In the previous chat we had explained what is a Business Model and business plan from the point of view of entrepreneurs or investors. In this chat we are going to define what is industry and then we shall link it to a simplified business model
Industry as a word has a wide range of official and perceived meanings. We shall start by the some of the literal definitions:
– The companies and activities involved in the process of producing goods for sale, especially in a factory or special area
– The people and activities involved in one type of business
– Something that is produced or is available in large quantities and makes a lot of moneyhttps://dictionary.cambridge.org/dictionary/english/industry
I would like to divert the discussion here to NAICS -North American Industry Classification System- which is applied across USA, Canada and Mexico.
NAICS is an industry classification system. But, the story starts from economics. NAICS divides the economy into 20 sectors and 1,057 industries in 2017 NAICS United States. Industries within these sectors are grouped according to the production criterion.
Manufacturing is one of the economy sectors recognized by NAICS. It includes Plastics, Metals, Papers, Food, Beverages and other industries. Industry grouping is based on the primary product that a company makes or sells and how it is produced.
Examples of other economy sectors in NAICS that are then divided into industries are Agriculture, Mining, Retail, Transportation. As an example of perception of economy sector by NAICS is a sector for Professional, Scientific, and Technical Services that comprises establishments engaged in activities where human capital is the major input. The industries within this sector are each defined by the expertise and training of the service provider. The sector includes such industries as offices of lawyers, engineering services, architectural services, advertising agencies, and interior design services.
So, what we are used to call as an industry or a heavy industry are really labelled as manufacturing activities.
If we are after Maintenance excellence, Why we need to understand Industry and Business?
In a simple one statement, you can’t understand any term outside the context in which it is used or applied. So if you are working in a manufacturing industry regardless of its scale or main product, you need to understand what is manufacturing. Then you apply what you had learned about the manufacturing guide lines to your specific workplace. Like this you gain a wider view or a helicopter view.
One more important reason, the individual processes building the business need to be aligned with the business structure and goals. Otherwise you will be speaking a different language and achieving targets that are not coherent to the organization.
This will create friction between the different processes within the organization. The processes owners and members won’t feel comfortable when singing a different tone.
This was clearly demonstrated with the ISO 9001:2015 update which focuses on aligning the Quality objectives of each process with the organization strategic direction. No more departments and sections in an organization is to generate quality objectives in separation of the general strategic directions and without understanding it.
What is the Manufacturing Sector?
The Manufacturing Sector involves the physical transformation of an input to generate a new product. This applies whether this product is a final one in a sense that it will be sold to an end consumer or it is a semi final product that will be sold to other industries within the Manufacturing sector to transform it to a new product.
This physical transformation uses power driven machinery of various sizes. Those machinery varies in size and complexity based on the manufacturing process it self. Those machinery together with the land and the buildings are the core assets of the organization. Assets as defined by ISO 55000 are something that has a value to the organization – present or future
Asset is an item with a potential value that an organization owns and has a use for it to create value (income) and, has the responsibility to care forRAMESH Gulati
Does the Manufacturing Sector include Maintenance Services?
Any service as maintenance and administrative services that are performed internally within the organization is included under the Manufacturing Sector as part of the Manufacturing process itself. Same activities as maintenance and administrative when outsourced to other organizations are classified as Service Sector industry .
Manufacturing functions as indicated in the above diagram can be performed in house or outsourced. It can be a business unit or part of other business units. It can be performed by a dedicated person or just a page in the processes manual performed along other functions by one person. This all depends on the size of the organization.
A Manufacturing company with 5 employees will perform all the above functions same as a company of 500 or 5000 employees. The difference is in the scale of each process and not in its existence. That’s why it is important that you understand all manufacturing processes. These processes might be overlooked or not named as it should be due to the small size of the organization. Equally, busily working in one business unit as the HR (Human Resources) may not provide enough time or overview to understand the importance of the packaging team.
We shall come across each process in coming chats.