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The Processes of Production and Improving Productivity Video

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  • 0:58 Mass Production
  • 1:42 Batch & Job Production
  • 2:56 Flexible Manufacturing System
  • 3:14 Just-in-Time Production
  • 3:36 Productivity
  • 5:30 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
In this lesson, learn about the different processes businesses use in the production of goods and services in our economy. You'll also learn about the concept of productivity and ways to improve it.

The Production Process

Imagine that you're a small business owner that started a successful bakery several years ago. You specialize in making muffins. A buddy from college has approached you about partnering up to bring your muffins to the national market. It sounds like a great opportunity, and you and your friend form a new company. You obtain financing to build an industrial bakery to mass-produce your muffins. However, before you complete construction, you need to figure out what production process you will use to make the muffins.

A production process is the method you'll use to turn inputs into muffins to sell. Inputs include raw materials, such as flour, sugar, oil, yeast, fruits and other ingredients you use for making muffins. Inputs also include the work you and your employees put into making the muffins. The production process is the manner in which you organize your muffin making activities. You have more than one production process from which to choose.

Mass Production

One option is to use mass production to produce your muffins. Mass production allows you to make massive amounts of muffins in a very efficient manner utilizing machinery, assembly lines and specialized labor. Each employee will be assigned a specialized task.

You'll have employees that are responsible for putting the ingredients into industrial mixers and employees responsible for monitoring the baking process. You'll also have employees who monitor the quality of the muffins as they leave the ovens and employees who package the muffins. Other employees will transport the packaged muffins to your shipping department for distribution to your retailers. This is a type of flow production where all production activities flow smoothly in one direction throughout the factory.

Batch Production

Since you are operating a bakery, the batch production process looks appealing. In batch production, you focus on producing a set quantity of one product at a time - called a batch. You can produce a batch of blueberry muffins followed by a batch of apple cinnamon muffins. You can then produce your chocolate chip and bran muffins. If you use batch production, it will be easier to keep your baking process running smooth because you won't have to worry about changing ingredients as much.

Job Production

You also looked into job production as a method of production, but it didn't seem to be a good fit. Job production is all about a variety of products but at a low volume of production. The same tools and similar resources are used, but the products are diverse. For example, a wedding cake company might have a team of bakers working in an assembly line. However, unlike your muffins, each cake will be different in some way. Some cakes will have two tiers and some will have three or more. Some cakes will be chocolate, some white and some marble.

Each cake will be decorated in different ways as well. So, while each baker on the line will have the same job, the details of that job changes from cake to cake. Unlike making bran muffins, each wedding cake is a separate 'job' unto itself. If you were starting a custom wedding cake business, the job production process might take the cake, but you're mass-producing muffins.

Flexible Manufacturing System

You've looked into purchasing a flexible manufacturing system, but don't have the cash to do it right now. A flexible manufacturing system would allow you to almost completely automate your muffin manufacturing. Flexible manufacturing systems usually increase productivity and reduce costs in the long run. It also leaves the boring part of the job to the machines.

Just-In-Time Production

You pride yourself on your organic muffins. Since you want to keep the same level of quality when you go national, you are looking into just-in-time production. When using just-in-time production, you will not need to keep much inventory of muffins beyond what has been ordered by your retailers. This not only keeps your muffins fresh, but your business partner happy, because it also means you won't have a bunch of cash tied up in flour, yeast and blueberries until you need them.

Productivity

Now, imagine that your factory is built and you've just completed your first year of muffin production. You are meeting with your business partner to discuss costs and revenue. While your business made a profit this year, you both feel that you could make even more money if you can increase the factory's productivity.

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