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Production History, Pt. 2

In this step, you will learn about the Factory System, a production system commonly used at the end of and after the 18th century onward.
© Luleå University of Technology

After the time of the Domestic System and approximately from the 18th century onward, the new main system used for production instead became the Factory System.

The Factory System is somewhat reminiscent of the Domestic System, but it has some key differences.

In this case, the customer places an order which is sent to a manufacturer, rather than a merchant. What the manufacturer does differently from the previous merchant example, is that they “collect” all craftsmen under the same roof, rather than the craftsmen being spread out in different places.

The manufacturer sends an order for material to a material supplier, who then delivers the material to the factory. Once the material has arrived at the factory, it goes through the internal processes, moving between the different craftsmen and stations to create the product the customer needs.

The manufacturer then delivers the finalized product to the customer.

Key differences between Domestic and Factory

By comparing the two systems we can see that the Factory System is a lot simpler due to significantly reduced number of steps and handovers required. This is largely dependent on a much more centrally organised work division.

When looking closer at the attributes of the factory system, what we see is that:

  • The manufacturer owns the equipment
  • The craftsmen become workers who are paid for their time rather than on a order-by-order basis
  • The manufacturer gains control over the whole process
  • There is a common base for coordination, rationalisation and standardisation
  • Several benefits come with large scale operations, such as economies of scale which is cost advantages that companies receive from efficient production (usually increased production and lowered costs).
© Luleå University of Technology
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