What is a Manufacturing Company? These are Characteristics, Systems and Business Processes

Manufacturing company is a form of company whose activities are to sell various raw materials or raw materials, as well as semi-finished products. The purpose of selling producers from manufacturing companies is to provide raw materials to be processed into products to meet market demand. The more demand in the market, the more production processes carried out by producers.

In general, manufacturing companies also produce products according to market demand. Therefore, the manufacturing process involves a variety of factors, including: Human resources, natural resources, machine tools. Currently, a manufacturing company is a form of company that plays a large role in an increasingly sophisticated technological era.

Manufacturing and sales companies are classified as trading companies because they function as sellers of goods and as business activities. For unique management purposes, production and sales are usually done in factories, making it more centralized. To know more about manufacturing companies, Sinaumed’s can see the following explanation:

Definition of Manufacturing Company

This company has many business activities. The more activities that are carried out, the more problems will occur. The problem that can occur is in the very limited elements of the organizational system. Therefore, someone performs two or more activities, records errors in purchasing and receiving raw materials, and records them in the inventory area.

Therefore, it is very important to record and measure manufacturing costs using accounting methods. Company problems need to be prevented or minimized by managing the company’s operations properly. From a technical point of view, the word manufacturing itself is an activity of processing raw materials through chemical and physical processes with the aim of changing the type, shape and appearance of the product. Production activities involve compounding processes from several components to form the whole product.

The definition of a manufacturing company from an economic point of view is the process of converting raw materials into a form of added value through one or more assembly processes. The expected end result is the creation of a product that is worth selling. Production itself consists of several labor steps, each labor step bringing the raw material closer to its final form. Then what is meant by a factory is a business unit that switches from raw materials to semi-finished products or finished products with a certain selling value.

The cultivation of manufacturing companies is managing equipment, machines and workers in one medium. All processes and stages carried out in this manufacturing activity lead to standard operating procedures or commonly called SOPs belonging to each work unit. In Indonesia alone, manufacturing companies are commonly referred to as factories.

In English, factory means factory and refers to a place or a description of a place. This factory or factory is used as an indicator of the location used in the process of making its product. Indonesia has several areas designated as industrial areas such as Cibitung and Cikarang. However, there may be industrial land in other parts of Indonesia.

Manufacturing Company Character

1. Manufacturing process 

The first characteristic of a manufacturing company is the manufacturing process. In other words, companies that involve processing raw materials into final materials can be referred to as manufacturing companies. In addition, producers must also have products to sell. Because it is a place where business profits or gains are achieved. Of course this character is not called a manufacturing company if there is no manufacturing process.

2. Inventory type 

The second character is the storage type or inventory form. According to experts, there are three types of supplies for manufacturers: raw materials, semi-finished products and finished products. This symbol distinguishes between a manufacturing company and a trading company. This is because the trading company is only responsible for marketing the product and does not act as a supplier of materials for the manufacture of the product. From this point of view, a company can certainly be described as a producer if it includes the materials and the product itself to make that product.

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3. Production costs 

The third sign is production costs, which means that if production costs are incurred, then the company is called a manufacturing company. The entire process of assembling raw materials into finished products is certainly associated with costs. About the cost of purchasing material processing machines, etc. Now, these costs are called production costs.

Manufacturing Company System

1. Implementation of a pull system 

The pull system strategy means that items are only collected when needed. This needs to be done because it is intended to be more flexible, to be able to respond more quickly to customer needs, and to avoid waste.

2. Focus on quality 

We need to focus on maintaining quality so that the products we produce have the best quality. In this process, quality is determined in the manufacturing process. Therefore, the most important key to ensure the quality of a product is the manufacturing process. There are several methods that can be applied or used to maintain production quality, such as the Six Sigma method and the basic concept of quality, namely the production of goods and services that are free of defects.

3. Planning and implementation 

Planning is an important strategy that we cannot ignore. The goal is to minimize the possibility of waste generation and “defective” or damaged production, and enable companies to perform all tasks in the process clearly and smoothly.

4. Ability to make decisions 

The decision-making strategy is one of the most important points to be able to improve producer performance. In this system, fast and accurate decision making is one of the most effective choices needed in the production process.

5. Good cooperation with suppliers 

Collaboration is the most influential because it can influence suppliers or companies that use lean manufacturing methods, commonly referred to as suppliers.

For the growth of a manufacturing company, various supports from suppliers, such as providing high-quality and perfect materials and on-time delivery, are essential. Therefore, suppliers or suppliers must be an important part of a  lean manufacturing company . This will enable companies to train not only their employees but also their suppliers.


Manufacturing Company Business Process

1. Procurement process 

The procurement process is a process in which the business activities of a manufacturing company are related to the procurement of goods. Therefore, this process is always needed to support the continuity of the company.

2. Stock in/out stock 

The second store process has an inventory in/out process. The point is the business process of manufacturing companies in the form of processing raw materials into final products.

3. Manufacturing process 

The manufacturing process is a process related to the sale or marketing of company products. Of course the purpose of this manufacturing process is to get a large profit from the product produced.

4. Accounting and Treasury 

The next process for the producer is its accounting and financial system. This business process aims to keep the company’s finances healthy and running smoothly.

5. General Affairs 

Manufacturing company business processes are general management, including elements such as policies, records, decisions, controls, and penalties. However, in the accounting process itself, manufacturers are generally different from other manufacturers. For the manufacturing facility itself, there is a process for managing raw materials and calculating production and overhead costs . Of course, for manufacturers, manual bookkeeping is very time consuming and not the right choice.

How To Make A Manufacturing Company Grow And Run Smoothly

1. Productivity 

When a product is low in stock, production costs, or even higher capital requirements, it is necessary to rethink the market strategy to follow before launching a manufacturing company. Profits obtained must also be maximized.

2. Quality control 

A company cannot survive unless its products and products are made with high quality. Especially if there are already many companies that can produce products at lower prices and maintain product quality. It is developed by many companies in China.

3. Use the best Design 

Manufacturing companies need to compete with their competitors. The best design is an absolute advantage when it comes to products, enabling companies to assert themselves against their competitors. For example, Apple makes a white speakerphone, but the cables are surprisingly annoying. Therefore, White’s hands-free kit was able to dominate the global market, and Apple made a huge profit by having the courage to bring a design concept that was different from other competitors to the market.

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4. Excellent financial management 

Manufacturing company finance is one of the most important factors that influence the success of a company. Companies need to think about how to manage capital, income and production costs for maximum profit. In manufacturing financial accounting, there are bound to be minor differences between commercial and service companies. This is because it includes a production cost report. Manufacturing Cost (HPP) is the main financial statement of the manufacturer.

Example of a manufacturing company

1. Food 

The food industry converts livestock and agricultural products into products for intermediate or final consumption. Industrial groups are distinguished based on the raw materials processed into food (usually obtained from animals and vegetables). Food produced in this business is usually sold to wholesalers or retailers for distribution to consumers.

2. Textiles 

This company is one of many industries operating in Indonesia. For example, this industry processes cotton into yarn and cloth, so that later these fabrics can be made into apparel. It is not uncommon for many people to work in the textile industry, because this industry can absorb a large workforce.

3. Chemicals 

The chemical industry is very important in this modern era because chemistry is needed for various economic activities. The chemical industry is divided into three main categories, such as heavy chemicals (using deposits or by-products), pharmaceuticals, and petrochemicals (chemicals obtained from fuel sources).

4. Cars 

The automotive industry is an industry that deals with the use of advanced technology in the manufacturing process. Many industrial products have been produced. Examples of car industry products include bicycles, motorcycles and cars.

5. Electronic equipment 

This is similar to the automotive industry, where electronics manufacturers use advanced technology to manufacture their products. This achievement of the electronics industry is one of the industries that Sinaumed’s uses most often in everyday life. Examples of this electronic industry are television, computers, fans, air conditioners, dispensers, electric stoves, and many other electronic products.

6. Crafts 

The craft industry is one type of industry that is widely used in Indonesian manufacturing. In most cases, if Sinaumed’s wants to set up a small business, you shouldn’t underestimate this example of a manufacturing company. The value of foreign exchange generated by this branch to promote Indonesia’s world economy has also become very high. Most of this production is directed to foreign consumption or export. To handle this kind of industrial production, it is usually made from various materials, especially used and environmentally friendly materials which make it a new product that has more visual value.

The Development of the Manufacturing Industry in Indonesia

The government wants to continue to change and coordinate its economy so that it is more focused on developing non-oil and gas companies. As quoted from the Investment Coordinating Commission website, abbreviated as BKPM, the manufacturing industry is more productive, can achieve various effects, add value to raw materials, and increase the number of workers. As the largest contributor of taxes and obligations.

The Ministry of Industry found that production in many sectors exceeded the country’s GDP, with textiles and clothing at 7.53 percent, basic metals at 9.94 percent, and transportation equipment at 6.33 percent. This is because the number of buyers increases over time, and the number of production processes increases according to demand. Various Indonesian manufacturing industries are also being developed in other ASEAN countries such as Vietnam and the Philippines.

This will encourage economic growth to be more competitive at the national, regional and global levels. Another difference that the Indonesian economy already has is its strength in the domestic market with an increase of 80 percent. The rest is for the export market, unlike Singapore and Vietnam which still have a dominant economic system that is geared towards export activities.

So, that’s an explanation about manufacturing companies that Sinaumed’s needs to know before moving into this field. Based on its development, manufacturing companies are one of the segments that have good prospects, so Sinaumed’s can start to follow suit. If Sinaumed’s needs lots of references about manufacturing companies, then you can visit sinaumedia’s book collection at www.sinaumedia.com , such as the following book recommendations: Enjoy studying. #Friends Without Limits.

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