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3.1 Production processes

3.1 Production processes

3.1.1 Methods of production

Job production

Definition

Job production: making one item, or a very small number of items, to a customer's own specification before the next order is started.

  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.
Example
  • JCB builds machines to order, fitting the attachments and cab a particular buyer needs for the site the machine will work on.
  • A tailored suit is cut to one person's measurements, and a wedding cake is designed for one couple.

Flow production

Definition

Flow production: making large quantities of identical products that move continuously along a production line, with the same task added at each stage.

  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.
Example
  • Nissan's Sunderland plant builds hundreds of thousands of cars a year on a moving line, so each car costs far less to build than a hand-made one.
  • Warburtons mixes, proves, bakes, slices and bags loaves in one continuous run, turning out identical loaves by the thousand.

job vs flo.png

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.
Note

Once a method is chosen, a business can raise output from the same resources using lean production and just in time, which the article on efficiency in production covers.

Exam technique
  • For recommend whether the business should use job or flow production, actually decide, and base the decision on how large and how varied the demand is.
  • The mistake to avoid is calling flow production cheaper without saying that this only holds at high output, because a half-empty line is expensive per unit.
  • AQA names job and flow production only, so do not write about batch or cell production.
Self review
  • What is job production?
  • Why is the unit cost of job production high?
  • Why does flow production need high and steady demand?
  • Give one drawback of flow production for the workers on the line.
  • Which method suits a maker of made-to-measure curtains, and why?

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

Definition

Lean production: an approach to operations that cuts waste of every kind, so the same output is produced using fewer resources.

  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.

Lean production flow: a customer order or sales forecast pulls supplier deliveries straight through the production line to finished goods, holding minimal stock so storage costs and wastage are low, with a second chain showing how a late supplier delivery stops production and delays customer orders.

Common Mistake
  • Lean production does not mean cutting jobs, and it does not mean cutting the quality or the features customers are paying for.
  • It means removing the waste inside the process, so the same staff produce more with less scrap, less waiting and less walking about.

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.
Example
  • A Greggs shop that moves the ovens, trays and till into the order the work actually flows cuts the steps each member of staff walks in a shift.
  • The same staff serve more customers per hour, so the wage cost carried by each sandwich falls.

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.
Example
average unit cost=total costoutput \text{average unit cost} = \frac{\text{total cost}}{\text{output}} average unit cost=outputtotal cost​
  • A Warburtons bakery makes 10,000 loaves a week at a total cost of £12,000.
average unit cost=£12,00010,000=£1.20 \text{average unit cost} = \frac{\pounds12{,}000}{10{,}000} = \pounds1.20 average unit cost=10,000£12,000​=£1.20
  • Cutting scrapped dough and idle oven time takes the weekly cost to £10,800 for the same 10,000 loaves.
average unit cost=£10,80010,000=£1.08 \text{average unit cost} = \frac{\pounds10{,}800}{10{,}000} = \pounds1.08 average unit cost=10,000£10,800​=£1.08
  • Each loaf now costs 12p less to make, which the bakery can take as extra profit on every loaf or use to undercut a rival's price.
  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

Definition

Just in time (JIT): a lean technique in which stock arrives from suppliers just as it is needed, so the business holds almost none.

  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.
Note

Just in time, just in case and the trade-off between them are taught in full in the article on just in time and just in case.

Exam technique
  • For explain how lean production could make the business more efficient, pick one waste that is visible in the case and follow it through to a lower unit cost.
  • Name the waste you are removing, whether it is wasted time, materials, space, movement or effort, instead of writing generally about being more efficient.
  • Finish the chain every time: less waste, lower total cost, lower unit cost, then either a lower price or a wider profit margin.
Self review
  • What does it mean to say a business is efficient?
  • Name four kinds of waste lean production sets out to remove.
  • Why does removing waste lower the cost of each unit?
  • Why is lean production not the same as cutting jobs?
  • How does just in time raise efficiency?

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Comparison of job production and flow production showing a custom wedding cake and a smoothie bottling line

Production turns inputs such as labour, raw materials, machinery and time into outputs that customers buy. A production process is the method a business uses to make that conversion, and the operations function manages how quickly and efficiently it happens.

Businesses usually balance customisation against efficiency. Job production focuses on unique orders, while flow production focuses on making large numbers of similar items.

The best method depends on the product, the level of demand, the need for skilled labour, and the finance available for equipment. Job production and flow production are methods of making products, not sectors of the economy.

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What makes job production different from producing standardised goods?

3.1 Production processes Revision Guide

  1. GCSE
  2. /Business
  3. /3.1 Production processes

Revision notes for AQA GCSE Business 3.1 Production processes. Open each subtopic for explanations, worked examples, and summaries of 3.1.1 Methods of production and 3.1.2 Efficiency in production. Written against the AQA GCSE Business (8132) specification, so the content matches what's examinable rather than general Business background.