Production

(Akrani)

There are a few types of production:

• Primary 
• Extracting raw materials (e.g. Mining, fishing, plantations)
• Secondary
• Processing raw materials into finished or semi-finished goods (e.g. factories)
• Tertiary
• Businesses providing services (e.g. restaurants, manicures and pedicures)

Production Methods

There are a few ways or methods in which business use to produce goods and services. Though there are only the three basic methods stated here, they are actually more complicated and complex than what is stated below.

Job Production

This method of production is where a product is produced individually, one at a time, sometimes even by just a single person. This type of production is usually common in "custom-made" products such as smaller scaled products like tailor-made clothes, carpentered furniture, hair or bigger projects like construction of buildings or bridges.



Advantages of Job Production:

• The products and services are suited to fulfill the consumers and customers' needs and wants specifically.
• There is no need to stock goods, because all products are created differently.
• This form of production encourages mastery and autonomy. The workers or producers are not limited by specific sets of instructions or specifications, they are allowed to create each product uniquely. 

Disadvantages of Job Production:

• It may take a longer time, as each product has to be created uniquely for each customer.
• As each product requires different specific materials or costs, the unit production costs increases.
• Specialist equipment and machinery may need to be acquired, it may be expensive.
• Workers have to be specially trained. (Hair stylists, engineers and carpenters need to be trained in their field of work to produce high quality products that are worth selling at the market)

Example:

• Peter is a very skilled shoe-maker who makes shoes for a wide range of people, from businessmen to  dancers. 
• He makes shoes uniquely to suit the feet structure of each of his customers. Therefore, he is a very well-known shoe maker in the area and most of the people in the area seek his services. 
• Due to the custom-made shoes he produces, his consumers don't mind paying him a slightly higher price as they believe the shoes are of higher quality. Therefore, Peter is able to make quite a high income.
• However, due to the way he produces his shoes, he has to buy a lot of raw materials. As he practices autonomy in his business, he hardly lets his workers do much. Sometimes, when there are too many orders, he works over time to try to keep up with the orders but he does not allow his workers to help. All his workers are allowed to do is to keep the shop clean, take orders and cut the leather material.
• The way Peter has been working has taken an effect on his health. To solve this, he needs to train his workers to become apprentices or hire people who are already experienced in this field. The opportunity cost here is that the apprentices or the specialists hired may not have the same style as him or they may not be up to standard and the quality of the shoes produced may drop.

The diagram above shows how job production is like in Peter's business. A single shoe maker makes shoes for various consumers.

Batch Production

This type of production is where similar products are produced in different batches. Examples of this include creating the same type of watch in different colors, producing different flavors of ice-cream, or baking different kinds of bread. 

How does it work?

Using the watch example, a batch of 100 red watches are produced first. When the red watches are done, the workers switch to making another batch of 100 yellow watches, then green watches etc. After that, these products will all go through the same packaging process before being sent to shops and other buyers. Though they are all of the same basic product, they are produced in different batches according to their different colors.

Flow chart showing batch production of different colored watches. 

Batch production can also be used in baking different types of bread. 

Advantages of Batch Production:

• It is very suitable for similar basic products with slightly different attributes so the same machinery and skills can be used to create a variety of products.
• Due to the variety of products, the workers are more motivated and satisfied. This is because they are not stuck at doing the same things all the time. 

Disadvantages of Batch Production:

• There may be higher production costs to produce variations of the product.
• When changing to produce different batches of products, it may cost time.
• Slightly different machinery and skilled laborers may still be needed, and it will cost more.
• There is a need for storage space to store raw materials and finished goods.

Flow Production

Flow production is what most people think a production in a factory is. It is also related to mass production. Flow production is where each worker has a specific role or task just repeats it over and over and over again. All these workers doing different tasks will make up the production line to produce a specific product. 

Example: Producing chocolate bars.

Advantages of Flow Production

• Huge amounts of the same standardized products can be produced in a short amount of time and economies of scale can be achieved too
• Increased of production efficiency
• The skills is needed is low, so the cost is lowered.
• The work in progress is also at a low level.
• As the products are all standardized, it cuts costs on the raw materials as well as the wages, therefore the low average costs will also allow the selling prices to be low.

Disadvantages of Flow Production

• A lot of raw materials is needed to keep up with the fast production line. Therefore warehouses and space is needed to stock up these materials.
• If the demand suddenly drops, there will be an overstocking of goods.
• The workers may not be very motivated as they are just repeating the same menial jobs over and over again.
• Setting up the production line and organizing the entire process may take time and it could be expensive.