Related Articles
What Are SFG Materials
Semi-finished goods (SFGs) are partly finished goods that are used as inputs in the production of consumer goods.
Semi-finished goods are also called intermediate goods or producer goods and they are the precursors to the main product.
In the case of pen manufacturing for example, the pen body, its top, and refill are part of the sub-assembly process and can be classified as SFGs.
If you take the example of automobiles, the engine is an intermediate good to be used in the production of the final good, the assembled automobile. Firms can make and use intermediate goods, sell them, or simply just buy them and use them.
Intermediate goods are often thus reused and resold among industries. The same car engine models are often used by Toyota and Subaru and the same electronics and precision tools are often used by a wide number of companies such as Apple, Huawei, and Samsung.
ROLE OF SEMI-FINISHED GOODS IN PRODUCTION
As stated earlier, semi-finished goods are all the goods used to make other goods. They are the parts and pieces of finished goods.
They are ubiquitous and are found in every aspect of the production process and in every type of production process.
The methods and intricacies of using these semi-finished goods to make finished products have unlimited room for improvement and variation and can definitely be supplement by an ERP system such as Odoo.
The traditional production line process involves the product moving sequentially along a line to stop and work centers divided on phases.
The item can be moved along conveyor belts or moved manually by staff. Along the assembly line, processes such as assembly, painting, and packaging make extensive use of semi-finished products, which are also allocated based on the type of work to be done.
The design of a production line allows easy storage and then implementation of these semi-finished goods into the final product. This process is very suited to the mass production of a single product or type of product, thus making the management of semi-finished goods easy.
Semi-finished goods can also be used in specialized capacities in production processes that are in continuous flow. Examples of products that are best suited to continuous flow production include chemicals, medicines, plastics, and colors.
The chemicals used to make these finished products often count as semi-finished goods.
The semi-finished goods here cannot be removed from the production line to be stored but this setup necessitates the careful use and implementation of the intermediate goods, acting as a natural incentive for efficiency.
Custom manufacturing involves manufacturing a wide range of products modified based on the requirements and specifications of a customer.
Custom manufacturing systems involved skilled workers and a range of equipment that make heavy use of semi-finished goods in order to actively deliver the best product possible.
A facility involved in custom manufacturing has to set aside specific areas focusing on the development of specific parts of the product.
These areas may include the paint spray area and the packaging area. This is not designed for high volume products but it also means that you can be careful and very precise with your use of semi-finished goods. You can also remove them from the production process and keep them for use.
Fixed position manufacturing is different from every other manufacturing process because in this process, the product to be finished is not moved from a fixed position.
All the semi-finished goods are brought to the site for assembly and production into the consumer good.
Fixed position manufacturing is deal for large-scale manufacturing such as the manufacture of aircraft or ships. The production and installment of the systems for line production and for continuous flow production is in itself, an example of fixed position manufacturing.
The idea of semi-finished or intermediate goods can also be applied to human capital, where the process is not as subtle as Harley-Davidson using intermediate goods such as steel, rubber, and paint to make motorcycles, the finished good.
The provision of services also involves the most obvious type of semi-finished good; training.
Training involves the imparting of knowledge and skills of personnel. As an example, hospitals convert the knowledge and skills of its personnel, alongside equipment and supplies, to provide healthcare services.
A mechanic shop converts the skills and expertise of its employees alongside equipment and supplies to provide automobile repair services.
If you frame it in terms of input and output, the production process involves converting inputs such as natural resources, raw materials, human resources, and of course most importantly, semi-finished goods into outputs i.e., products and services.
Whether it is process manufacturing or assembly manufacturing, semi-finished goods are always ubiquitous. This brings us to the final point regarding the standardization of semi-finished goods across processes and industries.
For example, if an automotive company uses the same engine and transmission across different car models, they save money, time, and energy.
This also undoubtedly has the effect of greatly easing the production process as the same personnel can work on different car models without having to undergo conversion training, another avenue where the company saves money.
The same maxim can be applied to almost every other industry and is perfectly viable as a business strategy given that the line between congruence/similarity and diversification is properly maintained.
CONCLUSION
When you consider the approaches you can take with semi-finished or intermediate goods towards development, a whole host of new ideas for improvement and innovation can open up to you.
When balanced with a wise and thoughtful consideration of the correlation between operational capabilities and the market demand conditions, you can propel your company on the path to unlimited possibilities of growth.
Syncoria is a digital transformation company based in Canda and an official Odoo Ready partner.