designed with the flexibility to make different products. Products are manufactured in batches based on customer orders, with the production line reconfigured after each batch to make the next set of products. Intermittent manufacturing systems generally handle small volumes of each product.
  • Continuous manufacturing system: This is designed for mass production of a single product. Semi-skilled workers at each station along an assembly line complete successive stages of assembling a product as it goes by. This approach is ideal for high-volume manufacturing, but it requires massive upfront costs.
  • Flexible manufacturing system: This approach creates a high-volume system that can be reconfigured relatively easily to produce different products. It aims to automate every step in production and includes the use of robots that can be reprogrammed to make different products. Since the whole process is designed to be automatic and use as few people as possible, these systems can run 24 hours a day and produce huge volumes of products at very low unit cost.

Manufacturing Examples

As businesses grow, they need to adapt their manufacturing strategies and technologies to manage increased operational complexity, support higher demand, and capitalize on new revenue opportunities. Here are two examples:

  • Corkcicle started life by developing an innovative in-bottle chilling product that allowed consumers to cool wine and other beverages without an ice bucket. With that success in hand, the company expanded to create a whole line of cooling products, from lunchboxes to sports canteens. As business complexity increased, Corkcicle implemented an integrated ERP system that provided greater visibility and control over inventory management and demand planning, as well as omnichannel commerce. The company also drove additional revenue with customized manufacturing options, such as branded and team logos.
  • Saddleback Leather began its journey with a single product: a custom leather bag that its founder designed to carry his schoolbooks. Fast forward to today, and the company produces dozens of leather products, including briefcases, wallets, purses, belts, and jewelry, sold directly to consumers on its website. With widely fluctuating seasonal demand, inventory management is critical. To meet that demand without overstocking, Saddleback implemented a cloud-based inventory planning solution along with an integrated ERP system, which supports manufacturing, ecommerce and other functions.

Manufacturing Risks

Manufacturing is a complex and often capital-intensive business that’s vulnerable to many risks. Factors that can derail manufacturing operations range from supply chain interruptions to forecasting errors.

  • Fluctuating raw materials prices: Prices of raw materials and components can fluctuate rapidly and unpredictably due to factors such as changes in global supply and demand. Even when manufacturers lock in the price of the materials themselves, they may be vulnerable to fluctuating global shipping costs.
  • Supply chain woes: Supply-chain problems can cause delays in obtaining critical components. The unavailability of components can hold up an entire manufacturing process.
  • Product recalls: Product defects can lead to expensive recalls, lawsuits, and reputational damage. It’s important to maintain strict and consistent quality control efforts throughout the production process, including a final inspection before products are shipped.
  • Regulatory compliance: Strict local regulations determine whether many products can be sold in markets worldwide. It’s vital for manufacturers to analyze the regulatory requirements in their target markets before selling their products or risk being forced to pay costly fines.
  • Forecasting errors: Inaccurate forecasting can result in making more products than can be sold or not enough to meet demand. Manufacturers can minimize the risk by using software that takes into account historical and seasonal sales patterns, as well as external factors.
  • Cyber risks: Hackers routinely target manufacturing systems with ransomware and other malicious attacks. Focusing on cybersecurity is critical for manufacturing companies.

How to Manufacture a Product: A Step-by-Step Guide

Manufacturing a new product is a multistage process that starts with an idea, moves through an intensive R&D process, and extends through manufacturing and post-production support. Each phase requires attention to design, materials, processes, and quality.

  1. Product conception: The process begins with the identification of an unmet market need or opportunity to improve an existing offering. It involves developing preliminary concepts through brainstorming sessions, competitive analysis, and coming up with rough sketches to gauge market potential.
  2. Market research: Market research is also a must to confirm demand and refine the concept. Determine whether similar products or substitute goods already exist, whether there’s a genuine market need, and how to sufficiently differentiate the new product from competitors. This research phase can also help design teams identify potential materials and production methods in line with target buyers’ expectations and price points.
  3. Product design: The design phase translates the initial concept into detailed specifications, addressing how the product will work, what it will look like, and what it will do. Designers and engineers often start with simple drawings or preliminary CAD models to define the product’s shape and size, components, materials, colors, surface finishes, and user interfaces before developing more detailed engineering drawings and 3D models. Effective product design balances functionality with manufacturability, considering design limitations, cost constraints, production feasibility, and environmental requirements.
  4. Product prototyping: Physical prototypes help production teams address design questions and obtain feedback from internal stakeholders, focus groups, and potential customers before committing to full production. Low-cost prototypes—such as 3D-printed or handmade models—are useful to test form and basic function before creating higher-quality prototypes as the design evolves. Prototypes should be tested under expected operating conditions, then refined until they meet all requirements.
  5. Production planning: Production planning turns finalized designs into actionable manufacturing strategies. Planning encompasses selecting a manufacturing approach, choosing what to make in-house or outsource, selecting suppliers, mapping production steps, designing or ordering necessary tooling and materials, and establishing quality control and inspection protocols that meet relevant regulatory requirements.
  6. Product manufacturing: With a detailed plan, manufacturers can begin pilot production runs to validate processes, identify issues before scaling up to full production, and train personnel. Carefully managed production ramp-up and process testing help establish and maintain quality consistency in line with design specifications. Once production stabilizes, look for continuous improvement opportunities to eliminate waste and improve efficiency.
  7. Post-production: Common post-production activities include managing distribution and order fulfillment, analyzing field performance and returns, addressing warranty claims, and gathering customer feedback to inform future improvements and new product lines. This analysis should also include plans to scale production and to evaluate manufacturing performance using metrics such as overall equipment effectiveness, throughput, and unscheduled downtime.

Future of Manufacturing

Technology continues to transform manufacturing, just as it is transforming other industries. Here are four of the most important technologies that will shape the future of manufacturing:

  • Internet of Things (IoT): Manufacturing systems increasingly are able to connect to the Internet and to each other, so they can communicate critical information that is used to monitor and optimize manufacturing processes. For example, machines can provide continuous information about environmental operating conditions or provide alerts when supplies of a specific component run low.
  • Artificial intelligence (AI): The promise of AI to provide intelligent awareness of complex processes has considerable potential in manufacturing. Applications include predictive maintenance: By analyzing historical data to reveal patterns associated with failure, AI may predict when maintenance is needed, helping to avoid costly production stoppages. AI could also be applied to the supply chain to analyze the huge range of factors that might affect the availability of raw materials.
  • Blockchain: Blockchain—the technology underlying cryptocurrencies like Bitcoin—provides an immutable record of activities and transactions. In manufacturing, blockchain could be used to track items used in production, identify counterfeit components, and verify inspection and other process steps for regulatory compliance.
  • Robotics: Robotics encompasses a lot of different futuristic technologies; their application to manufacturing is clear. Robotics can be used to automate processes, reduce labor costs, and, since they can work 24 hours a day, can lead to spectacular productivity gains.

Manage and Scale Your Manufacturing Business With NetSuite

NetSuite’s cloud-based manufacturing software provides a scalable and flexible platform for managing complex business processes, such as planning, procurement, manufacturing, supply chain, product data management, sales, and support.

NetSuite’s integrated applications help companies reduce time to market, enhance product quality, and improve support and services productivity. Support for multiple subsidiaries worldwide helps simplify global operations and increases visibility at the regional and corporate level. Businesses can improve productivity by automating error-prone spreadsheet-based processes, while customizable dashboards provide real-time visibility into performance across all areas of the business.

Technology continues to transform manufacturing, just as it is transforming other vital sectors of the economy. Cloud-based applications can help manufacturers increase efficiency, manage complex supply chains, and deliver products more quickly.

Manufacturing FAQs

What does manufacturing mean?

Manufacturing is the assembly and transformation of raw materials into products using machinery. It typically involves automating the production process in order to make products on a large scale at lower cost.

What is manufacturing in simple words?

Manufacturing uses machines to make products that people or businesses can buy.

What are three types of manufacturing?

The three types of manufacturing are:

  1. Make to stock (MTS): Products are manufactured based on demand forecasts. They are then held as inventory in a warehouse or retail location until purchased by a customer.
  2. Make to order (MTO): Products are manufactured only when a customer places an order.
  3. Make to assemble (MTA): A company manufactures a stock of components but only assembles them into products when a customer places an order. MTA is sometimes called assemble to order (ATO).

What are the different types of manufacturing?

The primary types of manufacturing are make to stock (MTS), make to order (MTO), and make to assemble (MTA). With make to stock, manufacturers build products based on demand forecasts. With make to order, they build products based on orders they receive. With make to assemble, they make components based on forecast demand but only assemble when they receive firm orders.