The word manufacturing has its roots in three ancient Latin words: manu, meaning by hand; facere, meaning to make; and faber, or maker. Recent definitions have expanded this definition into “to make from raw materials by hand or machinery.” The Department of Trade and Industry of the British government has defined manufacturing more broadly as “manufacturing firms transform ideas into products and services,” incorporating a range of activities from research to recycling of products. Over the past thousands of years, manufacturing has evolved from a craft practiced by individuals to an organizational activity performed by firms to an intraorganizational activity coordinated and controlled by sophisticated networks of firms transforming raw material into finished products. The equipment used to support manufacturing has undergone a similar evolution from simple tools to systems employing complex technology combinations.
In the years before the Industrial Revolution, manufacturing was an artisan activity. Craftsmen produced customized items and services for clients using hand tools. Production was heavily reliant on the judgment of the craftsman who implemented his own idea of standards and quality. Components could not be substituted from one producer to another and replacement parts had to be made by the original craftsman. To identify their work, some craftsmen would place a distinctive sign or “brand” on items.
The Industrial Revolution
All of this changed in the Industrial Revolution that occurred between 1770 to 1820 in England. Several factors combined to create the Industrial Revolution: a critical mass of people, improved market access, political stability, technology, and financial innovation. The critical mass of people was as a result of improvements in living conditions, increasing the local population. This created a market for manufactured products as well as labor for factories. Expansion of European powers in the previous 200 years provided large global markets for manufactured products. Political stability in England provided a low-risk environment for investments in large-scale production and distribution. Mass production required improved equipment, and the invention of the steam engine provided motive power for these new tools to produce items on a large scale. To support these production innovations required large amounts of financial capital that was available at the time from local banks.
Manufacturing in England and in the United States developed along different paths. English manufacturers focused on integrating skilled labor with machinery while the United States incorporated the use of unskilled labor. The machine tool industry began with Henry Maudsley, who created the first powered lathe, a machine to turn and cut metal. In the hands of skilled craftsmen, the ability to accurately produce metal components with a round profile such as screws accelerated the development of other machines supporting innovations in iron and textile production. The colonies in America initially imported all of their requirements for manufactured products. However, the conflict for independence encouraged Americans to develop their own sources of manufactured products. Development was initially slow because England prohibited the export of production tools or emigration of skilled labor. This changed when an English immigrant, Samuel Slater, brought British textile technology to America.
Technological improvements developed machine tools further, improving their accuracy and providing a basis for an increased range of metal processing industries. During this period, the manufacturing techniques of standardization and interchangeability began to be adopted into industry, beginning with the production of weapons in the United States. Simeon North, who developed a milling machine, and Eli Whitney applied these ideas in the manufacture of guns for the U.S. Army. Unlike the previously handcrafted items, these muskets were composed of standardized, uniform subcomponents, enabling any combination of them to be assembled into finished items. Another advantage of standard components was that relatively unskilled labor could be involved in manufacturing, enabling rapid expansion of production.
Parallel developments in machinery and production techniques continuously improved manufacturing. A key advance in production technique was the Scientific Management paradigm created by Frederick Taylor that had the following principles: (1) the optimal methods of working should be identified and implemented across the organization; (2) workers should be selected and trained to perform the tasks of the organization; and (3) management of the organization should focus on planning and analysis while workers executed manual tasks.
In practice, manual tasks were analyzed and decomposed into subtasks, which were then optimized to improve efficiency. Mass production, which was implemented by Henry Ford in the manufacture of automobiles, was the combination of standardized, interchangeable component production with the management techniques of Taylor.
U.S. manufacturing firms began growing rapidly, with further gains in efficiency occurring during the two world wars. The years after World War II saw the dominance of U.S. firms as they improved their processing and organizational abilities using techniques learned from weapons production. Wartime improvements in electronics enabled better control of machine tools resulting in Numerical Control systems, developed by MIT for the U.S. military. Rising incomes also meant that there were ready markets for finished products.
Even though U.S. manufacturers dominated world markets in 1970 and were refining their advantage with the development of computer-controlled tools, new techniques were being refined in Japan that would result in major changes by 1980. By focusing on efficiency and quality, Japanese manufacturers lowered production costs dramatically. Toyota, for example, achieved production efficiencies and quality levels that were several times better than its U.S. competitors’ using a system called Just-in-Time manufacturing or JIT. These production techniques were a logical extension of the mass production approach and followed these principles: (1) elimination of waste by elimination of inventory and by improved quality; (2) shifting workers from individual, low-skill tasks to high-skill, shared tasks; and (3) continuous refining and improvement.
Additional techniques employed by these firms included Concurrent Engineering, in which design and development was done simultaneously, and Total Quality Management, where quality was viewed as an organizational rather than a departmental function. By the end of the 1980s, Japanese firms dominated the manufacture of consumer items and occupied a sizable share of automobile manufacturing. Global financial liberalization and opening of world markets enabled manufacturers to invest in markets that were previously unavailable. Simultaneous improvements in information and communication technology enabled control of these organizations, linking them into production networks. The 1990s saw movement of manufacturing capacity from developed to developing countries with Mexico, then China benefiting from investments by U.S. manufacturers.
Present-day manufacturing is driven by the changes in production created by new technology, work methods, and the economic environment and changes in demand caused by new market requirements. Unlike the environment faced by firms 50 years ago, customers demand higher levels of customization, resulting in fragmented markets. In response, organizations are increasing their pursuit of a cross-functional approach to coordinate complex flows of materials and information in manufacturing networks. Instead of breaking tasks into subunits to be optimized, firms are developing integrated approaches to all manufacturing activities.
One approach to serving the new, fragmented market is Mass Customization, the ability to provide customized products or services using flexible process at an acceptable cost. Under the mass production paradigm, individual customization would be prohibitively expensive, out of the reach of all but a few consumers. However, improvements in manufacturing technology and supporting services have made the concept of Mass Customization increasingly feasible. Dell Computers has leveraged standardized computer components and its supply chain to provide millions of computer configurations to customers. Smaller manufacturers have used advanced technologies to provide a range of customized items from clothing to toys.
Manufacturing currently revolves around six major activities: research, design and development, production, logistics and distribution, sales and marketing, and services. Research is conducted into new technologies and techniques for manufacturing. Many established aspects of present-day manufacturing technology began as research ideas at universities. Computer-Aided Manufacturing, for example, had its roots in research conducted at MIT, and manufacturing techniques have been refined using industry and university research. Design activities translate ideas into detailed specifications for production. Products, services as well as the processes that create them, can be designed, and design is seen as a way of differentiating products in the marketplace. Customers have been found to pay a premium for products with superior aesthetics, such as those produced by Apple.
Production activities convert inputs into outputs according to the design specifications provided. Material processing activities, for example, convert metals, plastics, and ceramics into finished items using techniques ranging from cutting, joining, deformation, and melting. Traditionally, manufacturing processes have been subtractive or formative. In subtractive processes, material is removed from a block larger than the size of the finished product. Examples include machine tools such as lathes, drills, and milling machines. Formative processes apply transforming forces, heat or force, to material, creating a final shape. Examples of formative processes include forging, casting, or bending equipment.
Advances in materials science and process control have created a new class of processing technologies known as additive processes. In additive processes, material is manipulated to form a finished product in successive layers. Examples of additive processes, sometimes called rapid prototyping or rapid manufacturing processes, include stereo lithography, selective laser sintering, 3D printing, and laminated object manufacturing. Initially, these technologies only formed specialized plastics into prototypes, but recent refinements have enabled them to process metal components. These technologies enable organizations to engage in mass customization strategies, providing individualized products to customers.
Logistics can be defined as the management of material flow and information both within and across facilities. Within facilities, logistics is required to ensure that material is available where and when it is needed. Across facilities, logistics coordinates the movement of components and finished products for further processing or final sale. Sales and marketing activities interface with the final customer, earning revenue and providing valuable information on market developments. Coordination of marketing and production activities is important to manufacturers because improperly managed customer demand can lead to additional cost or lost revenue.
Finally, services have increased in importance from support functions such as advice and repair to business drivers in their own right. Manufacturers have pursued “servitization” strategies, in which the sale of industrial products is replaced by the provision of industrial services. The engineering firm Rolls-Royce offers a program for integrated provision of equipment and support on a lease basis, enabling customers to reduce up-front capital costs. Global concerns about the environment have placed increasing pressures on manufacturers from a range of public and private stakeholders. Manufacturers are being called to account for the impact of their products across the entire life cycle from raw material to disposal. Some organizations have taken a proactive approach, launching initiatives to reduce material and energy usage by changes in design and production.
The future of manufacturing is likely to see an increasing range of technology and techniques to convert concepts into finished products and services. In this context, firms may exhibit a range of models to serve customers, from the traditional sale of products to service-led models. Manufacturing has come full circle, from individual artisans creating customized products to mass manufacturers and now to small and large organizations providing customized products to individuals.
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