"a system of manufacturing in which all the materials, machinery, and workers required to manufacture a product are assembled in one place"

A process in which all the machinery, materials, and workers required to produce a good in large quantities are brought together in one place.

The factory system brought the means of production together in buildings (factories) where water power (later steam and electricity) supplied the energy to run the machinery that increased productivity and reduced labor costs. It was introduced to the United States in textile manufacturing in 1790.

factories may have been more efficient by reducing transactions costs, as argued by Oliver Williamson (1980). Source: econterms