PRODUCTION METHODS (SL)

UNIT 5: OPERATIONS MANAGEMENT

Introduction to Production Methods

• Every business is a producer of something.• When we think of production we tend to imagine big

factories with long lines of sophisticated machines, but it is worth bearing in mind that production can take a variety of forms.

• There are the large scale capital intensive production lines such as oil refineries or car plants.

• However, a web browser, an airline or even a beach resort is a business with an end product too.

• The art of managing production, to get the best end product is called operations management.

Types of Products

• Production is typically described as the creation of physical products (goods) or non physical products (services)

The Range of Goods & ServicesGOODS SERVICES

Physical Product High physical content but some service

High service content, but with some physical product

Service Products

MP3 Player Cosmetic Surgery Airline Travel Music Concert

Consumers get the product, but there maybe after sales service for technical problems or when you need to load updates.

Consumers gets the “new” nose/breasts/ wrinkle free face, but there is extensive treatment before & after the operation

Customers travel from A to B, but they have a meal, watch a film and get free drinks (maybe!)

Assuming that consumers don’t buy the T-Shirt or the CD, they only pay for the pleasure of the music.

PRODUCTION METHODS

There are four main production methods:

• Job•Batch•Mass/Flow/Line•Cell

Method of Production Type Description Example

Job Production of special one-off products made to specific order.

Custom-made cars with individualized accessories.

Batch Groups of a particular product made to order.

Car models with different features for each model.

MassFlowLine

Standardized products made in large quantities, usually by assembly lines

Cars that are made to a standard design.

Cell An adaption of mass production in which the flow is broken up by teams of workers who are responsible for certain parts of the line

Cars that are made to a standard design, but produced by a number of different cells.

Job Production

• This is the production method normally associated with the top end of the market, where the emphasis is on quality and the producer can charge premium prices.

• Products are market oriented with the client decided precisely what the product should be.

• Some of the features of job production are the need for clear objectives and careful planning, which means there may be a longer development phase of the product life cycle.

Job Production

• The client may require and expect greater consultation during the process and even after the product has been created.

• It is likely the same format would be inappropriate another time.

• The can add to the time taken to produce the product as there may not be a successful “blueprint” to use.

Advantages of Job Production

• The mark is up is likely to be high.• Clients get exactly what they want. • This production method is likely to motivate

skilled workers working on individual projects.• It can be a flexible production method.• A special relationship can be developed with

trend setters or role models.

Disadvantages of Job Production

• This production method can be expensive, requiring skilled workers and non-standardized materials.

• It is likely to be time consuming as there is much more consultation with the client than when using other production methods.

• There is the possibility the product might fail, because of the lack of knowledge of the client, but this may reflect badly on the business.

• This method can be very labor intensive and reliant on skilled workers.

Batch Production

• This is a production method normally associated with the middle of the market where the emphasis is on quality and affordability.

• Products are still market oriented.• Customers are offered customized products, but using a

range of standardized options. • This method of production requires careful planning as the

components of the product need to be interchangeable. • Some consultation will need to be made with customers as

their needs have to be taken into account, although the exact options may be limited.

Advantages of Batch Production

• Using this production method businesses can achieve Economies of Scale.

• Examples of Economies of Scale A small French manufacturer making savings

on its budget for certain components by bulk buying.

South African safari lodges making external savings by pooling resources.

Advantages of Batch Production

• Batch production allow customers more choice and so captures more market share.

• The producer will be more organized when routing through the factory compared with a product manufactured using job production.

• The method can be useful for trialing products. • Using this method it may be possible to deal

with unexpected orders.

Disadvantages of Batch Production

• Businesses may lose production time as machines are recalibrated and or retooled.

• This is known as down time.• Businesses may need to hold large stocks of

work in progress.• The size of the batches are dependent on the

capacity of the machinery (or labour) allocated to them.

Mass Production or Flow Production

• Businesses produce a high volume of standardized products using a continuous flow of raw materials along an assembly line.

• For this reason, it is also known as line production too.• This is perhaps our typical idea of a factory with long

conveyor belts routing the product through the different stages of production, without any pause in the whole process.

• There is a good argument for the automization of this method of production.

• Machines don’t need toilet breaks and can be relied on to produce the same standard every time they are set.

Mass Production or Flow Production

• Mass production requires careful planning in order to synchronize all stages of the production process.

• This production method may well run a critical path analysis to calculate the right order of activities

• For the process to be viable, the production must be driven by large reliable orders for the final product.

Mass Production or Flow Production

Set Up Costs• There is likely to be a large sunk cost in setting

up this method.• This investment must be recouped by selling a

high volume of standardized products.• The product is therefore sold at the low end of

the market and in large quantities.

Advantages of Mass Production

• Once set up, the system needs little maintenance. • The business can cater for large orders and so

achieve economies of scale.• Labour costs may be low as the jobs required are

relatively unskilled and with a fully automated process they are even replaceable.

• The business can respond to an increase in orders very quickly as the process has already been set up.

Disadvantages of Mass Production

• Set up costs will be high.• Breakdowns are costly as the whole assembly line

will be idle.• The business is very dependent on steady demand

from a large segment of the market• The system is inflexible and if there are sudden

changes in demand, the business may well be left holding large stocks of unwanted products.

• The production process can be demotivating for employees because of robotic activities.

COMPARISON OF THE THREE PRODUCTION METHODS Criteria Job Production Batch Production Mass Production

Set up time Long set-up time as there is a new set up for every new job.

Can be reasonably fast as set up is usually a modification of an existing process. Otherwise as for mass production.

Very long set up as it takes time to synchronize the whole process.

Cost per unit High Medium Low

Capital(machinery)

Can be flexible as it depends on specific use

A mixture of machines used, but this method is based on general purpose machines

Can involve large numbers of general purpose machines designed for a specific function

Labour Highly skilled may be craft workers.

Semi-skilled and need to be flexible.

Unskilled & need medium training

Production time

Likely to be long Once set up, production can be swift

Production is swift.

Stock Low raw materials and finished stock, but high work in progress.

High raw materials-buffer stocks. Medium work in progress & finished stock

High raw materials & finished stock – low work in progress