The type of production a business uses largely depends on the scale of the production with which it is involved.
A short introduction to production methods
This video shows Business experts and entrepreneurs including Deborah Meaden and Lord Sugar discuss choosing raw materials and managing stock levels in business.
Job production (also called unit production) means that orders are produced one at a time. Job production is suitable for one off products.
- Skilled labour is oftern used
- Employees have to be versatile, and flexible tools and equipment are often used
- Economies of scale are not possible
Batch production is a method where they produce goods in batches
- By pre preparing dishes it cuts down on cooking time and waiting times so means that customers are more likely to be satisfied
- Batch production is quicker than job production and more suited to a fast food restaurant
Mass production lowers cost per unit
- Large scale producers can employ techniques that are unable to be used by a small scale producer.
- Larger firms can use computers / technology to replace workers on a production line
- Able to transport bulk materials.
Lean production looks at reducing all forms of waste throughout the production process.
Types of waste:
- Human effort
- Production is organised around teams
- Every team is responsible for one stage in the production process
- This helps improve motivation as it encourages team work
- It can increase quality as employees feel more ownership of the final product
- Teams will self-check their work before it enters the next stage of production
Goods are produced to order so stock levels are minimal. Keeping low stock levels decreases the costs of storing them helping to increase profits. This increases the flexibility of a firm. It helps reduce waste as you only use what you need
For JIT to be effective you need the following:
- Excellent supplier relationships – need the supplies to arrive at exactly the right time
- Reliable employees – or stoppages may occur
- A flexible workforce – need them to be able to work any time and any where
Advantages of JIT
- Increased focus on quality
- Costs are reduced: e.g. Warehousing, Security and insurance
Disadvantages of JIT
- May be difficult to meet unexpected major increases in demand
- Can be problems caused by suppliers
- Loss of discounts for buying in bulk
- This is used as a USP for many businesses
- Businesses try and produce items more quickly than competitors or deliver it more quickly to them increasing sales
- To decrease new product development times firms use simultaneous engineering
- Simultaneous engineering is where everyone involved in the project works on it at the same time – engineers, designers etc
- This decreases the time taken to get the product to market
Kaizen – Continuous incremental improvement of an activity to eliminate waste. This is a Japanese approach to production
- Everyone in the business has to be involved for it to work
- Review all processes and procedures and look at better ways of doing them to increase performance
- Based on the idea of gradual change not radical overhauls
- Need to have well qualified staff who are trained to identify improvements to process or product to improve performance of the organisation
Workers are key to all lean production techniques. All of the methods demand for employees to have high levels of empowerment and involvement so they constantly try to improve how the business works. There is a need to have “people-centred management”.
When businesses introduce methods of lean production they need to:
- Use a management style that is more listening in its approach – need employees to feel that they can come forward with their ideas
- Train all employees
- Increase skill levels of employees so they can do more than one job
- Develop good manager-subordinate relations