Production methods

5 OPERATIONS MANAGEMENT

30This chapter covers syllabus section 5.1

SETTING THE SCENEOn completing this chapter you should be able to:

Cell production at Dr. MartensWorld-famous Dr. Martens footwear is made using cell production methods. Production workers are divided into individual cells or teams made up of up to 17 people. Each team is responsible for its own production. Staff work 39 hours a week, but each cell (or pod) can divide that time how they wish. For example, if a cell prefers to work four long days and have a day off, it can do so. For every extra 100 pairs of shoes each cell makes over its target, its members receive extra money. Each cell does everything apart from the cutting and stitching, which still use mass production methods. Each cell is responsible for:

organising work schedules ●

planning output ●

meeting order deadlines ●

quality. ●

Everyone in each cell is multi-skilled – they can carry out all the tasks needed to produce the boots. This has two advantages: absence of any staff member means production can continue and doing a variety of tasks – with the increased responsibility that cell production brings – reduces boredom and increases motivation. Since introducing the cell production system, product-ivity has improved – yet so has quality.

● describe and compare the features and applications of job, batch, line, fl ow and mass production

● analyse the implications for functional departments that arise from changing the production method

● analyse the most appropriate method of production for a given situation

● understand the need for some organisations to use more than one production method.

Points to think about:

● Do you think all products could be made using cell production? Explain your answer.

● What additional costs might there be from introducing cell production?

● Analyse the potential advantages of cell production – making reference to motivation theorists.

316

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Photo 30.1

5 OPERATIONS MANAGEMENT

317

IntroductionThere are several different ways in which goods and services can be produced. They are usually classifi ed into:

job production ●

batch production ●

fl ow production and mass production ●

mass customisation ●

cell production. ●

EXAM TIP

Although mass customisation is not examined specifi cally in IB examinations, this important recent production development may be used for comparison purposes.

KEY TERMS

job production producing a one-off item specially designed for the customer

batch production producing a limited number of identical prod-ucts – each item in the batch passes through one stage of production before passing on to the next stage

fl ow production producing items in a continually moving process – also known as line production

mass production producing large quantities of a standardised product

mass customisation the use of fl exible computer-aided production systems to produce items to meet individual customers’ requirements at mass production cost levels

Production methodsJOB PRODUCTIONThis is normally used for the production of single, one-off products. These products may be small or large and are often unique. Good examples of job production would be a specially designed wedding ring or made-to-measure suits or the Yangtze dam in China. In order to be called job production, each individual product has to be completed before the next product is started. At any one time, there is only one product being made. New, small fi rms often use labour-intensive job production, before they get the chance to expand and purchase advanced equipment. Job production enables specialised products to be produced and tends to be motivating for workers, because they produce the whole product and can take pride in it.

However, this production method tends to result in high unit costs, often takes a long time to complete, and is usually labour intensive. The labour force also needs to be highly skilled and this is not always easy to achieve. Aston Martin is an example of a very expensive car that

is individually produced for the needs of each customer. Each engine is hand built and carries a plate with the engineer’s name on it.

BATCH PRODUCTIONBatch production makes products in separate groups and the products in each batch go through the whole produc-tion process together. The production process involves a number of distinct stages and the defi ning feature of batch production is that every unit in the batch must go through an individual production stage before the batch as a whole moves on to the next stage.

A good example of this form of production is a baker making batches of rolls. First, the dough is mixed and kneaded. Then, after being left for a time, the dough is separated into individual amounts, the right size for rolls. After this, the rolls are baked together and then they are left to cool. When they have cooled, they are put on display in the shop and another batch can be prepared. Each roll has gone through the process with the other rolls in the batch and all the rolls have undergone each stage of the batch before going on to the next stage.

Batch production allows fi rms to use division of labour in their production process and it enables economies of scale if the batch is large enough. It is usually employed in industries where demand is for batches of identical products – such as 500 school uniforms for the students at one school. It also allows each individual batch to be specifi cally matched to the demand, and the design and composition of batches can be easily altered.

The drawbacks are that batch production tends to have high levels of work-in-progress stocks at each stage

Job production – every Aston Martin engine is built by hand

●

●●H

5 OPERATIONS MANAGEMENT

317

IntroductionThere are several different ways in which goods and services can be produced. They are usually classifi ed into:

job production ●

batch production ●

fl ow production and mass production ●

mass customisation ●

cell production. ●

EXAM TIP

Although mass customisation is not examined specifi cally in IB examinations, this important recent production development may be used for comparison purposes.

KEY TERMS

job production producing a one-off item specially designed for the customer

batch production producing a limited number of identical prod-ucts – each item in the batch passes through one stage of production before passing on to the next stage

fl ow production producing items in a continually moving process – also known as line production

mass production producing large quantities of a standardised product

mass customisation the use of fl exible computer-aided production systems to produce items to meet individual customers’ requirements at mass production cost levels

Production methodsJOB PRODUCTIONThis is normally used for the production of single, one-off products. These products may be small or large and are often unique. Good examples of job production would be a specially designed wedding ring or made-to-measure suits or the Yangtze dam in China. In order to be called job production, each individual product has to be completed before the next product is started. At any one time, there is only one product being made. New, small fi rms often use labour-intensive job production, before they get the chance to expand and purchase advanced equipment. Job production enables specialised products to be produced and tends to be motivating for workers, because they produce the whole product and can take pride in it.

However, this production method tends to result in high unit costs, often takes a long time to complete, and is usually labour intensive. The labour force also needs to be highly skilled and this is not always easy to achieve. Aston Martin is an example of a very expensive car that

is individually produced for the needs of each customer. Each engine is hand built and carries a plate with the engineer’s name on it.

BATCH PRODUCTIONBatch production makes products in separate groups and the products in each batch go through the whole produc-tion process together. The production process involves a number of distinct stages and the defi ning feature of batch production is that every unit in the batch must go through an individual production stage before the batch as a whole moves on to the next stage.

A good example of this form of production is a baker making batches of rolls. First, the dough is mixed and kneaded. Then, after being left for a time, the dough is separated into individual amounts, the right size for rolls. After this, the rolls are baked together and then they are left to cool. When they have cooled, they are put on display in the shop and another batch can be prepared. Each roll has gone through the process with the other rolls in the batch and all the rolls have undergone each stage of the batch before going on to the next stage.

Batch production allows fi rms to use division of labour in their production process and it enables economies of scale if the batch is large enough. It is usually employed in industries where demand is for batches of identical products – such as 500 school uniforms for the students at one school. It also allows each individual batch to be specifi cally matched to the demand, and the design and composition of batches can be easily altered.

The drawbacks are that batch production tends to have high levels of work-in-progress stocks at each stage

Job production – every Aston Martin engine is built by hand

●

●●H

Production methods30

318

of the production process. The work may well be boring and demotivating for the workers. If batches are small, then unit costs are likely to remain high. There is often a need to clean and adjust machinery after each batch has passed through.

Batch production should not be confused with fl ow production. Some fi rms produce ‘batches’ of products using a fl ow production system. For example, a soft drinks fi rm may bottle a batch of 20 000 cans of orange drink before resetting the line and producing a ‘batch’ of another drink. This is not, however, batch production. The individual items are free to move through the process without having to wait for others, so it must be fl ow production.

FLOW PRODUCTIONThis method is used when individual products move from stage to stage of the production process as soon as they are ready, without having to wait for any other prod-ucts. Flow production systems are capable of producing large quantities of output in a relatively short time and so it suits industries where the demand for the product in question is high and consistent. It also suits the produc-tion of large numbers of a standardised item that only requires minimal alterations. This is why it is often referred to as mass production. Flow production usually takes place on a production line – hence the use of the term line production.

An example would be a Coca-Cola production plant like the one in Ho Chi Minh City, Vietnam. Here, the product is standardised in that it is a can of soft drink of a standard size. The system is fl ow production because

the cans move through the various stages independently. However, the fi rm can make changes to the contents of the cans and the labelling on them without having to alter the fl ow production system. They are capable of producing Coke, Sprite and Schweppes Soda Water on the same production line. It is essential that the fl ow produc-tion process be very carefully planned, so that there are no disruptions in the system. In a perfect system, the production process would be broken down so that all of the stages were of equal duration and producing equal output levels.

Flow production has a number of advantages over other types of production. Labour costs tend to be rela-tively low, because much of the process is mechanised and there is little physical handling of the products. The constant output rate should make the planning of inputs relatively simple and this can lead to the minimisation of input stocks through the use of just-in-time (JIT) stock control. Quality tends to be consistent and high and it is easy to check the quality of products at various points throughout the process. The main disadvantage is the high initial set-up cost. By defi nition, capital intensive, high-technology production lines are going to cost a great deal of money. In addition, the work involved tends to be boring, demotivating and repetitive.

Batch production of identical bread rolls

Flow production at the Coca-Cola plant in Ho Chi Minh City, Vietnam

EXAM TIP

It is important to weigh up the advantages and disadvantages of each production method if a question asks you to compare production methods.

Production methods30

318

of the production process. The work may well be boring and demotivating for the workers. If batches are small, then unit costs are likely to remain high. There is often a need to clean and adjust machinery after each batch has passed through.

Batch production should not be confused with fl ow production. Some fi rms produce ‘batches’ of products using a fl ow production system. For example, a soft drinks fi rm may bottle a batch of 20 000 cans of orange drink before resetting the line and producing a ‘batch’ of another drink. This is not, however, batch production. The individual items are free to move through the process without having to wait for others, so it must be fl ow production.

FLOW PRODUCTIONThis method is used when individual products move from stage to stage of the production process as soon as they are ready, without having to wait for any other prod-ucts. Flow production systems are capable of producing large quantities of output in a relatively short time and so it suits industries where the demand for the product in question is high and consistent. It also suits the produc-tion of large numbers of a standardised item that only requires minimal alterations. This is why it is often referred to as mass production. Flow production usually takes place on a production line – hence the use of the term line production.

An example would be a Coca-Cola production plant like the one in Ho Chi Minh City, Vietnam. Here, the product is standardised in that it is a can of soft drink of a standard size. The system is fl ow production because

the cans move through the various stages independently. However, the fi rm can make changes to the contents of the cans and the labelling on them without having to alter the fl ow production system. They are capable of producing Coke, Sprite and Schweppes Soda Water on the same production line. It is essential that the fl ow produc-tion process be very carefully planned, so that there are no disruptions in the system. In a perfect system, the production process would be broken down so that all of the stages were of equal duration and producing equal output levels.

Flow production has a number of advantages over other types of production. Labour costs tend to be rela-tively low, because much of the process is mechanised and there is little physical handling of the products. The constant output rate should make the planning of inputs relatively simple and this can lead to the minimisation of input stocks through the use of just-in-time (JIT) stock control. Quality tends to be consistent and high and it is easy to check the quality of products at various points throughout the process. The main disadvantage is the high initial set-up cost. By defi nition, capital intensive, high-technology production lines are going to cost a great deal of money. In addition, the work involved tends to be boring, demotivating and repetitive.

Batch production of identical bread rolls

Flow production at the Coca-Cola plant in Ho Chi Minh City, Vietnam

EXAM TIP

It is important to weigh up the advantages and disadvantages of each production method if a question asks you to compare production methods.

5 OPERATIONS MANAGEMENT

MASS CUSTOMISATIONThe search for production methods that combine the advantages of job production – fl exibility and worker satis-faction – with the gains from fl ow/mass production – low unit costs – has led to the development of mass custom-isation. This method is only possible because of tremen-dous advances in technology such as computer-aided design (CAD) and computer-aided manufacturing (CAM). These have allowed much quicker developments of new products, designs that feature many common compo-nents and robotic machinery that can be switched to making different parts. Developments in the organisation of the production fl ow lines have also reduced the alien-ating effects of typical mass production. The emphasis on repetitive, boring tasks has been a major factor in poor worker motivation.

The mass customisation process combines the latest technology with multi-skilled labour forces to use production lines to make a range of varied products. This allows the business to move away from the mass marketing approach with high output of identical prod-ucts. Instead, focused or differentiated marketing can be used which allows for higher added value – an essential objective of all operations managers. So, Dell Computers can make a customised computer to suit the custom-er’s specifi c needs in a matter of hours. By changing just a few of the key components, but keeping the rest the same, low unit costs are maintained with greater product choice.

H HIGHER LEVEL

CELL PRODUCTION

KEY TERM

cell production splitting fl ow production into self-contained groups that are responsible for whole work units

Cell production is a form of fl ow production, but instead of each individual worker performing a single task, the production line is split into several self-contained, mini-production units – known as cells. Each individual cell produces a complete unit of work, such as a complete washing machine motor and not just a small part of it. Each cell has a team leader and below that a single level of hierarchy made up of multi-skilled workers. The perform-ance of each cell is measured against pre-set targets. These targets will include output levels, quality and lead times. Cells are responsible for the quality of their own complete units of work – this links in with total quality manage-ment (TQM) (see Chapter 33, page 346), job enrichment and team working (see Chapter 14, page 152).

The cell production system has led to:

signifi cant improvements in worker commitment and ●

motivation because there is team work and a sense of ‘ownership’ of the complete unit of workjob rotation within the cell ●

increased productivity. ●

Success of cell production depends on a well-trained and multi-skilled workforce prepared and able to be fl exible and accept a more responsible style of working (see Figure 30.1).

ACTIVITY 30.1Read the case study below and then answer the questions that follow.

Sunburst BakeriesSunburst Bakeries is a supplier of all kinds of bread and cakes to leading supermarkets. It has a huge factory that makes the entire range of products – no fi nished items are bought in from other bakers. Production facilities are split into three main areas. Different production methods are used in these three areas. The demand patterns for three of the best-known Sunburst products are very different. Standard loaves are bought by supermarkets every day, all year round. There is some variation in demand through the seasons – but very little. Large, family-sized cakes are mainly bought at weekends – whereas dough-nuts are most often bought midweek for children’s lunch

boxes. Finally, the business is famous for its hand-made wedding cakes, each one to a different design. There have been rumours among the workers that one section of the factory that uses batch production might be converted into fl ow-line production.

22 marks, 40 minutes

1 Explain the key differences between job and batch production. [6]

2 For each of the products referred to above, suggest and justify an appropriate production method. [8]

3 Explain the possible effects on Sunburst’s stock levels and profi tability if it replaced batch production with fl ow line production. [8]

319

Table 30.1 summarises the main features, advantages and disadvantages of the four methods of production.

5 OPERATIONS MANAGEMENT

MASS CUSTOMISATIONThe search for production methods that combine the advantages of job production – fl exibility and worker satis-faction – with the gains from fl ow/mass production – low unit costs – has led to the development of mass custom-isation. This method is only possible because of tremen-dous advances in technology such as computer-aided design (CAD) and computer-aided manufacturing (CAM). These have allowed much quicker developments of new products, designs that feature many common compo-nents and robotic machinery that can be switched to making different parts. Developments in the organisation of the production fl ow lines have also reduced the alien-ating effects of typical mass production. The emphasis on repetitive, boring tasks has been a major factor in poor worker motivation.

The mass customisation process combines the latest technology with multi-skilled labour forces to use production lines to make a range of varied products. This allows the business to move away from the mass marketing approach with high output of identical prod-ucts. Instead, focused or differentiated marketing can be used which allows for higher added value – an essential objective of all operations managers. So, Dell Computers can make a customised computer to suit the custom-er’s specifi c needs in a matter of hours. By changing just a few of the key components, but keeping the rest the same, low unit costs are maintained with greater product choice.

H HIGHER LEVEL

CELL PRODUCTION

KEY TERM

cell production splitting fl ow production into self-contained groups that are responsible for whole work units

Cell production is a form of fl ow production, but instead of each individual worker performing a single task, the production line is split into several self-contained, mini-production units – known as cells. Each individual cell produces a complete unit of work, such as a complete washing machine motor and not just a small part of it. Each cell has a team leader and below that a single level of hierarchy made up of multi-skilled workers. The perform-ance of each cell is measured against pre-set targets. These targets will include output levels, quality and lead times. Cells are responsible for the quality of their own complete units of work – this links in with total quality manage-ment (TQM) (see Chapter 33, page 346), job enrichment and team working (see Chapter 14, page 152).

The cell production system has led to:

signifi cant improvements in worker commitment and ●

motivation because there is team work and a sense of ‘ownership’ of the complete unit of workjob rotation within the cell ●

increased productivity. ●

Success of cell production depends on a well-trained and multi-skilled workforce prepared and able to be fl exible and accept a more responsible style of working (see Figure 30.1).

ACTIVITY 30.1Read the case study below and then answer the questions that follow.

Sunburst BakeriesSunburst Bakeries is a supplier of all kinds of bread and cakes to leading supermarkets. It has a huge factory that makes the entire range of products – no fi nished items are bought in from other bakers. Production facilities are split into three main areas. Different production methods are used in these three areas. The demand patterns for three of the best-known Sunburst products are very different. Standard loaves are bought by supermarkets every day, all year round. There is some variation in demand through the seasons – but very little. Large, family-sized cakes are mainly bought at weekends – whereas dough-nuts are most often bought midweek for children’s lunch

boxes. Finally, the business is famous for its hand-made wedding cakes, each one to a different design. There have been rumours among the workers that one section of the factory that uses batch production might be converted into fl ow-line production.

22 marks, 40 minutes

1 Explain the key differences between job and batch production. [6]

2 For each of the products referred to above, suggest and justify an appropriate production method. [8]

3 Explain the possible effects on Sunburst’s stock levels and profi tability if it replaced batch production with fl ow line production. [8]

319

Table 30.1 summarises the main features, advantages and disadvantages of the four methods of production.

Production methods30

320

Impact of changing production methodsA change in production methods will impact on the different functional departments of a business.

Job Batch Flow/mass Mass customisation

Main feature ● Single one-off items

● Group of identical products pass through each stage together

● Mass production of standardised products

● Flow production with many standardised components but customised differences too

Essential requirements

● Highly skilled workforce

● Labour and machines must be fl exible to switch to making batches of other designs

● Specialised, often expensive, capital equipment – but can be very effi cient

● High steady demand for standardised products

● Many common components● Flexible and multi-skilled workers● Flexible equipment – often CAM to

allow for variations in the product

Main advantages ● Able to undertake specialist projects or jobs, often with high value added

● High levels of worker motivation

● Some economies of scale

● Faster production with lower unit costs than job production

● Some fl exibility in design of product in each batch

● Low unit costs due to constant working of machines, high labour productivity and economies of scale

● JIT stock management easier to apply than with other methods

● Combines low unit costs with fl exibility to meet customers’ individual requirements

Main limitations ● High unit production costs

● Time consuming● Wide range

of tools and equipment needed

● High levels of stocks at each production stage

● Unit costs likely to be higher than with fl ow production

● Infl exible – often very diffi cult and time consuming to switch from one type of product to another

● Expensive to set up fl ow-line machinery and each section needs to be carefully synchronised

● Expensive product redesign may be needed to allow key components to be switched to allow variety

● Expensive fl exible capital equipment needed

Table 30.1 Summary of main production methods

Figure 30.1 How cell production might be organised in an assembly plant

Bought-incomponents

Finishedgoods

Machiningof components

and qualitychecks

Majorsub-assemblies

and qualitychecks

Final assembly,checking

andpackaging

FROM JOB TO BATCHFinance: ●

cost of equipment needed to handle large numbers ❍

in each batchadditional working capital needed to fi nance high ❍

levels of stocks and work in progress.

5 OPERATIONS MANAGEMENT

321

Human resources: staff demotivation – less emphasis ●

placed on an individual’s craft skills.

Marketing: ●

can no longer promote the product as being ‘custom- ❍

ised to each consumer’may have to promote the benefi ts of lower prices ❍

and consistent quality.

FROM JOB OR BATCH TO FLOWFinance: ●

cost of capital equipment needed for fl ow production ❍

any production delays during the change-over ❍

period may impact on cash fl ow.Human resources: risk of low motivation and boredom ●

if traditional line production techniques are used.Marketing: ●

mass production requires mass marketing so ❍

market research will be vital to identify largest market segmentsaccurate estimates of future demand to ensure that ❍

output matches demandpromotion and pricing decisions will have to be ❍

geared towards a mass marketing approach – not niche marketing, so the orientation of the business might have to change.

FROM BATCH OR FLOW TO CELL PRODUCTIONFinance: expensive CAM methods may be needed to ●

allow cells to switch from one product to another.Human resources: ●

recruitment of fl exible, adaptable staff keen to work ❍

in teamsstaff training will be needed to achieve multi-skilling. ❍

Marketing: productivity and quality improvements ●

should allow competitive pricing and promotion of the improved quality products.

Choosing appropriate production methodsThe following factors will infl uence whether a business adopts one of the four methods of production considered above – that is job, batch, fl ow or fl ow production with the development to mass customisation.

SIZE OF THE MARKETIf the market is very small, such as for designer clothes, then job production is likely to be used. Flow production is most effi ciently adopted when the market for similar or identical products is very large and consistent throughout the year. If mass production is used in this way, then mass

marketing methods will also have to be adopted to sell the high output levels that can be manufactured. Even in a market for mass produced items, such as cars, there may be market niches that will allow smaller manufacturers to survive by making one-off products or batches of iden-tical goods before changing the design or style for another model. If the market demands a large number of units, but at different times of the year, for example textbooks at the start of the academic year, then batch production might be most appropriate.

THE AMOUNT OF CAPITAL AVAILABLEA purpose-built fl ow production line is diffi cult and expensive to construct. Small fi rms are unlikely to be able to afford this type of investment and are more likely to use job or batch production.

AVAILABILITY OF OTHER RESOURCESLarge-scale fl ow production often requires a supply of relatively unskilled workers and a large, fl at land area. Job production needs skilled crafts people. If any of these resources are unavailable, or very limited in supply, then the production method may have to be adapted to suit available resources, given the market constraint referred to above.

MARKET DEMAND FOR PRODUCTS ADAPTED TO CUSTOMER REQUIREMENTSIf fi rms want the cost advantages of high volumes combined with the ability to make slightly different prod-ucts for different markets, then mass customisation would be most appropriate. As was seen above, technology is giving fi rms the fl exibility to produce a variety of models from the one basic design and production process.

Using more than one methodMost fi rms do not just use one production method. It is quite common for many businesses to use all three production methods to gain the benefi ts that they offer. A French restaurant might have a continuous supply of staple items on the menu – such as frites – but make batches of a dish that can be kept hot for a long time (or even frozen and reheated easily) such as boeuf bour-guignon. Specialist dishes that have to be cooked at the table, such as fl ambés, will use job production. Standard Land Rover models are made on a line production system of mass production. Orders for military versions with special features in common will be made together in one batch. One-off orders, such as a bullet-proof, gold-plated model for an oil prince would be hand assembled and fi nished.

5 OPERATIONS MANAGEMENT

321

Human resources: staff demotivation – less emphasis ●

placed on an individual’s craft skills.

Marketing: ●

can no longer promote the product as being ‘custom- ❍

ised to each consumer’may have to promote the benefi ts of lower prices ❍

and consistent quality.

FROM JOB OR BATCH TO FLOWFinance: ●

cost of capital equipment needed for fl ow production ❍

any production delays during the change-over ❍

period may impact on cash fl ow.Human resources: risk of low motivation and boredom ●

if traditional line production techniques are used.Marketing: ●

mass production requires mass marketing so ❍

market research will be vital to identify largest market segmentsaccurate estimates of future demand to ensure that ❍

output matches demandpromotion and pricing decisions will have to be ❍

geared towards a mass marketing approach – not niche marketing, so the orientation of the business might have to change.

FROM BATCH OR FLOW TO CELL PRODUCTIONFinance: expensive CAM methods may be needed to ●

allow cells to switch from one product to another.Human resources: ●

recruitment of fl exible, adaptable staff keen to work ❍

in teamsstaff training will be needed to achieve multi-skilling. ❍

Marketing: productivity and quality improvements ●

should allow competitive pricing and promotion of the improved quality products.

Choosing appropriate production methodsThe following factors will infl uence whether a business adopts one of the four methods of production considered above – that is job, batch, fl ow or fl ow production with the development to mass customisation.

SIZE OF THE MARKETIf the market is very small, such as for designer clothes, then job production is likely to be used. Flow production is most effi ciently adopted when the market for similar or identical products is very large and consistent throughout the year. If mass production is used in this way, then mass

marketing methods will also have to be adopted to sell the high output levels that can be manufactured. Even in a market for mass produced items, such as cars, there may be market niches that will allow smaller manufacturers to survive by making one-off products or batches of iden-tical goods before changing the design or style for another model. If the market demands a large number of units, but at different times of the year, for example textbooks at the start of the academic year, then batch production might be most appropriate.

THE AMOUNT OF CAPITAL AVAILABLEA purpose-built fl ow production line is diffi cult and expensive to construct. Small fi rms are unlikely to be able to afford this type of investment and are more likely to use job or batch production.

AVAILABILITY OF OTHER RESOURCESLarge-scale fl ow production often requires a supply of relatively unskilled workers and a large, fl at land area. Job production needs skilled crafts people. If any of these resources are unavailable, or very limited in supply, then the production method may have to be adapted to suit available resources, given the market constraint referred to above.

MARKET DEMAND FOR PRODUCTS ADAPTED TO CUSTOMER REQUIREMENTSIf fi rms want the cost advantages of high volumes combined with the ability to make slightly different prod-ucts for different markets, then mass customisation would be most appropriate. As was seen above, technology is giving fi rms the fl exibility to produce a variety of models from the one basic design and production process.

Using more than one methodMost fi rms do not just use one production method. It is quite common for many businesses to use all three production methods to gain the benefi ts that they offer. A French restaurant might have a continuous supply of staple items on the menu – such as frites – but make batches of a dish that can be kept hot for a long time (or even frozen and reheated easily) such as boeuf bour-guignon. Specialist dishes that have to be cooked at the table, such as fl ambés, will use job production. Standard Land Rover models are made on a line production system of mass production. Orders for military versions with special features in common will be made together in one batch. One-off orders, such as a bullet-proof, gold-plated model for an oil prince would be hand assembled and fi nished.

Production methods30Final evaluationThe traditional differences between the three basic production methods are becoming much less obvious. Many complex products, such as computers and indus-trial engines, can be adapted to meet different consumers’ different requirements. The fl exibility offered by tech-nology to large businesses could put at risk the survival of small fi rms that used to exploit small market niches with hand-built or batch-produced products. However, there is always likely to be a demand from increasingly wealthy consumers for original and specialist products, such as architect-designed, one-off houses, and small fi rms with non-mass production methods will still thrive in these market segments.

H

THEORY OF KNOWLEDGE

The production line in one of Indonesia’s most productive garment manufacturers is a diffi cult place to work: always hot, very noisy, with a high risk of injury and frighteningly long hours. It is, however, very profi table, employs hundreds of people and it delivers top-brand clothing to the US and Europe at low prices.

In groups, discuss the following statement. ‘There is no place for sweat-shop working conditions in a socially responsible society’.

● OVER TO YOU

REVISION CHECKLIST1 Why do many small fi rms use job production?2 Explain one advantage and one disadvantage that

batch production has compared to job production.3 What is meant by a ‘fl ow-line production system’?4 Why is there a trend towards more customisation in

fl ow production?5 Under what circumstances would you advise a manu-

facturer of jeans and T-shirts to switch from batch to fl ow production?

6 Give an example of a business – other than a restaurant – that might use all three of the main methods of production.

REVISION ACTIVITYRead the case study below and then answer the questions that follow.

In search of quality in quantityThe spread of mass customisation techniques across indus-tries is starting to spell an end to the old production line. Mass production using fl ow production, based on standard-ised parts and processes, was introduced by Henry Ford early in the twentieth century. It greatly cut the costs of making each unit, but the main drawback was that all goods coming off a single production line were identical. In mass custom-isation the line can be varied to make different products, either individually or in small batches.

Caterpillar, the US supplier of construction and power equipment, says that virtually all of the 11 000 engines it makes each year are different. The variation comes from

changes to 10–20% of the 1000 parts that go into each product. Software for the engine controls can also be varied. Cessna makes a wide range of general aviation aircraft from the single-engine piston to business jets on several different production lines. Of the 17 different models produced last year, Cessna produced and delivered over 1200 planes to customers. By producing a variety of models, Cessna is able to market its products to a much wider range of customers, meeting their individual requirements and adding higher value to the components used. Mass customisation needs:

advanced and fl exible capital equipment, e.g. car paint ●

robots can now paint vehicles in ‘one-off’ colours in between lines of cars in standard coloursskilled and well-trained workers able to operate this ●

machinery and adapt it to make different productsproduct designs that contain as many standardised parts ●

as possible in different versionsreliable suppliers able to supply slight variations in ●

standard parts or components.

The consultancy Strategic Horizons says mass customisation has increased greatly in the last few years. ‘Some time this century mass customisation will be the main form of manu-facturing.’

12 marks, 23 minutes1 Explain the difference between traditional fl ow or mass

production and mass customisation. [6]

2 Examine the benefi ts of mass customisation to either a computer manufacturer or a dress-making business. [6]

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