To talk about semi-finished products, you must first know some important and related terms. We start with what is a product: a product is a good that is made in order to market it in the market and meet a consumer need.
This product is not generated spontaneously, rather it is the end of a systematic process that links a series of sectors and activities. For this, it is necessary to know how the production system works.
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In this article you will find:
Economic Sectors and their Integration
Everything production process starts with the activities of the primary sector of economy, with the exploitation of natural resources to obtain and extract raw materials.
This raw material is taken by the industries that make up the secondary sector. Then, it is transformed by mechanical or chemical processes and create the most different articles, goods and products. These will be marketed by the tertiary sector and transferred to the final consumer.
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For some there are two other sectors:
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- The quaternary corresponding to research and development activities that promote technical and scientific improvements to other sectors.
- The quinary made up of non-profit and domestic activities, all necessary for the proper functioning of the rest of the sectors and the economy in general.
However, there are other authors who still consider these last two sectors as an integral part of the third.
The Productive Cycle
Returning to the explanation of secondary sector and reviewing in a little more detail, you have to industrial process It is very complex, but whether it is a construction company, a mining company, a factory, a manufacturing company, a textile factory, or an energy industry, its process can basically be explained as a system with the following elements:
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- Environment: Material, human and financial resources, legislation, competition, clients. Suppliers, macroeconomic policies, etc.
- Input: raw materials from the primary sector or semi-finished products from another industry in the secondary sector.
- Process: product elaboration.
- Output: Finished product or semi-finished product.
- Control and feedback mechanisms.
Thus any factory takes inputs from its environment and gives them input to its system, processes them and returns its production to the environment, then through mechanisms control and feedback improves processes and adapts its production to new market requirements, thereby restarting the production cycle.
In this cyclical process it was possible to observe the appearance of the term semi-finished product twice, but what is this concept really about? A brief additional explanation is still missing.
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Product Types
Among the previous lines you can see the idea of the three forms that a product can take:
Raw Products
In this case it is the raw Materials, those obtained by the primary sector directly from natural sources, through exploration, exploitation, extraction and obtaining of resources, in the industrial sector this work corresponds to the basic industries; This type of product is what will be transformed by factories to produce consumer goods.
Semi-manufactured Products
They are the raw materials that have undergone a first industrial transformation, but have not yet been finished completely into a final product, since they require another manufacturing transformation process to be used for the consumption.
Final products
This is already the finished product that will be destined for the commercialization, ready for the consumption of the client and to satisfy the necessity of him.
Definition of Semi-finished Product
As previously appreciated, a secondary sector industry requires raw material from the primary sector to transform it into a final product or consumer good, these goods will have the objective of satisfying a need of the final consumer and for this, it will give to these finished products and it will transfer them to the tertiary sector which will commercialize them.
This is with respect to finished productsHowever, it is necessary to talk about semi-finished products, in this case the inputs or inputs that a factory requires. In this example called A, it is not a raw material or natural resource from the primary sector, but a semi-processed product by another factory from the secondary sector, in this example called B.
In this case, factory A is going to finish transforming a semi-finished product, by company B, into a final product destined for consumption.
Thus, a semi-finished product can be understood as those goods or articles that require going through a second industrial process before being transformed into a finished good and in a condition to be used or consumed by the end customer.
An example of this type of product can be a wooden board. In this case, factory A takes its raw material from the primary sector: wood, and through its productive process transforms it into a table. This table is a semi-finished product when manufactured by B transforms it into a chair and allocates its production to a store for its commercialization and subsequent use by the person who I bought.
