3.1.1 Methods of production

Job production

1. One-off orders: each product is made to what one customer has asked for, so no two jobs are identical and the work starts again from scratch each time.
2. Labour-intensive: skilled staff do most of the work using general tools, rather than a machine line built for one design.
   1. A bespoke kitchen is measured, built and fitted by joiners for one house, so the same design is never repeated.
3. High unit cost: skilled wages and the hours each item takes are carried by a single unit, so the cost of each unit is high and the selling price has to be high too.
4. Very flexible: size, materials and design can change with every order, so the business can take on unusual work that a production line could not handle.
5. Motivating work: staff use a range of skills and see a finished product they can take pride in, which helps a small firm keep experienced workers.

Flow production

1. Continuous and standardised: the product never stops moving, and every worker or machine repeats one task on every unit that passes, so each unit comes out the same.
2. Capital-intensive: machinery and automation do most of the work, so fewer workers are needed, but the cost of setting up the line runs into millions of pounds.
3. Low unit cost: the cost of the line is spread across a very large output and materials are bought in bulk, so each unit costs little to make.
4. Needs high and steady demand: if sales fall, the line runs below capacity, the set-up cost is spread over fewer units and the cost of each unit rises sharply.
5. Repetitive for staff: doing one short task all day is boring, which can lead to mistakes, absence and staff leaving.
6. Expensive to change: retooling the line for a new design costs a great deal and stops output while it happens, and one breakdown halts every stage at once.

When job production suits a business

1. Job production suits a business whose customers each want something different, because the specification changes with every order.
2. It suits low volumes, where demand is far too small to repay the cost of building a production line.
3. It suits products customers will pay a premium price for, since the high unit cost has to be covered somehow.
   1. A made-to-measure suit sells for hundreds of pounds more than an off-the-peg one because the fit is cut for one body.
4. It suits a business competing on skill, quality and reputation rather than on price, such as a bespoke furniture maker.

When flow production suits a business

1. Flow production suits a business selling one standard product in very large numbers, where every customer is happy to receive the same thing.
2. It suits demand that is high and predictable, because the line has to run near capacity for its set-up cost to be worth paying.
3. It suits a business competing on price, because the low unit cost allows a low selling price and still leaves a profit on each unit.
4. It needs a business with the finance to buy the machinery in the first place, which a new start-up rarely has.

3.1.2 Efficiency in production

What efficiency means in production

1. Efficiency means getting a given amount of output from as few resources as possible, so very little of what the business pays for is wasted.
2. A more efficient factory turns the same workers, machines, materials and floor space into more finished goods.
3. That matters because the money already spent on wages, rent and machinery is then carried by more units, so the cost of each unit falls.
4. AQA names two ways of raising efficiency in production: lean production, and just in time as one of the techniques inside it.

Lean production

1. Lean production starts by looking at every step in the process and asking whether that step adds anything the customer would pay for.
2. Steps that add nothing are redesigned or removed, and the workers who do the job are usually the ones who spot them.
3. It is a continuous habit rather than a one-off project, so small improvements are made week after week.

The waste lean production removes

1. Wasted time: workers and machines standing idle while they wait for parts, instructions or a slower stage to catch up.
2. Wasted materials: offcuts, spillage, and faulty units that have to be scrapped or reworked, all of which were bought and paid for.
3. Wasted space: floor space and warehousing filled with stock and half-finished work, which the business is paying rent, heating and insurance on.
4. Wasted movement: parts and people travelling further than they need to, because machines and benches are laid out in the wrong order.
5. Wasted effort: checks, forms and handling repeated at more than one stage, and making more units than there are orders for.

How less waste lowers the unit cost

1. Waste is money the business has already spent and will get nothing back for, so removing it lowers total costs while output stays the same.
2. The cost of each unit is the total cost spread across the units made, so a lower total cost across the same output gives a lower unit cost.

1. A lower unit cost also gives room to survive a fall in the selling price, because there is more distance between the cost of a unit and its price.

Just in time

1. JIT raises efficiency by removing the wasted space and the cash tied up in a warehouse full of stock waiting to be used.
2. It also exposes waste elsewhere, because with no spare stock to hide behind, a faulty batch or a slow stage stops the line and has to be put right rather than worked around.