In a manufacturing environment, there are a lot of jargon that people in other professions do not understand.
Sometimes it’s easier to explain technical terms using examples from our everyday life.
Let me try that.
Imagine your house is a factory and ironing clothes is a manufacturing process.
To keep things simple, let’s assume this process is the only process in the factory.
Clean clothes are raw materials from the supplier (maybe it’s your mom?) and the finished goods are clothes that are clean and wrinkle-free.
There are two systems you can apply.
In the first system, you iron all the clean clothes after you receive them from your supplier.
You then keep them in the wardrobe, which acts as finished goods warehouse.
You know you will most likely wear them someday, but you do not know the exact date.
But when you need a wrinkle-free shirt, you know it’s available in the warehouse.
We call it make-to-stock system – stock means supplies at your disposal.
The second system is known as make-to-order system.
When you receive clean clothes from your supplier, you put them in the wardrobe.
In this case, wardrobe is the supermarket, not FG warehouse.
When you want to go out, you take the shirt you want to wear from the wardrobe and iron it.
That means you iron clothes only when you need them.
That’s make-to-order system – order means demand.
To be continued…
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