Production methods
Introduction:
There are several different ways in which goods and services can be produced
They usually classified into
o Job production
o Batch production
o Flow production
o Mass customization
Job production:
Producing a one-off item specially designed for the customer
These products can be small (specially designed wedding ring) or large (a custom made
food truck)
In order to be called job production, each individual product has to be completed before
the next product is started. Thus, at any one time there is only one product being made.
Job production involves labour intensive production method, producing specialised
products.
Job production is motivating to the workers because they produce the whole product
and can take pride in it
However, job productions
o Needs highly skilled labour force, which is not abundant and thus expensive
o Takes long time to complete a product (although rewarding for workers)
Batch production:
Producing a limited number of identical products, (in batches)
The production process involves a number of distinct stages
Every unit in batch must go through an individual production stage before the batch as a
whole moves on to the next stage.
Usually used in industries where there are demand for batches of identical products.
It also allows each individual batch to be specifically matched to the demand that is
altering the design and composition of the batches.
Batch production allows firms to use division of labour in their production process and it
enables some gain from economies of scale if the batch is large enough.
However,
o Batch production tends to have high levels of work-in-progress stocks at each
stage of the production process.
o The work may well be boring and demotivating for the workers
o If batches are small, then economies of scale cannot be achieved and unit costs
will be high
o There is often a need to clean and adjust machinery after each batch has passed
through
Flow production:
In this process individual products move from stage to stage of the production process
as soon as they are ready, without having to wait for any other products.
Flow production systems are capable of producing large quantities of output in a
relatively short time.
It suits the industries where the demand for the product in question is high and
consistent
It also suits production of large numbers of standardized item that only requires
minimal alterations (that’s why also known as mass production)
Flow production has the following advantages
o Lower labour costs as most of the process is mechanized.
o Quality tends to be consistent and high and easy to check at various points
throughout the process.
o Also the constant output rates will make the planning of input simple.
o Unit cost is reduced, as there is ability to gain economies of scale.
However, the flow production requires high initial set up cost. In addition the work
involved tends to be boring, demotivating and repetitive.
Mass customization:
This production technique tends to provide the flexibility and worker satisfaction of job
production along with the gains of low unit costs of flow production.
This process combines the latest technology with multi skilled labour forces to use
production line to make a range of varied products
This allows the business to move away from mass marketing approach with high output
of identical products
Instead, focused or differentiated marketing can be used which allows for higher added
value.
So products can be customized to suit customers’ need in a matter of hour, by changing
just a few of the key component but keeping the rest the same
Thus low unit costs are maintained with greater product choice
However, both multi skilled labour force and latest flexible machineries are expensive
Production method making the choice:
Factors that will influence which production methods will be adopted by a business
o Size of the market
Job production- very small market
Batch production – if the market demands for large number of units, but
at different times of year
Flow production- when there is a large and consistent market for
similar or identical products throughout the year.
o The amount of capital available
o Availability of other resources
E.g. unskilled labour for flow production
Skilled labour for job production
o Market demand exists for products adapted to specific customer requirements
Cost advantage of high volumes combined with ability to make slightly
different products for different markets then mass customization is
appropriate.
Problems of changing production methods:
Job to batch
o Cost of equipment
o Additional working capital to finance stocks and work in progress
o Staff demotivation as less individual craft
Job or batch to flow:
o Cost of capital equipment
o Staff training to be flexible and multi skilled so that boredom can be reduced by
moving workers to different tasks
o Accurate estimates of future demand to ensure that output matches demand.
Evaluation:
The traditional difference between the three basic production methods are becoming
less obvious
Many complex products are now easily being produced as per consumer requirements
due to modern technology
The flexibility that technology offers large firms can risk the survival of small business
However, there is always likely to be demand for original specialist products and thus
small firms with non mass production method will still thrive in these markets.
