Definition: A manufacturer is a company that uses raw materials and employee labor hours to create finished products.
What Does Manufacturer Mean?
There are many different types of companies in the world. Some companies focus on creating new products like manufacturers where as other companies focus on selling products like retailers. Everyone is familiar with famous manufacturers like the Ford Motor Company.
Ford gets raw materials delivered to its factories on a daily basis. These pieces of metal and glass are then molded and shaped into finished cars. The original Ford River Rouge assembly line plant was famous for having raw materials come in one end of the plant and finished Model T cars leave the other end of the plant.
Example
Manufacturers mainly focus on production and creating products or finished goods. Manufacturers rarely sell their products directly to consumers or the end users of the products. Instead, manufactures usually sell their products to other businesses down the chain like a retailer, dealer, or wholesaler.
Take our Ford example for instance. Consumers can’t really go to a Ford plant and buy a new car. Instead, the consumer has to visit one of Ford’s dealerships in order to purchase a new car. This division of labor helps the manufacturer focus on producing the best possible goods at the cheapest price while the retailer or dealer has to focus on marketing and selling the end product.
Much of the traditional manufacturing and retailing definitions have changed in the last decade with the internet. More and more smaller manufacturers are starting online retail stores to sell directly to their customers.
