What Is a Manufacturer?

You’re scrolling through your phone, sipping your favorite brew, when you wonder: “Where did all this stuff come from?” Your mug, your phone, even that comfy chair you’re sitting in – they all started somewhere. That “somewhere” is often a manufacturer.

The world of manufacturing shapes our daily lives in ways we often overlook. Let’s take a closer look at what manufacturers do.

The Essence of Manufacturing: Beyond Assembly Lines

Manufacturers play a central role in transforming basic materials into the products we use daily. At its core, a manufacturer is a person or company that takes raw materials or component parts and transforms them into finished goods. These products are then sold to consumers, wholesalers, distributors, retailers, or even to other manufacturers.

Types of Manufacturers

There are several types of manufacturers, each playing a distinct role in the production process. These distinct types of manufacturers help us better understand the diverse roles within the manufacturing industry:

1. Raw material processors: They take the most basic materials (ore, lumber, or crude oil) and refine them into usable components.
2. Component makers: These manufacturers create specific parts for use in larger products such as computer chips or car engines.
3. Finished product creators: These manufacturers produce the items you see on store shelves, ready for consumers to buy and use.

The Manufacturing Process: From Idea to Reality

Here’s how the manufacturing process unfolds:

1. Design: Engineers and designers conceptualize new products or improvements to existing ones.
2. Sourcing: Manufacturers procure the best materials and components to bring their designs to life.
3. Production: Raw materials and components are transformed into finished products.
4. Quality control: This step ensures everything meets the required standards.
5. Distribution: The finished products are sent out into the world and ready for sale.

3D printing is an emerging technology in the manufacturing industry. It offers new possibilities for rapid prototyping, customization, and small-scale production runs. This technology is particularly beneficial for smaller manufacturers and entrepreneurs, allowing them to compete more effectively in the market.

The Business of Making: Strategies and Challenges

Manufacturing involves much more than just production. It’s a complex business that requires careful management of various aspects, such as supply chain logistics, inventory control, quality assurance, and market demand forecasting. Manufacturers must also navigate regulatory compliance, technological advancements, and changing consumer preferences. Manufacturers juggle costs, pricing strategies, and the challenges of scaling up operations. It’s like playing a high-stakes game of Tetris, where the pieces are materials, labor, and market demands.

Three key types of manufacturing strategies are:

1. Make to Stock (MTS): Producing based on demand forecasts.
2. Make to Order (MTO): Creating products only when orders are received.
3. Make to Assemble (MTA): A hybrid approach that keeps components ready to assemble when orders come in.

Each strategy has its pros and cons, and choosing the right one can significantly impact a manufacturing business.

Manufacturers vs. Retailers vs. Wholesalers: What’s the Difference?

Manufacturers, retailers, and wholesalers play different roles in getting products from the production line to your hands. Let’s break down these key players in the supply chain:

Manufacturers are at the start of the journey. They’re the ones transforming raw materials or components into finished products. Whether it’s a smartphone, a chair, or a bottle of shampoo, manufacturers are responsible for the actual creation of goods. To stay competitive, they focus on mass production processes, quality control, and often innovation.

Wholesalers or distributors come next in the chain. They are essentially middlemen who buy products in bulk from manufacturers and act as a distribution point. They don’t typically sell to end consumers like you and me. Instead, they supply retailers with the products they need to stock their shelves or online stores.

Retailers are the final step before a product reaches you, the consumer. They purchase goods from wholesalers or sometimes directly from manufacturers. Retailers then sell these products to customers, usually in smaller quantities. They’re responsible for creating the shopping experience, whether that’s in a physical store or through an e-commerce platform.

The Economic Impact: Why Manufacturing Matters

Manufacturing remains a significant part of the U.S. economy. According to the National Association of Manufacturers (NAM), as of 2023, manufacturing accounted for 10.3% of GDP in the United States. The sector employed 13 million workers and contributed $2.89 trillion to the U.S. economy. Also, the average annual compensation for manufacturing workers was $98,846, including pay and benefits.¹

The importance of small businesses in manufacturing is still evident. The U.S. Census Bureau reports that as of 2023 (the most recent data available), there were 346,000 manufacturing firms in the U.S. Of these, 231,298 (about 94.5%) had fewer than 100 employees, and 203,793 (about 83.3%) had fewer than 20 employees.²

Connecting with Manufacturers: A Guide for Entrepreneurs

If you are planning to start a business and need to find a manufacturer to help produce your product, you can find manufacturers through online directories, such as ThomasNet. These platforms offer thousands of manufacturer profiles, and many of these directories vet their listings to ensure legitimacy.

Other methods include:

• Getting referrals from other business owners
• Searching by NAICS code (a classification system for businesses)
• Checking out forums and social media
• Google search

Sources

1. https://nam.org/manufacturing-in-the-united-states/ ︎
2. https://www.census.gov/econ/overview/ma0300.html#:~:text=The%20Annual%20Survey%20of%20Manufactures,universe%20of%20346%2C000%20manufacturing%20establishments ︎