1. 5.1 Production Methods
IBBM

2. Production
How goods and services are produced.

3. Types of Production Job Production Batch Production
Flow Production, Line Production, or Mass Production
Mass Customization
Cell Production (HL)

4. Job Production
Producing a one-off item specifically designed for the customer.
Can be small or large – but usually unique
Examples: Wedding cakes, draperies, Yangtze dam in China
Pros: motivating for workers as they participate in the complete production process
Cons: high unit costs per item

5. Batch Production
Products are made in separate groups with each group going through the complete process together
Examples: a baker making rolls, cheerleading uniforms
Pros: enables economy of scale if batches are large enough, batches can be matched to demand, batch design can be changed
Cons: high level of “work-in-progress” for each stage of production, the work may be boring and demotivating for workers, if batches are small unit costs may be high, cleaning may need to be completed between batches

6. Flow Production or Line Production (Mass Production)
Used when individual products move through one stage of production to next when the product is ready.
Examples: soda, pencils
Pros: capable of producing large quantities in short time frames, and standardized items, labor costs are low because automated equipment is used, inputs can be easily determined because of constant known output, quality is consistent and easily checked at multiple stages of production
Cons: high setup costs, boring repetitive tasks, demotivating for employees
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8. Mass Customization
Combines job production with mass production to customize products to suit individuals.
Examples: computers, automobile assembly
Pros: designs include customized elements to standardized parts reducing consumer alienation, differentiated products for consumers, low unit cost for “customized” product, reducing boring and repetitive tasks
Cons: high setup costs and equipment costs

9. Summary Job Batch Flow/Line/Mass Mass Customization Main Feature
Single one-off items
Group of identical products pass through each stage together
Mass production of standardized products
Flow production with many standardized components but customized differences too
Essential
Requirements
Highly skilled workforce
Labor and machines must be flexible to switch to making batches of other designs
Specialized, often expensive, capital equipment – but can be very efficient
High steady demand for standardized product
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 flexibility in design of product in each batch
Low unit costs due to constant working of machines, high labor productivity and economies of scale
JIT stock management easier to apply than with other methods
Combines low unit costs with flexibility 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 flow production
Inflexible – often very difficult and time consuming to switch from one type of product to another
Expensive to set up flow-line machinery and each section needs to be carefully synchronized
Expensive product redesign may be needed to allow key components to be switched to allow variety
Expensive flexible capital equipment needed

10. Cell Production
Splitting flow production into self-contained groups that are responsible for whole work units.
Performance Standards:
Productivity measured, quality, lead times
Pros: worker commitment and motivation is high because there is team work and sense of ownership in the work performed; job rotation within the cell, increased productivity
Cons: need multi-skilled workers HL

11. Cell Production
Splitting flow production into self-contained groups that are responsible for whole work units.
Performance Standards:
Productivity measured, quality, lead times
Pros: worker commitment and motivation is high because there is team work and sense of ownership in the work performed; job rotation within the cell, increased productivity
Cons: need multi-skilled workers, need to be flexible, workers need to be responsible
Bought-in components
Finished goods
Sub assemblies produced and quality checks
Machining of components and quality checks
Final assembly, quality checks packaging HL

12. Switching from Job to BATCH
Considerations when changing from job production methods to batch.
Finance
Cost of equipment to handle larger volume of the batch
Higher stocking levels require more finance
Human Resources
Less emphasis in an individual’s craft could demotivate employees
Marketing
Product is no longer custom
May have to promote lower prices and consistency in quality

13. Switching from Job or Batch to FLOW
Considerations when changing from job or batch production methods to flow.
Finance
Cost of equipment to handle a large volume of production
Production delays during change over could create cash flow problems
Human Resources
Low motivation and boredom could occur
Marketing
Market research becomes important to target larger markets
Accurate sales forecasting to match demand with output
Promotion and pricing will have to change to be geared toward a mass market approach….this could change the direction of the business.

14. Switching from Batch or Flow to CELL
Considerations when changing from batch or flow production methods to cell.
Finance
Cost of equipment to handle multiple products within a cell
Human Resources
Recruitment or training of multi-skilled workers
Creation of work teams
Marketing
Productivity should create more competitive pricing
Quality improvements should improve product

15. Choose a Production Method
Size of Market
Very small markets are suited for job or batch production
Flow production is useful for producing a large quantity of identical products for very large markets with consistent demand.
Batch production is suited for large production runs at intervals of time….3X per year

16. Choose a Production Method
Amount of Capital Available
Large amounts of capital are required for flow production systems
Small amounts of capital can be used to set up job or batch production methods

17. Choose a Production Method
Available Resources
Flow production requires large amounts of unskilled workers
Flow production requires land for large factories
Job and batch production requires a skilled work force

18. More than One Way
Most businesses use more than one way of producing their products.
Land Rover
Line production of the standard products
Batch production of their military version
Job production for special orders that will be hand assembled (bullet proof glass, gold plated trim, Italian leather seats)