Business Production Methods, Technology, and Quality Control
Understanding Production and Productivity
Production is the provision of a product to satisfy wants and needs. The process involves businesses adding value to their products.
Productivity is the measure of outputs against the inputs used to create them. This is measured by the formula:
Output (over a given period of time) / Number of employees
If a worker makes more products in the same amount of time, their productivity increases. Firms aim to be productively efficient to make more profits and compete against their competitors.
Methods of Production
Job Production
In job production, goods are made individually, often by one person. These goods are usually specialized, made to order, and no two are the same.
Pros
- The product meets the exact requirements of the customer.
- Workers have more varied jobs.
- There is more job satisfaction for workers.
Cons
- Skilled labor is needed.
- It is slower and more expensive than other methods of production.
- The process is usually labor-intensive.
Batch Production
Products are made in batches according to a specific order.
Pros
- It is flexible; you can easily change from making one product to another.
- It still gives some variety to workers’ jobs.
- Production is not significantly affected by machinery breakdown.
Cons
- It is expensive to move products around the workplace.
- Storage space will be needed to store raw materials, which is expensive.
Flow Production
Large quantities of a product are produced in a continuous process. This method uses specialization, benefits from economies of scale, and is capital-intensive.
Pros
- Low costs lead to low prices and high sales.
- Increased efficiency.
- Little training is needed.
- Goods are produced quickly and cheaply.
- Goods do not need to be moved around like in batch production, which saves time.
- Quality is high and standardized.
Cons
- Work can be boring for the workers, leading to little job satisfaction.
- It requires a lot of capital to set up.
- If one machine breaks down, the whole production process stops.
Which Type of Production Should Be Used?
The type of production used varies with how the product is demanded:
- Job Production: Used when a unique and individual service is required.
- Batch Production: Used when demand is higher, but products will not be sold in large quantities. Batches are made to orders.
- Flow Production: Used when demand for the product is high and steady.
Stock Control Essentials
Stock control is important so that a business will not run out of stock and be unable to satisfy demands. When stock levels get to a certain point, more goods need to be reordered for the stock level to reach its maximum again. If more goods are not reordered, stocks could run out because of an unexpected surge in demand. However, keeping a lot of stock costs money, so the level of stock in a company should always be balanced.
Lean Production Principles
Lean production focuses on cutting down waste and increasing efficiency. It tries to reduce the time taken to produce a product and transport it to the selling point. It includes the following methods:
- Kaizen
- Just-in-Time (JIT) Production
- Cell Production
- Kanban
Kaizen
Kaizen is the principle of continuous improvement through the elimination of waste. It values the ideas of workers and involves regular meetings to discuss how to increase efficiency.
Advantages of Kaizen
- Increased productivity.
- Reduced amount of space needed for the production process.
- Work-in-progress is reduced.
- An improved layout of the factory floor may combine jobs for some employees, freeing others to do other tasks.
Just-in-Time (JIT) Production
JIT aims at eliminating the need to hold stocks. Goods are delivered to the selling point just when they are needed. JIT production requires:
- Reliable suppliers.
- An efficient system for ordering raw materials.
Cell Production
In cell production, the production line is divided into cells. Each cell makes an identifiable part of the finished product, which can boost worker morale.
Kanban
Kanban is a system of ordering used with JIT production. It operates with two component bins. When one is emptied, production begins to fill it while the other is used. The first bin is refilled by the time the second one is empty, ensuring a continuous flow.
The Role of Technology in Production
Technology plays a significant role in modern production processes and retail operations.
In the Production Process
- Automation: Equipment in the production process is controlled by a computer.
- Mechanization: Tasks are done by machines operated by people.
- CAD (Computer-Aided Design): Used for designing 3D objects.
- CAM (Computer-Aided Manufacture): Computers control machines in the production process.
- CIM (Computer-Integrated Manufacture): CAD and CAM are used together. The computer that uses CAD is directly linked with the one that controls the production process.
In Retail Operations
- EPOS (Electronic Point of Sale): When a product’s barcode is scanned, the information is printed on a receipt, and data is sent to a computer to keep track of stocks.
- EFTPOS (Electronic Funds Transfer at Point of Sale): The cash register is connected to the retailer’s main computer and banks. The customer’s credit/debit card is swiped, and the money is debited from their bank account. A receipt is printed to confirm the transaction.
Impact of New Technology
Advantages
- Increased productivity.
- Boring jobs are done by machines, which boosts motivation.
- Training is needed to operate new machines, making workers more skilled.
- Better quality of products.
- Better stock control.
- Quicker communication and reduced paperwork.
- Information is available faster, resulting in faster decision-making for managers.
Disadvantages
- Potential for unemployment as machines replace human labor.
- Expensive to invest in new technology and replace outdated technology.
- Employees may be unhappy with changes in the workplace.
Approaches to Quality Control
There are three primary ways to control quality:
Quality Control
This involves checking and removing faulty products at the end of the production process. This method can waste a lot of money on products that are ultimately discarded.
Quality Assurance
This involves inspecting products during and at the end of production. The aims are to stop faults from happening and set a quality standard that all products have to achieve. It requires teamwork and responsibility.
Total Quality Management (TQM)
TQM encourages everyone in the organization to concentrate on quality. Quality becomes the main aim for all staff, ensuring that products satisfy all customer needs.