Production methods

 

 

PRODUCTION METHODS

 

Changing the method of production has significant effects across different functional areas of a business. Whether the business is shifting from job production to batch production, from batch or flow production to cell production, or transitioning to mass customization, each transition comes with financial, human resource, and marketing implications.

1. From Job Production to Batch Production

  • Finance:
  • Cost of Equipment: A switch to batch production typically involves investing in new equipment that can handle large batches of products. This means that capital expenditure increases as machinery must be upgraded or replaced to handle larger volumes efficiently.
  • Working Capital: Batch production increases the need for additional working capital to finance high levels of stock and work-in-progress. Raw materials for large batches need to be purchased upfront, and inventory must be managed carefully to avoid excessive stock.
  • Human Resources:
  • Staff Demotivation: Job production often emphasizes individual craftsmanship, which can be highly motivating for workers. However, batch production requires workers to focus on repetitive tasks in a group setting, which may lead to a decrease in job satisfaction and a loss of personal pride in the work.
  • Marketing:
  • Customization Loss: In job production, the uniqueness of the product allows marketing to focus on the customization offered to the customer. In batch production, this emphasis on individuality is lost, so marketing needs to focus more on the benefits of lower prices and consistent product quality.

 

2. From Job or Batch Production to Flow Production

  • Finance:
  • Capital Investment: Transitioning to flow production typically requires large capital investment in specialized, automated machinery and systems. This can be very expensive, and financing these investments can strain a company’s resources.
  • Cash Flow Impact: The transition period, where production lines are being set up or adjusted, may cause temporary delays in production and a negative cash flow impact. During this time, output may be reduced, and inventory management becomes more complex.
  • Human Resources:
  • Worker Motivation: Flow production often leads to repetitive tasks and assembly line work. This can cause workers to experience boredom, demotivation, and a lack of personal connection to the product. If workers are not given sufficient autonomy or variety, this can result in higher turnover and absenteeism.
  • Marketing:
  • Mass Marketing Shift: With flow production, companies typically produce large quantities of a single product. This requires a shift in marketing strategies from a niche focus (as seen in job or batch production) to mass marketing. Market research becomes crucial to identify the largest customer segments to ensure that the right volumes are produced.
  • Demand Estimation: Accurate forecasting of demand is critical, as producing too much can lead to excess stock, while producing too little can result in missed opportunities.

 

3. From Batch or Flow Production to Cell Production

  • Finance:
  • Investment in CAM: Cell production often requires significant investments in Computer-Aided Manufacturing (CAM) systems. These systems enable the production cells to switch efficiently between different products, increasing flexibility but also adding to the cost.
  • Human Resources:
  • Staff Recruitment: The move to cell production requires recruiting workers who are flexible, adaptable, and willing to work in teams. Employees must also be willing to take responsibility for the entire product, from start to finish, rather than focusing on a single task.
  • Training for Multi-skilling: Staff need to be trained in multiple skills to handle the diverse tasks involved in each cell. This can be time-consuming and costly, but it leads to higher levels of employee engagement and job satisfaction.
  • Marketing:
  • Competitive Pricing and Quality: As productivity and quality improve in cell production, businesses can offer better quality products at competitive prices. Marketing strategies can emphasize these improvements, positioning the company as a producer of high-quality goods at attractive prices.

 

Choosing Appropriate Production Methods

The choice of production method depends on various factors that influence both business operations and market demand.

Factors Influencing Production Method Selection:

  1. Size of the Market:
  • Small Markets: For niche markets where demand for custom or high-quality products is low, job production is more appropriate. For example, designer clothing or custom-built homes.
  • Large Markets: Flow production is most efficient for mass markets where demand for identical products is high and constant. Mass production requires mass marketing strategies to sell large quantities.
  • Variable Demand: Batch production suits markets where demand fluctuates seasonally or over time, such as for textbooks at the start of an academic year.
  1. Amount of Capital Available:
  • Capital Investment: Flow production requires a significant investment in equipment and infrastructure, which is often only feasible for larger businesses. Smaller businesses might prefer job or batch production, as these methods require less capital.
  1. Availability of Resources:
  • Skilled Labor: Job production requires highly skilled labor to produce specialized products. Flow production, on the other hand, often requires large numbers of relatively unskilled workers to operate the machinery. The availability of the right labor force will influence which production method is viable.
  • Space Requirements: Flow production often requires a large, flat area to house the automated production lines, while job production may be done in smaller, more specialized environments.
  1. Customer Requirements for Customization:
  • Mass Customization: As technology advances, mass customization becomes more feasible, allowing businesses to produce high volumes of customized products at low unit costs. This method is ideal when a company wants to offer personalized products but still enjoy the cost savings of mass production.
  • Customization Needs: If customers require significant customization (e.g., highly personalized clothing or one-off products), job production may still be the best option.

 

Using More Than One Method

Many businesses use a combination of different production methods to achieve the best of all worlds. For example:

  • Restaurants: A restaurant might use flow production for standard menu items like fries, batch production for dishes like stews that can be prepared in advance, and job production for special orders or items requiring individual preparation.
  • Automotive Industry: A company like Land Rover might use flow production for standard models, batch production for military versions with special features, and job production for unique, one-off orders (e.g., a gold-plated model).

 

Final Evaluation

While the traditional distinctions between job, batch, and flow production are becoming less clear due to technological advancements, businesses must still choose production methods based on their market, resources, and strategic goals. For example, small businesses may still find success with niche, hand-crafted products, while larger firms can use mass production methods to dominate in high-demand markets.

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