Industrial Classification and Production
Industry Classification
Dimensions: Small, medium, large industry. Reference parameters: Production capability, number of employees, range of investments, and annual turnover. The parameter values can change with:
- Mechanization and/or automation degree
- Sector classification (manufacturing, chemical, etc.)
Transformations Nature: Mechanical, chemical, electric, textile, steel, food, or mixed (electromechanical, electrochemical, chemical-textile).
Level of Integration:
- Vertical Integration Industry: Upstream or downstream extension of the process, which overall constitutes the so-called “integral cycle.” Benefits: more added value, respect of time, quality, etc.
- Horizontal Integration Industry: Increase in production volume by acquiring orders of the same product (or similar products) from multiple suppliers. Benefits: specialization, saturation and rapid amortization of plants, low costs, etc.
Production Cycle Size
- Closed or Integral Cycle Industries: From raw materials to final product.
- Opened Cycle Industry:
- Base or extraction (from raw materials to semi-finished product). Chemical industries that produce polymers. Polymer: Substance consisting of macromolecules formed by a large number of small simple units called monomers. EX: Polymers for synthetic textiles.
- Refiners or processing (from semi-finished to a more advanced processing stage) industry that performs the weaving operation (spinning-weaving-finishing).
- Completive (from semi-finished to final product).
- Complementary industry (waste as raw materials).
- Subsidiary industry (they produce services, for example, maintenance).
Technological Diagram
- One-line industry (limestone-kiln-lime oxide)
- Converging industry (cars, household appliances)
- Analytical or divergent industry (refineries, distilleries)
- Converging–divergent industry (steel industry)
Process Continuity
- Continuous: If they are conducted without interruption for long periods of time (e.g., cast iron, refineries, sugar mills).
- Non-continuous: If they are conducted for limited periods of time.
- Repetitive: Medium-sized or large lots; production can be interrupted without major damage. They are industries that produce for the warehouse (e.g., industries of household appliances, cars, etc.).
- Intermittent: If the production takes place for dealing with specific orders and in small batches (e.g., industries of general mechanics, construction of machines for special use).
Even if the manufacturing process is bound by the type of production that has been chosen, within the same category of products, you can work with some flexibility. As you approach homogeneous product categories, the more you try to reduce the rigidity.
For intermittent processes for single orders or small lots, it is necessary to have a loud flexibility to avoid depending on a few customers. For large lot processes, will tend towards high production automation process to increase the volume produced and reduce costs (not suitable for a variable final demand).
Other Factors
- Capital-labor ratio
- Legal form of the company
Production Volume Levels | Single Costs | Final Demand | Benefits |
High | Low | Production of undifferentiated goods | Economies of scale |
Low | High | Variable | Flexibility |
The various ways of producing a productive flow can then be classified by the analysis of characterizing factors:
- Number of products in the time unit
- Size of the range of different productions
Inverse correlation