Factories produce one supply unit each turn. The cost of building a factory is 3 megacredits and one supply unit. The maximum number of factories that you can build on a planet is limited by the size of your colonist population.
When a planet becomes over populated (at somewhere around 11,000,000 on your homeworld) the colonists will be forced to eat and use supplies to keep from starving. Some planets can reach a state of over population at around 1,000,000 colonists if they have an arctic or desert climate. If you notice that your supply production has stopped or slowed than you are having an over population problem. There are a few desert and arctic planets were the climate is so bad that 1 clan is considered over populated.
When there is not enough manpower on the planet to maintain structures on the planets surface the structures will decay at a rate set by host. The rate is the number of undermanned structures that can be lost in a single turn. If it is set to 3 than up to 3 of each type of structure can be lost in a single turn on a planet that does not have enough colonists to support. This applies to mines, factories and defense outposts.