The PRODUCTION deals with the way that a business chooses to ORGANISE the PRODUCTION PROCESSES which it will use to make products.
Labor intensive production makes products using mainly human effort. This allows employees to use their skills and initiative to make products, giving them a high degree of job satisfaction, although the wages of skilled workers will be higher.
CAPITAL INTENSIVE production makes products using mainly MACHINES/TECHNOLOGY.
This allows for a HIGHER VOLUME OF IDENTICAL PRODUCTS to be made and employees with less skills to be employed, thus giving a LOWER COST PER UNIT.
However, MACHINES/TECHNOLOGY very EXPENSIVE TO BUY and can BREAK DOWN, causing production to stop.
PRODUCTION SYSTEM
The production system of an organization is that part, which produces products of an organization.
It is that activity whereby resources, flowing within a defined system, are combined and transformed in a controlled manner to add value in accordance with the policies communicated by management.
The production system has the following characteristics:
• Production is an organized activity, so every production system has an objective.
• The system transforms the various inputs to useful outputs.
• It does not operate in isolation from the other organization system.
• There exists a feedback about the activities, which is essential to control and improve system performance.
Methods Of Production
• Mass production
• Job shop production
• Batch shop production
1) Mass Production :-
1) The flow is in a straight line.
2) All facilities are arranged as per the sequence of Operations.
3) Output of one operation becomes the input of for the subsequent operation.
4) It believes in break up of task into its simplest possible elements. These elements are then grouped as per production norms.
5) Concept of assembly line is used for mass production. On assembly line, the material moves continuously at a uniform speed. It reaches the various work stations, where a portion of work is done.
FEATURES OF MASS PRODUCTION:-
• Dedicated special purpose machines having higher production capacities and output rates.
• Large volume of products.
• Shorter cycle time of production.
• Lower in process inventory.
• Perfectly balanced production lines.
• Flow of materials, components and parts is continuous and without any back tracking.
• Production planning and control is easy.
• Material handling can be completely automatic.
• Examples;- BIKES AND CARS.
ADVANTAGES OF MASS PRODUCTION
• Higher rate of production with reduced cycle time.
• Higher capacity utilization due to line balancing.
• Less skilled operators are required.
• Low process inventory.
• Manufacturing cost per unit is low.
• There is a smooth flow of material
DISADVANTAGES OF MASS PRODUCTION
• Breakdown of one machine will stop an entire production line.
• Line layout needs major change with the changes in the product design.
• High investment in production facilities.
• Maintenance is challenging
• More capital required because of duplication of machines
2) JOB SHOP PRODUCTION
• In Job Shop Production, the products are mostly customized products.
• Based on the customer requirements, the products are produced.
• In this type of production, every job is different from the other in terms of type, cost, efforts, consumption of materials or specifications
FEATURES OF JOB PRODUCTION
The main FEATURES of Job Production are as follows:
• Each product is made ONE AT A TIME as a single separate piece of work (or JOB)
• Each product made will be UNIQUE because it has been designed to meet specific standards that the customer has set
• Lots of (normally skilled) labor is usually used - this means it is known as a LABOUR INTENSIVE method of production.
• Examples of products made using job production would include designer jewelers or clothing, roads, buildings and parts for local industrial machinery.
ADVANTAGES OF JOB PRODUCTION
• Job Production should provide a variety of work for staff to complete which should INCREASE their MOTIVATION, SKILLS and PRODUCT QUALITY
• Job Production should provide a very HIGH LEVEL of CUSTOMER SATISFACTION because it provides a high quality and unique product that meets their specific needs.
• Job Production should result in HIGH PRICES (and profits) because customers will pay a lot for high quality products that meet their specific needs.
DISADVANTAGES OF JOB PRODUCTION
• Job Production can be EXPENSIVE to run because skilled staff will often expect HIGH WAGES and EXPENSIVE SPECIALIST EQUIPMENT may be needed.
• Job Production can be EXPENSIVE to run because as each product is unique there.
• Job Production can take a long time to complete (especially on big jobs) which can cause CASHFLOW PROBLEMS while waiting for payment.
3) BATCH PRODUCTION
All the products manufactured under a batch are similar in terms of type, cost, efforts, consumption of materials or specifications.
This is when the same product is made for a while, then production is switched to another product. They will return to the production of the first product again later on.
Examples include:
Bakers
Clothing manufacturers
Coca Cola bottling plants
sports shoes
FEATURES OF BATCH PRODUCTION
• A group of products (known as a BATCH) is made TOGETHER at the same time.
• Each product WITHIN a batch is IDENTICAL.
Separate batches can be SLIGHTLY DIFFERENT from each other.
• Although there can be some variation between batches, all products made will be BROADLY SIMILAR.
• Often uses lots of capital equipment - this means it is known as a CAPITAL INTENSIVE method of production.
• Examples of products made using Batch Production would include different flavours of pizza, soup, jam, etc
ADVANTAGES OF BATCH PRODUCTION
• The slight variations that can be made between batches provides a business with SOME FLEXIBILITY and the ability to make a RANGE OF PRODUCTS. This means a business can INCREASE SALES by satisfying the needs and wants of a variety of consumers.
• The use of CAPITAL can allow a relatively LARGE NUMBER OF PRODUCTS to be made without paying for lots of workers. This can LOWER PRODUCTION COSTS.
• The use of CAPITAL often means that many staff used do not carry out complex work as machines do it for them. This can mean STAFF will be fairly CHEAP to employ as they will need few skills. This can LOWER PRODUCTION COSTS.
• RAW MATERIALS can be bought in BULK, therefore saving money due to ECONOMIES OF SCALE.
DISADVANTAGES OF BATCH PRODUCTION
• The simple, similar processes batch production often needs staff to do can be BORING and so DECREASE their MOTIVATION, SKILLS and PRODUCT QUALITY.
• Any mistakes can be very COSTLY as a whole batch of products could be damaged or wasted at once.
• Any changes in batch types will result in DELAYS (to reset machines, etc) which can DECREASE PRODUCTION.
• The COST of each item might be HIGH if the BATCH SIZE IS SMALL, so the price charged to the customer might be higher.
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