Malted barley needs to be unbroken (because broken barley may not germinate or may germinate unevenly) and it needs to be unhulled because unhulled barley absorbs water more evenly, creating a more predictable, controllable rate of germination.
The barley grains are soaked in water for about 40 hours, then drained, then kept at about 60 F (15 C.)
In about 5 days, the barley will start to produce sprouts. At this point, the process is halted when the barley is dried in ovens for about 30 hours. If it’s dried at 122 F (50 C), it will produce a light malted barley; if dried at 220 F (104 C), it will produce a dark malted barley. After drying, the tiny sprout that was produced is removed.
This process is called “modifying” in the trade. The time that the barley is allowed to germinate is referred to as the “modification” time.
What the process accomplishes is awakening enzymes that converting starch into sugar in the grains. This sugar is then consumed by yeast during the brewing process. If the seed sprout had been allowed to grow further, it would have started eating up the sugar for its own needs.
To be used, the grains are crushed, and mixed with water which absorbs the sugar, and frees it up for the yeast to eat.
Each brewery or distillery used to malt its own barley, but now all of them have it done by large suppliers, though they will specify any special ways in which they want the malting done. Some may imply through marketing that they still malt their own, but often close examination reveals that it’s in fact outsourced.