Finished product

economic-dictionary

The finished product is the good resulting from the manufacturing process. That is, that good that is obtained after going through the production process and that is ready for delivery; either to be incorporated into another production process, or to be delivered to the final consumer.

Although the concept is concise, it presents a relativity depending on the company and the production process we are talking about. In other words, a finished good, for one organization, is raw material, or a semi-finished good for another. If the company produces tires, even if it is not a finished product, but a component of another, for this it is a finished product; since, in this case, the company to which we refer only manufactures the tires.

Taking another example to understand what we say, a technology company considers its microchip for smartphones as a finished product. However, for the manufacturers of telephones, this, as it happened with the tires, is one of the necessary components for its operation. This, despite the fact that the microchip is a fundamental piece.

Characteristics of a finished good

Some of the characteristics of the finished products are:

  • They are the result of a production process that may include the use of other assets. For example, raw materials, intermediate or semi-finished goods, and capital goods.
  • Some people include in the definition even the packaging process. Therefore, before being available for purchase by consumers, they are called consumer goods. Prior to this, they are exclusive goods from the manufacturer's inventory.
  • They have a reserved section in the inventory control of organizations, therefore, they represent an asset for them.
  • In the internal accounting process, they can be classified according to the term, either short, medium or long term. This depends on the economic activity of the company. For example, finished goods such as food or rapidly obsolete technology are short-term.
  • The availability of finished products evolve over time along with the needs of societies. Since meeting these needs is the objective of these goods.

Quality control of finished goods

Companies must establish a process for verifying the technical characteristics of their products. This allows them to check the functionality of the product and verify that they meet quality standards.

To do this, different activities are carried out, such as the following:

  • Inspections are carried out in the production process to analyze the efficiency of each step. Likewise, this process applies to inventory management.
  • Also, once finished, random samples are selected to check the characteristics. Undergoing functionality tests for, for example, building materials.
  • In products for human consumption, the time in which it perishes and the conditions that keep it fit for consumption are checked.
  • Tests are carried out to choose the best packaging, which does not deteriorate and conserves the products.

Tags:  Commerce Colombia comparisons 

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