5.2. Production Methods

Task 1: Group work - watch your assigned video clip. Identify the effect of technology on today's production methods and its implications for both labour & location

Methods of Production

1: Job production: Producing a one-off item specially designed for the customer.

Job production is normally used for the production of single one-off products. The products may be small or large and are often unique. 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 firms 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 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. Watch the video of a master watch maker producing a bespoke watch to get some idea of why these watches are so expensive.

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 engineers name on it.

Advantages

▪ The product meets the exact requirements of the customer

▪ The workers often have more varied jobs

▪ More varied work increases employee motivation

▪ Inspection and supervision are easier

▪ The customer can make alterations to the design during the process, increasing their flexibility

▪ Uniqueness results in added value to the product

Disadvantages

▪ Skilled labour is often used

▪ The costs are higher because it is often labour intensive

▪ Production is more time consuming

▪ The business will have a longer working capital cycle

▪ Since they are not producing in bulk, they cannot really benefit from economies of scale

2: Batch production: Producing a limited number of identical products - each item in the batch passes through one stage of production before passing onto the next stage.

Batch production makes products in separate groups and the products in each batch go through the whole process together. The production process involves a number of distinct stages and the defining 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.

Batch production allows firms to use division of labour in the 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 (say, raspberry doughnuts). It also allows each individual batch to be specifically matched to the demand, and the design and composition of batches can easily be altered (to say, chocolate doughnuts).

The drawbacks are that batch production tends to have high levels of work-in-progress stocks at each stage of the production process. The work may well be boring and de-motivating for 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.

This is how hot dogs and bubble gum are produced.

Advantages

▪ It is a flexible way of working and production can easily be changed from one product to another

▪ It gives some variety to workers’ jobs

▪ Production may not be affected to any great extent if machine breaks down.

▪ Can respond to customer orders faster by bring work-in-progress to final production stage

▪ Better economies of scale

▪ Easier to calculate costs

▪ Allows for specialisation of the workforce

▪ There is still enough variety to suit a range of customer needs

Disadvantages

▪ It can be expensive as semi-finished or finished products will need moving about

▪ Warehouse space will be needed for stocks of raw materials and components. This is costly.

▪ There is less flexibility as the batch cannot be stopped once it has started

▪ There are greater storage costs for work-in-progress

▪ Employees may become bored with producing the same things all the time

3: (a) Flow production: Producing items in a continually moving process - also known as line production

Flow Production and Mass Production

This 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 products. Flow production systems are capable of producing large quantities of output in a relatively short time and so it suits industries where demand for a product is high and consistent. It also suits the production of large numbers of a standardised item that only requires minimal alterations. This is often why it is often referred to as mass production. Flow production usually takes place on a production line - hence the use of the term production line.

Flow production has a number of advantages over other types of production. Labour costs tend to be relatively low, because much of the process is mechanised and there is little physical handling of products. The constant output 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 (a 5.7 topic). 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 definition, capital intensive, high technology production lines are going to cost a great deal of money. In addition, the work involved tends to be boring, de-motivating and repetitive.

Advantages

▪ Costs are kept low and therefore prices are also lower

▪ It is easy for capital intensive production methods to be used – reducing labour cost and increasing efficiency

▪ Capital intensive methods may only need relatively unskilled workers and therefore little training is needed

▪ Low costs and therefore low prices usually mean high sales

▪ Goods are produced quickly and cheaply

▪ There is no need to move goods from one part of the factory to another as with batch production, so time is saved

Disadvantages

▪ It is a very boring system for the workers, there is little job satisfaction

▪ The capital costs of setting up the production line can be very high

▪ If one machine breaks down the whole production line will have to be halted.

(b) Mass production: Producing large quantities of a standardised product and Mass customisation is the use of flexible computer-aided production systems to produce items that meet individual customer requirements at mass production cost levels.

The search for production methods that combine the advantages of job production - flexibility and worker satisfaction - with the gains from flow/mass production - low unit costs - has lead to the development of mass customisation. This method is only possible because of tremendous advances in technology such as computer-aided design (CAD) and computer-aided manufacturing (CAM). These have allowed much quicker development of new product designs that feature many common components and robotic machinery that can be switched to making different parts.

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 businesses to move away from a mass marketing approach with high output of identical products. Instead, differentiated marketing can be used which allows for higher added value - an essential objective of all operations managers.

Advantages

· Less waste as this employs just-in-time techniques

· Lower labour costs as robots and good planning are used

· Quality can be easily detected by deviations in the line and controlled

· Less work-in-progress, therefore lower storage space and there is less handling

· Faster conversion from raw materials to sales

· Average costs are considerably lower

Disadvantages

· The work can easily become boring and repetitive

· Breakdowns or delays will have a huge impact on productivity

· Almost no flexibility, so the customers’ tastes are not always met

· Operations must halt for problems to be rectified

· Lots of storage due to the large production

· High set up costs for the business

4: Cell production: Splitting flow production into self-contained groups that are responsible for whole work units

Cell production is a form of flow production, but instead of each 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 performance of each cell is measured against pre-set targets (output levels, quality and lead times, etc).

Cells are responsible for the quality of their own complete units of work (total quality management - topic 5.3, job enrichment and team working - topic 2.5).

The cell production method has led to:

● increased worker commitment and motivation

● job rotation within the cell

● increased productivity

Task 2: You will be put into five different groups groups. Each group will watch one of the following videos on production. Your group should take notes on the method of producing the products. See following webpage for differences between production system - http://www.bbc.co.uk/schools/gcsebitesize/designresistantmaterials/processindpracrev1.shtml

• Task 5 Advise Velospeed as to how Information technology could transform its business.

Velospeed designs, manufactures and distributes bicycles. Designs are drawn by hand. These are passed to skilled workers who construct the bicycle frame by hand using traditional materials such as steel. Some customers have reported quality problems with frames.

The frame is the only part that Velospeed builds itself. Wheels, gears, brakes and pedals are sourced from individual suppliers.

Orders for these parts are made over the phone, recorded on paper and files in a storage cabinet. The company has problems in retrieving and analysing cost data for management reports.

Although not mentioned directly, Velospeed would use Computer Aided Design (CAD) and Computer Assisted Manufacturing (CAM). Watch the following video on the benefits of CAD and CAM to a manufacturing organisation to help you complete the task.

Task 6: The Mini was one of the few parts of the former Rover group to be retained by BMW following its takeover in 1994. The Mini was seen as a valuable brand by BMW and it continued to develop it with the introduction of new models in 2001 and 2012. Production of the car was transferred to the Cowley plant in Oxford and the company spent £230 million on improvements to production facilities. The plant currently produces over 210 000 vehicles a year, but BMW is keen to increase this further.

BMW changed the culture of the organisation by introducing a new way of working at Cowley. It moved away from the traditional flow production to a team-based approach. The workforce was reorganized into self-managing teams or cells of between eight and 15 people. The teams can make production decisions and have job rotation schemes. Responsibility for achieving plant-wide targets is now in the hands of those teams. Each team has more of a stake in the way the business develops rather than a hierarchical system where workers feel alienated from decision-making, stifling initiative and leading to a culture of dependency. The organisation also introduced fortnightly team talks where plans, decisions, suggestions and points of view could be aired.

Define the following terms:

i. flow production

ii. job rotation [4 marks]

2. Analyse two disadvantages BMW may have encountered using flow production. [6 marks]

3. Explain the characteristics of cell production. [6 marks]

4. Evaluate the decision of BMW of switching its production of the Mini from flow production to cell production. [9 marks]

Task 7: Royal Danish Bearings (RDB) is a successful multinational company operating in the ball bearing industry.

Throughout the twentieth century, it expanded by internal/organic growth. Consistent with business thinking of that era, the company concentrated its manufacturing in three megafactories (very large factories) located in Denmark, northern Germany and Sweden, where the workforce had become highly skilled in operating machinery for industrial production.

In terms of operations, RDB manufactured standard-sized ball bearings in a flow production process. It sometimes used batch production for deliveries to established customers who used non-standard-sized ball bearings, and sometimes job production for one-off special orders, such as large ball bearing systems for power stations or mines.

Victoria Smaill, Director of Operations, would like to see the production methods in each of the three factories changed into autonomous cells, where each cell is assigned to serve a region of the world and each with its own strategic and tactical/operational objectives. The CEO of Royal Danish Bearings, Nana Jacobson, is not so convinced as there are both advantages and disadvantages to this proposal as well as the impact on various functional departments within the business to consider.

1. Define the following terms from the case study.

a. Job production

b. Batch production [4marks]

2. Distinguish between Flow and Cell Production. [4 marks]

3. Analyse the likely effects of RDB changing production methods from batch to flow production on the finance, human resources and marketing departments within the company. [7 marks]

4. By considering the different production methods available to RDB, discuss Mrs Smaill’s proposal to shift all operations in each factory to cell production. [10 marks]

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