Further processing (production)
In economics and business administration , further processing is when companies acquire intermediate or semi-finished products from other companies and process them into end products through their own production .
In civil law, processing is understood to mean the production by transforming one or more substances into a new movable object ( (1) BGB ). The decisive factor is that semi-finished products (and possibly other raw materials ) are changed in their essence by a production process and that a new product is created from this , the market price of which is higher than the value of the processed materials. This added value is also provided for in Section 950 (1) BGB. Further processing in this sense is the production of products that have already been processed but are not yet ready for the market . This further processing can also take place in the context of contract processing .
Stages of production
The vertical range of manufacture in companies worldwide is not always so extensive that all stages of production up to the end product are available in one company . The division of labor means that at least two companies are involved, so that there are also at least two production stages. This refers to production stages that contribute to increasing the degree of completion of products. The degree of completion is to be understood as the processing status of a product at a specific point in time. The semi-finished products come from the "preliminary stage" of a value chain consisting of at least two production stages . Further processing takes place until a product has passed through all production stages and has reached the "final stage".
The further processing takes over at least partially products which - from the point of view of the processing company - do not yet have the degree of completion that is sufficient for the end product to be ready for the market .
In economics, when calculating the gross domestic product (GDP) and gross national product (GNP) it is important that the end products are only aggregated and that the intermediate products are eliminated in order to avoid double entries. Gross domestic product and gross national product are therefore key figures that relate to the end products valued at market prices . For example, the total price of a car should not also include the value of the tires that were sold to the car manufacturer in the GDP / GNP. Double counting is avoided by only counting the added value created at each production stage in relation to GDP / GNP.
- Gerd Rainer Wagner, Degree of completion and industrial supply elasticity , 1981, p. 23
- Gustav Dieckheuer, Macroeconomics: Theory and Politics , 1993, p. 3
- Rudiger Dornbusch / Stanley Fischer / Richard Startz, Makroökonomik , 2003, p. 39