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What is a Joint Product?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 23 August 2016
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Joint products are two or more products that are produced at the same time by using the same basic manufacturing process as well as the same essential raw materials in that production process. Essentially, the products follow the same manufacturing or refining process up to a certain point, when they branch off and are finally finished into two or more distinct products. The process of joint product manufacturing is common in a number of industries, with the petroleum and the food industry being two examples.

One of the main benefits of a joint product approach is that a company can manufacture a wider range of goods without incurring the expenses related to operating multiple manufacturing platforms. Since the same basic raw materials and the same production machinery is used for the majority of the processing of those materials, the company can often minimize waste while also increasing the output each production hour. Both time and money is saved since it is possible to produce multiple products using the same processes and even the same processing facilities. This in turn means a lower cost per produced unit, which allows the company to offer those units for sale at highly competitive prices.

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With petroleum products, the joint product approach makes it possible to simultaneously produce goods such as gasoline, different types of oil, and kerosene using many of the same production techniques and facilities. Eventually, each joint product reaches what is known as the split-off point, which is essentially the point in the production process where the petroleum based products each move off into separate processes that result in the refinement of those products into their final form. Since so much of the production process was the same for all the products, the manufacturer is able to produce greater quantities to meet the demand for each of those products.

A similar approach can be found in the food industry. The joint product approach is often used when it comes to producing dairy products for consumption by the general public. Along with refining milk for sale, a manufacturer can also simultaneously produce cream, cheese, and butter as part of the overall process, making it possible to market several different dairy products produced using the same facilities. As with oil products, the end result is the ability to produce these related products faster, allowing the manufacturer to save money while still keeping up with consumer demand.

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