Production of Goods and Services

Production of Goods and Services

Definition and Classification of Production:

• Production refers to the tasks, processes, and operations involved in converting inputs (like raw materials, labour, and capital) into outputs (goods and services).
• Depending on the nature and use of the final output, production can be classified into different types: Primary, Secondary, and Tertiary.

Production Methods:

• Job Production: It is when a single product is made at a time, tailored to the customer’s specific requirements. This method is normally used for customised products, like wedding dresses or custom-made furniture.
• Batch Production: It involves production of a group or ‘batch’ of similar products together. This is commonly used in industries like baking or clothing.
• Flow Production (or mass production): This method is used for large-volume production where the process is continuous and products are identical, such as in car manufacturing.
• Cell Production: This is a blend of the other methods where workstations are organised in ‘cells’. Each cell is responsible for a significant part of the finished product, often used in large assembly operations.

Factors Influencing the Choice of Production Method:

• Nature of the Product: If the product is unique and requires specific craftsmanship, job production would be suitable.
• Quantity of Output Required: For producing goods in high quantities, flow production is optimal.
• Cost: Flow production might have higher initial setup costs, but per unit cost eventually decreases due to economies of scale.
• Skill Level of the Workforce: If workers have high levels of skill and versatility, job or cell production may be suitable as they offer variability and job enrichment.

Quality Control and Assurance:

• Quality Control: It refers to checking products as they are produced to ensure that they meet stated quality standards. This may involve sample testing during various stages of the production.
• Quality Assurance: This is a distinct approach, aiming at ‘getting things right first time’. All staff take responsibility for quality, aiming to prevent poor quality products or services from being produced in the first place.

Lean Production:

• An approach to management that aims to improve efficiency and effectiveness by eliminating waste (e.g. wasted resources or time), reducing lead time, and increasing flow. Lean production methods include Just-In-Time (JIT), Kaizen, and Total Quality Management (TQM).

Just-In-Time (JIT) Production:

• A production method that seeks to produce items exactly when they are needed in the production process, not before or after. JIT aims to reduce costs by minimising the amount of goods and materials held in stock.

Kaizen (Continuous Improvement):

• A strategy where employees are encouraged to come up with small, incremental changes to improve efficiency and quality in production. This is seen as a more human and less disruptive method to drive improvement.

Total Quality Management (TQM):

• A management approach that seeks to improve quality by involving all employees in looking for ways to improve product/service quality and performance. An emphasis is put on continual improvement.