Manufacturing is a cornerstone of the global economy, supporting jobs, driving exports and enabling innovation across industries. For UK manufacturers, success depends on matching the right production strategies and methods to their products, customers and markets, while managing the pressures that come with operating in an increasingly complex environment.

What Is Manufacturing?

Manufacturing involves the mechanical, physical, chemical or biological transformation of materials into finished goods. That includes everything from processing raw ingredients into food and pharmaceuticals to assembling parts into aircraft, medical devices or consumer electronics.

Key Takeaways

  • Manufacturing transforms raw materials and components into finished goods through a structured, multi-step process.
  • The United Kingdom ranks 11th among the world’s largest manufacturing economies with manufactured goods accounting for 42% of total UK exports.
  • Manufacturers often use more than one production method to expand their capabilities and market reach.
  • Production strategies such as make to order (MTO), make to stock (MTS) and make to assemble (MTA) balance demand, cost efficiency and inventory risk.
  • UK manufacturers face a host of challenges, including rising costs, workforce shortages, supply chain disruptions, product recalls and cybersecurity threats.

Manufacturing Futures: Tomorrow's Vision

Manufacturing is being reshaped by rapid advances in AI, automation and connected operations. Discover how intelligent production, resilient supply chains and emerging value models are transforming manufacturing, while sustainability and data-driven decision-making redefine growth and performance.
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Manufacturing Futures: Tomorrow's Vision report

Manufacturing Explained

Though often pictured as the production process itself, manufacturing encompasses everything from initial product design and procurement through fulfilment and after-sales support. Production planning is also central to manufacturing, requiring manufacturers to coordinate materials, capacity and schedules while managing variability in supply chains, labour and costs.

Manufacturing spans industries with vastly different production requirements, regulatory demands and supply chain structures, making the choice of production strategy and method essential to a company’s success.

A Brief History of Modern Manufacturing

Historians widely regard the United Kingdom as the birthplace of modern manufacturing. Beginning in the 1760s, mechanisation and emerging steam power gave rise to a factory system built initially on textiles, replacing home- and workshop-based production during the First Industrial Revolution. By the mid-19th century, Britain was the world’s leading manufacturer. Known as the “workshop of the world”, textiles, iron and steel products, industrial machinery and locomotives were among its primary exports.

The 20th century ushered in mass production, automation, computer-aided design (CAD) and global supply chains, while UK manufacturing gradually transitioned toward high-value sectors such as aerospace, pharmaceuticals and automotive. Lean manufacturing principles, pioneered by Toyota in the late 1940s and 1950s, took production efficiency and quality management to new heights. UK manufacturers increasingly adopted these techniques, such as just-in-time production and continuous improvement, from the 1980s onward. The sector continues to evolve today, as robotics, AI and other digital technologies offer new ways to boost productivity and product quality.

The Current State of Manufacturing in the UK

The United Kingdom ranks 11th among the world’s largest manufacturing economies, with manufactured goods accounting for 42% of the UK’s total exports. The sector contributes approximately £220 billion in output and 10% of the UK’s GDP, but rising costs, supply constraints and global trade pressures continue to challenge growth. Food products are the largest subsector by product sales, followed by transport, which includes motor vehicles, trailers and semi-trailers. Despite accounting for 48% of all UK research and development, UK manufacturers, especially those small- and medium-sized, lag in their adoption of automation and digital technologies such as AI and robotics.

The Three Types of Manufacturing: MTS, MTO and MTA

Manufacturers plan, produce and fulfil orders based on product type, actual and forecast demand, and customer delivery requirements. Make-to-order (MTO), make-to-stock (MTS) and make-to-assemble (MTA) are three widely used production strategies that help manufacturers balance demand, cost efficiency, inventory levels and risk. Many manufacturers rely on more than one strategy, tailoring approaches to different product lines.

Make-to-Order (MTO)

Make-to-order (MTO) manufacturing produces goods to fulfil specific customer orders. The production cycle begins only after an order is received, so production matches actual customer demand. This lessens the risks of overproduction and excess inventory costs. MTO supports smaller orders and customised products, and is suited to complex, high-value sectors such as aerospace, industrial machinery, specialist automotive and shipbuilding, typically at higher production costs and with longer lead times.

Make-to-Stock (MTS)

Under the make-to-stock (MTS) approach, manufacturers produce goods based on customer demand forecasts, with inventory held until it is sold. This strategy is typically used for standardised products with predictable demand, such as packaged foods, consumer electronics, toys, textiles and pharmaceuticals. MTS enables efficient, high-volume production and faster order fulfilment than MTO. But it depends on accurate forecasting, getting it wrong can lead to stockouts and lost sales or excess inventory and the carrying costs that come with it.

Make-to-Assemble (MTA)

The make-to-assemble (MTA) strategy is a hybrid of MTS and MTO. Manufacturers produce and stock components in advance based on customer demand forecasts, but complete final product assembly only after an order is placed. Common in automotive, furniture and industrial equipment, MTA allows customers to customise product configurations before final assembly while delivering faster lead times than MTO (components are ready and waiting, only final assembly remains). However, forecasting is more complex because manufacturers must predict demand for individual components, not just finished products. And component inventory ties up capital and carries obsolescence risk if specifications change or customer preferences shift.

Manufacturing Production Methods

A manufacturer’s choice of production method is a fundamental decision that determines the types of products it can make, the customers it can serve and the markets it can compete in. While some manufacturers focus on a single method, others employ more than one to expand their capabilities and reach. The most common production methods are process, discrete, repetitive and job shop manufacturing, which manufacturers can also combine in a mixed mode approach.

Process Manufacturing

Process manufacturing uses formulas or recipes to combine and transform ingredients or raw materials into finished products. It’s common in industries such as chemicals, food and pharmaceuticals. Batch and continuous processing are the two primary types of process manufacturing. Batch processing produces goods in fixed quantities, with each batch completed before the next begins. This provides flexibility for formula variations or smaller production runs. Continuous processing runs around the clock with minimal stoppages, suited to high-volume products like petrochemicals, paper or bulk chemicals where consistent output is the priority. Both methods face challenges around yield optimisation and regulatory compliance, though tracking and quality control can be harder with batch processing.

Discrete Manufacturing

Discrete manufacturing involves assembling individual components into distinct, countable finished products, from aircraft and medical devices to furniture, appliances and industrial machinery. Manufacturers typically produce these items on production or assembly lines, using a bill of materials to track components and routing instructions to meet production schedules. Because a single missing part can halt an entire assembly line, discrete manufacturing depends on tight coordination between inventory management and supply chain operations.

Repetitive Manufacturing

Repetitive manufacturing is the high-volume, continuous production of identical or near-identical products using dedicated lines and standardised processes. It’s prevalent in automotive, consumer electronics and consumer goods. Product variations may include the same model in different colours or trim levels. Unlike continuous process manufacturing, which transforms raw materials through formulas or recipes, repetitive manufacturing assembles components into finished goods, with dedicated lines well suited for automation for improved consistency, speed and cost efficiency.

Job Shop Manufacturing

A high-mix, low-volume production model, job shop manufacturing produces small batches of bespoke or custom products, such as prototypes, tooling and specialist equipment for aerospace, engineering, medical devices and industrial machinery. Each job typically requires its own sequence of steps and equipment configurations, making it the most flexible production method. But it can also be the least efficient, with longer lead times, more complex production planning and higher per-unit costs driven by customisation and the need for skilled labour. Job shop manufacturing is closely aligned with make-to-order (MTO) production, since work typically begins only after a customer places an order.

Mixed Mode Manufacturing

Mixed mode manufacturing employs two or more production methods within a single facility, combining process, discrete, repetitive or job shop approaches. It allows manufacturers to produce a diverse range of goods with different production requirements, but complicates production planning and inventory management. This is because each method has its own scheduling logic, equipment needs and inventory demands.

Examples of mixed mode manufacturing include using process manufacturing to produce the active ingredients in pharmaceutical tablets and repetitive manufacturing to fill and package doses. Or, a metal fabricator might run repetitive lines for standard components while using job shop manufacturing for custom orders.

The Primary Steps in the Manufacturing Process

From initial product concept to final delivery, manufacturing follows a structured sequence of integrated steps that transform ideas into finished products. Each of the following steps build on the previous one, creating a shared, data-driven foundation that underpins product viability and effective production planning.

  1. Product ideation: The manufacturing process starts with conceptualising viable new products or product improvements that align with demand, production capabilities and business goals. Demand signals such as customer pain points, sales data, market trends, industry shifts and internal operational insights typically inform these ideas.
  2. Market research: Manufacturers use formal research and analysis to validate and refine product concepts. This is the time to gain insight into actual demand, customer requirements, pricing expectations and initial commercial viability.
  3. Product design: The design process translates validated product concepts into detailed specifications covering technical, commercial and regulatory requirements. CAD and other digital design tools are used to create 3D models for visualisation and simulation, as well as 2D technical drawings with manufacturing instructions and tolerances.
  4. Prototype product: A prototype is an early-stage, working model of a new or updated product. They can be physical or digital. Built to evaluate design, functionality, manufacturability and safety, prototypes help identify and resolve issues before full-scale production begins, reducing the risk and cost of late-stage design changes.
  5. Production planning: Production planning determines what to produce, in what quantities and when to match demand to capacity, material availability and workforce availability. It sets the production schedules, rotas and resource allocations that guide actual production.
  6. Production: With planning complete, production typically begins with a pilot run to verify that processes and equipment perform to specification and meet quality standards. A gradual ramp-up then allows for training and process refinement before scaling to full output, with ongoing monitoring of key performance metrics.
  7. Post-production: Post-production covers final quality inspections, labelling, packaging, warehousing and distribution. Tracking orders through to delivery confirmation helps manufacturers monitor on-time performance and catch fulfilment issues early.

Manufacturing Examples

UK manufacturers across sectors are investing in technology and process improvements to address production challenges and support growth. The following examples illustrate different approaches.

The UK’s largest bicycle manufacturer based in West London produces around 100,000 folding bikes annually and plans to double output by 2027 through a new factory in Ashford, Kent. To support that growth, the company is automating labour-intensive processes such as brazing and coating, which previously relied on skilled manual work. Working with robotics partners, the company developed automated solutions that are 30% faster than manual methods while reducing energy consumption and emissions by an estimated 15–20%. The Ashford facility is expected to create 500 skilled manufacturing jobs.

A precision component manufacturer based in Knowsley that supplies aerospace clients including Rolls-Royce and Collins Aerospace works within a sector where safety and accuracy are non-negotiable. Facing limited visibility into shop floor performance, the company invested in systems that connect its machines to real-time monitoring dashboards. This gives operators and managers instant insight into availability, downtime and quality metrics with great returns. The investment delivered a 17% increase in machine availability, a 72% reduction in quality planning and reporting time and a 20% improvement in overall productivity.

Manufacturing Challenges

Manufacturers face significant pressures from workforce shortages and rising costs to cybersecurity threats that put profitability and growth at risk. Navigating these pressures demands more than efficient production; it requires the right information, at the right time, to make better decisions across the business. Top manufacturing challenges include the following:

  • Workforce shortages: Skills and workforce gaps are a major barrier to growth for the UK manufacturing sector, which employs approximately 2.5 million people. Nearly half of UK manufacturers identify a lack of technical skills, including in engineering, automation and AI, as their biggest challenge. Many are adopting technologies such as automation to redeploy employees to higher-value tasks. 36% of manufacturers cite labour shortages as a major driver of these digital investments.
  • Supply chain disruptions: Decades of deindustrialisation have left the UK without domestic production at scale for essential industrial inputs such as critical minerals, chemicals, battery components and ammonia. This reliance on international imports exposes manufacturers to a range of risks such as geopolitical events, transport disruptions, rising energy prices and tariffs, making supply chain resilience a persistent challenge.
  • Rising expenses: Energy costs remain a major competitive disadvantage for UK manufacturers, who face some of the highest industrial electricity prices in the G7. Margin pressure also comes from taxes, rising business rates, inflation driven by geopolitical factors and higher labour costs.
  • Cybersecurity risks: Manufacturing is among the most targeted industries for cyberattacks. Reliance on interdependent supply chains, along with valuable intellectual property (IP) and complex operational environments, increases manufacturer exposure to cyberattacks.
  • Product recalls and defects: Product recalls and defects pose operational, legal, regulatory and reputational risks for manufacturers. They often signal deficiencies in quality assurance, traceability, supplier oversight and compliance.

How Software Enables Modern Manufacturers

The era of smart manufacturing hinges on digital transformation to achieve real-time, enterprise-wide visibility. Cloud-based software such as ERP platforms provide manufacturers greater control by integrating workflows and creating a shared system of record across finance, purchasing, inventory, production, warehousing and fulfilment. AI-enhanced manufacturing software supports automation of routine tasks, predictive analytics and data-driven decision-making across business processes. Cloud platforms also make it easier for manufacturers to scale by adding users, locations or capabilities as they grow without replacing core systems.

Grow Your Manufacturing Organisation with NetSuite

As manufacturing operations grow more complex, many companies turn to integrated software systems to automate workflows and keep core business processes in sync. NetSuite Manufacturing ERP Software gives manufacturers enterprise-wide visibility and control, from production planning and lean manufacturing to fulfilment across multiple locations. Combined with NetSuite Inventory Management Systems Software, manufacturers can access real-time cloud-based inventory monitoring for all locations, with end-to-end traceability from supplier to customer. Automated replenishment uses demand-based algorithms to calculate reorder points and generate purchase orders, helping to rightsize inventory. Industry-specific functionality and real-time reporting dashboards round out the platform, helping manufacturers monitor KPIs, improve performance and cut costs.

Manufacturing is a critical pillar of the UK economy, contributing approximately £220 billion in output. But the industry faces mounting pressures from rising costs, workforce shortages and supply chain vulnerabilities. To close the gap with global peers, UK manufacturers are beginning to turn to automation, AI and other digital technologies, not as a solution in themselves, but as tools to address labour constraints, improve responsiveness and make faster, better-informed decisions. The manufacturers most likely to build resilience and capture growth will be the ones that combine these capabilities with a commitment to continual improvement and the flexibility to adapt as conditions change.

Manufacturing FAQs

What are the seven steps of manufacturing?

The seven steps of manufacturing are product ideation, market research, product design, prototyping, production planning, manufacturing and post-production. While these steps generally follow the sequence they’re listed in, things like design changes, testing results or supply constraints may require manufacturers to revisit earlier stages before moving forward.

What are five S’s in manufacturing?

The Five S’s are a lean manufacturing methodology for organising and maintaining efficient workplaces. Originally developed in Japan, the five phases are seiri (sort), seiton (set in order), seisō (shine), seiketsu (standardise) and shitsuke (sustain). In practice, this means removing unnecessary items, organising what remains, cleaning and inspecting the workspace, creating consistent processes and maintaining those standards over time. Together, they help reduce waste, improve safety and support continuous improvement on the shop floor.

What is the biggest problem in manufacturing?

There’s no single answer. Challenges vary by region, sector and company size, but rising employment costs consistently rank among the top concerns for UK manufacturers. Labour expenses, including wages, National Insurance contributions and training have increased significantly in recent years, squeezing margins and forcing manufacturers to weigh investment in automation against workforce expansion. Skills shortages, supply chain disruptions and high energy costs are also persistent challenges.