Methods of Production and Technology (15.3)

Chapter 15 - Production of Goods and Services

Lesson Objective: To understand the three main methods of production

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I am sure you now understand everything about inventories, JIT, and Kaizen. It's time to go further on Operations Management and explore the different methods of production:

The simplest method of production a business can have is job production:

• This is when each individual item is completed before the next product starts production (e.g. a tailor making customized suits);

• Next, batch production: a method in which batches are completed at a time freeing up equipment to be used on the next batch (e.g. a bakery bakes a batch of cookies at a time before the next batch can go in the oven);

Finally, flow production (a.k.a. mass production): production method where products continuously go through a production line. Common for mass produced and standardized products which different parts are added at different stages of the production line. (p. 210)

This summarizes it all:

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Which method of production is the best? That depends on many variables and considering those before making a decision is key: (p. 210 bottom)

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Activity 15.4

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Technology has been constantly changing production methods and improving these methods in different ways.

Computer-aided Design (CAD) is one of the breakthroughs in technology that has changed how products are developed and created:

Designing a product has become simpler, faster, and cheaper (3D designs);

• Using 3D designs for testing various features combinations can help assessing the safety and durability of products, for example;

• Cost-saving due to the ability of virtually building, testing, and changing products instead of having to actually produce a prototype;

• 3D printing allows for inexpensive prototypes to be created.

Computer-aided Manufacturing (CAM) on the other hand assists on controlling machinery allowing for a significant reduction in labor costs (less workers required due to automation) as well as completely removes human error.

Technology hasn’t only changed manufacturing though. It has also had a large impact on the services industry:

• The banking industry has gone through a tech revolution;

• Payment systems have become nearly 100% human-free;

• Inventory levels are nowadays automatically calculated by software.

As you can see, the impacts of technology in businesses is immense. And like everything else, there are benefits and disadvantages to it:

	Advantages	Disadvantages
Business	Reduced cost and time to design new products; Increases productivity; Reduced costs of production; Improves quality; Reduces Waste.	Can be expensive; Technology can change quickly and businesses need to adapt (costly); Training may be necessary (costs).
Consumers	Better quality; Lower prices; More features can be added easily.	Products quickly go out of fashion; It becomes increasingly hard to repair products.
Workers	Simple and repetitive tasks (boring) can be done by technology; Work becomes easier; Businesses using technology are likely to be successful and provide job security.	Possible redundancy; Work can become less interesting; Reduced opportunities for promotion.

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To-Do List:

• Exam Practice Questions (p. 214)

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Chapter 15 - Production of Goods and Services