Chapter 2

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.
 Classification of Industries cont…

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.
Classification of Industries cont…

IV. Manufacturing 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 labor.
Manufacturing sectors include production of food,
chemicals, textiles, machines and equipment.
 Classification of Industries 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 labor 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.
Classification of Industries cont.…

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 systems can be classified as
 Job Shop
Batch
Mass and
Continuous Production systems
 Types of production system cont..

1.Jobshop 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:
1. High variety of products and low volume.
2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge because of
uniqueness.
4. Large inventory of materials, tools, parts.
5.Detailed planning is essential for sequencing the requirements of each product,
capacities for each work center and order priorities.
 types of production system
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
1. Higher cost due to frequent set up changes.(e.g. shearing m/c)
2. Higher level of inventory at all levels and hence higher inventory cost.
3. Production planning is complicated.
4. Larger space requirements.
 types of production system cont.…

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).
 types of production system 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:
1. Complex material handling because of irregular & longer flows.
2. Production planning and control is complex.
3. WIP is higher compared to continuous production.
4. Higher set up costs due to frequent changes in set up.
 types of production system cont.…

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.
 types of production system 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. (Ethiopia?)
 types of production system 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:
1. Breakdown of one machine will stop an entire
production line.
2. Line layout needs major change with the changes in
the product design.
3. High investment in production facilities.
4. The cycle time is determined by the slowest operation.
 types of production system cont.…
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
 types of production system 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
1. Flexibility to accommodate and process number of
products does not exist.
2. Very high investment for setting flow lines.
3. Product differentiation is limited
 types of production system 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 , process and Assembly operations cont…

• 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.
Manufacturing , process and Assembly operations 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.
Manufacturing , process and Assembly operations cont.…

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.
Manufacturing , process and Assembly operations 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.
 Manufacturing , process and Assembly operations cont…

• 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
Manufacturing , process and Assembly operations cont…
• Support Functions
 Includes those functions which support the activities of
the above mentioned functions.
a) Purchasing: has the responsibility of buying the
necessary materials of the proper quality and quantity at
the most favorable price and securing deliveries on time
according to schedules established.
b) Sales: have the responsibility for selling product of the
company and for liaison after material has been
delivered.
c) Maintenance: has the responsibility for the execution of
preventive maintenance, repair of old equipment,
installation of new equipment and provision of facilities .
d) Personnel: has the responsibility for hiring ,
administering and training workers; and for the
termination of employments.
 Manufacturing , process and Assembly operations 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.
Manufacturing , process and Assembly operations cont…

a. 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.
 Manufacturing , process and Assembly operations cont…

• 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
Manufacturing , process and Assembly operations cont…

• 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.
Manufacturing , process and Assembly operations cont…
• 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.
Manufacturing , process and Assembly operations cont…
• 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 labor , proper utilization of machines,
shipping products of good quality on schedule,
and keeping plant operating costs at a minimum
possible level.
Manufacturing , process and Assembly operations 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.
 quantitative aspect: the more parts an assembled
product has the more complex it is.
 qualitative aspect: number of operations required
to produce a product.
3.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 TWO
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