Methods of production, efficiency and lean production

Last time

Before we start: last time, in Location decisions and sustainable production, you learned these points. Here they are again on one card. Keep them in mind, because today builds on them.

How things are made

A tailor makes one suit for one customer. A bakery makes trays of the same bread, then switches to cakes. A soft drinks factory makes the same bottle all day. These are three methods of production. This lesson covers them, plus how businesses become more efficient.

Job production

Job production makes one product at a time, to the customer's own order, such as a wedding dress or a house. Advantages: products meet the customer's exact needs, a high price can be charged, and work is interesting for skilled workers. Disadvantages: high cost per unit, slow, and needs skilled workers.

Batch production

Batch production makes a quantity of one product, then switches to a batch of another, such as bread then cakes. Advantages: some variety, and lower costs than job production. Disadvantages: machines must be cleaned or reset between batches, and stock must be stored.

Flow production

Flow production makes large quantities of the same product continuously, on a production line. Advantages: very low cost per unit, economies of scale, and machines can work all day. Disadvantages: expensive machines, boring work, little variety, and the whole line stops if one machine breaks.

The three methods

Here are the three methods compared on what examiners ask about.

Productivity and efficiency

Productivity is output per worker or per machine in a period. Higher productivity means lower costs per unit. It rises with training, better machines, motivation, and better ways of working. Efficiency means producing with the least waste of resources.

Lean production

Lean production means techniques that reduce waste of every kind: materials, time, space and effort. Just-in-time keeps almost no inventory: materials arrive exactly when needed. Kaizen means continuous small improvements suggested by workers. Benefits: less storage cost, less waste, faster production and more motivated workers. Risk: a late delivery stops production.

Managing inventory

Inventory is the stock of raw materials, work in progress and finished goods. Too much inventory ties up cash and storage space, and goods may go out of date or be stolen. Too little means production stops, or customers leave because goods are out of stock.

Technology in production

Automation uses machines controlled by computers; robots do repetitive or dangerous tasks. Benefits: higher productivity, consistent quality, and lower long-run costs. Drawbacks: high initial cost, job losses, and training needed; workers may resist change.

Choosing a method

The method depends on demand: huge demand for identical products suits flow; varied orders suit job or batch. And on the product: unique products need job production. And on finance: flow production needs expensive machines.

Mistakes that lose marks

Mistake one: saying job production has a low cost per unit. It is the most expensive per unit. Mistake two: describing just-in-time as keeping lots of stock. Mistake three: giving advantages of technology without the drawbacks in a judgement. The fix: the right method, its cost, and both sides.

The full-marks tip

The full-marks tip: match the method to the product and demand: unique to job, groups to batch, huge identical to flow. For lean production, name the technique and say what waste it cuts.

On one card

So, on one card: methods of production. Keep it for revision.