Any production method relies on efficiency – this can be viewed in different ways:
Productivity – a measurement of output per unit of the factor used (labour, capital or land)
Productivity = -------------------
Units of Factor
Technical Efficiency – output produced using the fewest possible inputs
Productive Efficiency – output produced at the lowest possible cost
Production decisions involve deciding methods for new production runs and analysis of existing methods.
Decisions may include:
Substitute machinery for labour?
Use of new technology?
Organisation of the production layout?
Change of production method?
Production Methods Copyright: Photolibrary Group Whilst all output can be classed as production, different production methods may be more appropriate for different products or services. Agriculture tends to be very land intensive – efficiency could be measured in terms of output per acre/hectare
Production Methods Copyright: iStock.com As technology and analysis of production methodology has improved, methods have changed dramatically – what used to be labour intensive production methods are now capital intensive
Production Methods California Oil is Source of Wealth and Fear Copyright: iStock.com Textile factory Copyright: Stock.Xchng Bottle production line Copyright: Photolibrary Group
The choice of production method and the factor inputs depends on such things as:
the nature of the product
the scale of production
Production Decisions Which method? Type of Product One-Off Order? Mass Market product? Batch? Market size and Segment Factor Costs – Land, Labour and Capital Complexity of design
Job Production – One-off production - each item might have particular specifications
Flow Production – suitable for mass market products that are identical
Batch Production – each stage of the production process has an operation completed on it before moving on to the next stage – allows modifications to be made to products that otherwise are the same
Production Methods Which is more efficient? Operation 1 2 3 4 5 6 7 8 9 10 11 Finished Product This?
Production Methods Operation 1 1a 1b 1c 1d 2a 2b 2c 3a 3b 3c 3d 4 Finished product Or this?
Production Methods Or this? Cell 1 Cell 2 Cell 3 Finished Product Finished Product Finished Product
Answer – it could be any of them!
The design of the production space can influence:
Quality assurance procedures
Kaizen (Continuous Improvement)
Kaizen (Continuous Improvement)
Japanese concept – not made redundant by the decline of the Japanese economy which may be due to other institutional factors!
Focus on gradual and continuous improvement
A whole business philosophy
Importance of EVERYONE buying into the concept and the vision
Great attention paid to customer requirements and needs
Efficient stock control methods help reduce costs and improve cash-flow
Flexible working practices and empowerment – help increase efficiency, reduce costs and improve motivation
Leadership seen as vital. Ability to communicate a clear vision, take people along with the vision and to think about where the company needs to be in 5, 10, 15 and 20 years time
Fundamental principles – often characterised as ‘lean production’ – reducing waste, zero defects, high quality control measures at all stages
Punctuality in all aspects – delivery, supply, manufacture, etc.
Six Sigma Methodology
Coined by Motorola Engineer Bill Smith
Now a major influence on production methods and quality assurance
Data and statistical driven approach to eliminate defects in production
Aims to improve processes and reduce variations in quality
Necessitates organisational change, training and planning