Production of goods and services

• Production is the provision of a product or service to satisfy consumer wants and needs.
• In a developing country, labour-intensive methods are used whereas in a developed country capital intensive methods are used.
• The operations manager is responsible for making sure that raw materials are provided and made into finished goods and services.
• A Factory manager is responsible for the quantity and quality of products coming off the production line.
• A purchasing manager is responsible for providing the materials, components and equipment required for production.
• A Research and Development manager is responsible for the design and testing of new production processes and products.
• Productivity is the output measured against the inputs used to create it.
• As employees become more efficient, the output produced per employees will rise and therefore the costs of producing the product will fail.
• How can you increase productivity?

  Motivate employees more effectively.

  Use capital-intensive methods.

  Introduce new technology.

  Train staff to be efficient.
• Why do businesses hold stock?


  It ensures that there is always enough inventory to satisfy demand, inventory levels must be carefully controlled. If inventory levels get too low they might actually run out if there is an unexpectedly high demand for the goods.
• Lean production covers a variety of techniques used by businesses to cut down on waste and therefore increase efficiency.
• Types of waste that occur during production.

  Waiting- when goods are not moving wastes are occurring.

  Transportation- moving goods unnecessarily causes waste.

  Unnecessary inventory- if there is too much inventory it costs more money to store them.

  Motion- unnecessary actions made by workers is a health and safety risk that wastes time.

  Over-processing-using complex machinery for simple tasks is wasteful.

  Defects- any faults require the goods to be fixed and wastes time.
• What are the benefits of lean production?

  Goods and services are produced quicker.

  Equipment is used more effectively.

  Cutting out some processes to speed up production.

  Less storage of raw materials and components.
• Kaizen means continuous improvement through the elimination of waste.
• Kaizen is done through the ideas of workers themselves. Small groups of workers meet regularly to discuss problems and possible solutions.
• What are the advantages of Kaizen?

  Productivity increases.

  Reduced amount of space needed for the production process.
• Just in time inventory control involves virtually reducing the need to hold inventories of raw materials or unsold inventories of raw materials.
• What are the benefits of JIT inventory control?

  It reduces the cost of inventory as no raw materials and components are ordered to be kept in the warehouse just in case needed.

  The product is sold quickly so the business will earn money faster.
• The business will therefore need very reliable suppliers and an efficient system of ordering raw materials and components.
• Cell production is where the production line is divided into separate self-contained cells, each making an identifiable part of the product. It improves the morale of the employees and makes them work harder so they become more efficient.
• Job production is where products are made specifically to order
• What are the advantages of job production?

  The products meet the exact requirements of customers.

  It is often used for high-quality goods meaning a high price can be charged.
• What are the disadvantages of job production?

  Producing often takes a long time.

  Any errors made in producing the product will be expensive to correct
• Batch production is where similar products are made in blocks or batches.
• What are the advantages of batch production?

  Production can easily be changed from one product to another.

  Production may not be affected to a great extent if machinery breaks down.
• What are the disadvantages of batch production?

  Warehouse space is needed for stocks which is expensive.

  Machines have to be reset between production batches which means there is a delay and output is lost.
• Flow production is where large quantities of a product are produced in a continuous process.
• What are the advantages of flow production?

  It may benefit from economies of scale when purchasing.

  There is high output of a standardised product.
• What are the disadvantages of flow production?

  It is a very boring system for workers, leading to a lack of motivation.

  The capital costs of setting up the production line can be very high.
• What factors affect which product to use?

  If a fairly unique product or an individual service is required, job production is used. If the product can be mass-produced using an automated production line then flow production will be used.

  If demand is higher and more products can be sold but not in very large quantities, batch production will be used. International markets are served by businesses using flow production.
• How did technology change the production methods?

  Automation- factory equipment is controlled by a computer.

  Mechanization- Production is done by machines, controlled by people.

  Computer-aided design- Computer software that draws items being designed more quickly and allows them to be rotated.

  Computer-aided manufacture-computers monitor the production process and control machines.
• What are the advantages of new technology?

  Productivity is greater as new production methods are used.

  Greater job satisfaction stimulates workers, as routine and boring jobs are now done by machines.
• What are the disadvantages of new technology?

  Unemployment rises as machines take over people's jobs.

  New technology is changing all the time and will often be outdated quite quickly and need to be replaced to continue being competitive.