5.1 Production Methods

1. 5.1 Production Methods Chapter 30

2. Production • How goods and services are produced.

3. Types of Production • Job Production • Batch Production • Flow Production, Line Production, or Mass Production • Mass Customization • Cell Production (HL)

4. Job Production • Producing a one-off item specifically designed for the customer. • Can be small or large – but usually unique • Examples: Wedding cakes, draperies, Yangtze dam in China • Pros: motivating for workers as they participate in the complete production process • Cons: high unit costs per item

5. Batch Production • Products are made in separate groups with each group going through the complete process together • Examples: a baker making rolls, cheerleading uniforms • Pros: enables economy of scale if batches are large enough, batches can be matched to demand, batch design can be changed • Cons: high level of “work-in-progress” for each stage of production, the work may be boring and demotivating for workers, if batches are small unit costs may be high, cleaning may need to be completed between batches

6. Flow Production or Line Production(Mass Production) • Used when individual products move through one stage of production to next when the product is ready. • Examples: soda, pencils • Pros: capable of producing large quantities in short time frames, and standardized items, labor costs are low because automated equipment is used, inputs can be easily determined because of constant known output, quality is consistent and easily checked at multiple stages of production • Cons: high setup costs, boring repetitive tasks, demotivating for employees Video: http://science.discovery.com/videos/how-its-made-pencils.html

7. Mass Customization • Combines job production with mass production to customize products to suit individuals. • Examples: computers, automobile assembly • Pros: designs include customized elements to standardized parts reducing consumer alienation, differentiated products for consumers, low unit cost for “customized” product, reducing boring and repetitive tasks • Cons: high setup costs and equipment costs

8. Summary

9. Cell Production • Splitting flow production into self-contained groups that are responsible for whole work units. Performance Standards: Productivity measured, quality, lead times • Pros: worker commitment and motivation is high because there is team work and sense of ownership in the work performed; job rotation within the cell, increased productivity • Cons: need multi-skilled workers HL

10. Cell Production • Splitting flow production into self-contained groups that are responsible for whole work units. Performance Standards: Productivity measured, quality, lead times • Pros: worker commitment and motivation is high because there is team work and sense of ownership in the work performed; job rotation within the cell, increased productivity • Cons: need multi-skilled workers, need to be flexible, workers need to be responsible Finished goods Bought-incomponents Sub assemblies produced and quality checks Machining of components and quality checks Final assembly, quality checkspackaging HL

11. Switching from Job to BATCH • Considerations when changing from job production methods to batch. • Finance • Cost of equipment to handle larger volume of the batch • Higher stocking levels require more finance • Human Resources • Less emphasis in an individual’s craft could demotivate employees • Marketing • Product is no longer custom • May have to promote lower prices and consistency in quality

12. Switching from Job or Batch to FLOW • Considerations when changing from job or batch production methods to flow. • Finance • Cost of equipment to handle a large volume of production • Production delays during change over could create cash flow problems • Human Resources • Low motivation and boredom could occur • Marketing • Market research becomes important to target larger markets • Accurate sales forecasting to match demand with output • Promotion and pricing will have to change to be geared toward a mass market approach….this could change the direction of the business.

13. Switching from Batch or Flow to CELL • Considerations when changing from batch or flow production methods to cell. • Finance • Cost of equipment to handle multiple products within a cell • Human Resources • Recruitment or training of multi-skilled workers • Creation of work teams • Marketing • Productivity should create more competitive pricing • Quality improvements should improve product

14. Choose a Production Method • Size of Market • Very small markets are suited for job or batch production • Flow production is useful for producing a large quantity of identical products for very large markets with consistent demand. • Batch production is suited for large production runs at intervals of time….3X per year

15. Choose a Production Method • Amount of Capital Available • Large amounts of capital are required for flow production systems • Small amounts of capital can be used to set up job or batch production methods

16. Choose a Production Method • Available Resources • Flow production requires large amounts of unskilled workers • Flow production requires land for large factories • Job and batch production requires a skilled work force

17. More than One Way • Most businesses use more than one way of producing their products. • Land Rover • Line production of the standard products • Batch production of their military version • Job production for special orders that will be hand assembled (bullet proof glass, gold plated trim, Italian leather seats)