What is a Manufacturer?
A manufacturer is a person or company that produces finished goods from raw materials by using various tools, equipment, and processes, and then sells the goods to consumers, wholesalers, distributors, retailers, or to other manufacturers for the production of more complex goods.
Types of Manufacturers
1. Made to Stock (MTS)
Made to Stock manufacturers produce substantial quantities of goods and store the manufactured goods before their final sale. MTS businesses aim to forecast the demand for their products in the market and then produce the quantity of goods corresponding with the predicted demand.
The success of made to stock manufacturers mostly depends on their ability to forecast the market demand correctly. If the forecast significantly deviates from the actual demand, they will face the under- or over-production.
2. Made to Order (MTO)
Unlike their MTS counterparts, made to order manufacturers produce goods only if they receive orders from customers. The nature of MTO production eliminates the necessity to forecast future demand for the products. Thus, MTO businesses will not face overproduction.
However, MTO manufacturers generally face a higher lead time between the initiation and completion of an order. In addition, a sudden increase in the current demand for the products tends to put additional pressure on the operations, which, in turn, will lead to even higher lead times.
3. Made to Assemble (MTA)
Instead of immediately producing a final good, made to assemble manufacturers initially create the basic parts of a final good that can be quickly assembled together when an order from a customer is received. MTA production significantly reduces lead times for customer orders. Nevertheless, the business could face lower demand for certain types of basic parts.
Manufacturing in India
A globally competitive manufacturing sector is India’s greatest potential to drive economic growth and job creation this decade. Due to factors like power growth, long-term employment prospects, and skill routes for millions of people, India has a significant potential to engage in international markets. Several factors contribute to their potential. First off, these value chains are well positioned to benefit from India’s advantages in terms of raw materials, industrial expertise, and entrepreneurship. Second, they can take advantage of four market opportunities: expanding exports, localising imports, internal demand, and contract manufacturing.
With digital transformation being a crucial component in achieving an advantage in this fiercely competitive industry, technology has today sparked creativity. Manufacturing sector in India is gradually shifting to a more automated and process driven manufacturing which is expected to increase the efficiency and boost production of the manufacturing industry. India is gradually progressing on the road to Industry 4.0 through the Government of India’s initiatives like the National Manufacturing Policy which aims to increase the share of manufacturing in GDP to 25 percent by 2025 and the PLI scheme for manufacturing which was launched in 2022 to develop the core manufacturing sector at par with global manufacturing standards.
Manufacturing has emerged as one of the high growth sectors in India. Prime Minister of India, Mr Narendra Modi, launched the ‘Make in India’ program to place India on the world map as a manufacturing hub and give global recognition to the Indian economy. Government aims to create 100 million new jobs in the sector by 2022.
India is an attractive hub for foreign investments in the manufacturing sector. Several mobile phone, luxury and automobile brands, among others, have set up or are looking to establish their manufacturing bases in the country. The manufacturing sector of India has the potential to reach US$ 1 trillion by 2025. The implementation of the Goods and Services Tax (GST) will make India a common market with a GDP of US$ 2.5 trillion along with a population of 1.32 billion people, which will be a big draw for investors. The Indian Cellular and Electronics Association (ICEA) predicts that India has the potential to scale up its cumulative laptop and tablet manufacturing capacity to US$ 100 billion by 2025 through policy interventions.
One of the initiatives by the Government of India’s Ministry for Heavy Industries & Public Enterprises is SAMARTH Udyog Bharat 4.0, or SAMARTH Advanced Manufacturing and Rapid Transformation Hubs. This is expected to increase competitiveness of the manufacturing sector in the capital goods market. With impetus on developing industrial corridors and smart cities, the Government aims to ensure holistic development of the nation. The corridors would further assist in integrating, monitoring and developing a conducive environment for the industrial development and will promote advance practices in manufacturing.
