the-nature-of-operations methods-of-operation-production

Capital intensive operations

• Capital-intensive production predominately uses machinery and technology in the production of goods and services

  • Large-scale production of standardised products is likely to be capital-intensive

  • Manufacturing in developed countries where labour costs are relatively high is likely to be capital-intensive

    • E.g. Vehicle manufacturers such as Ford use robots and other production technology to manufacture cars, with supervisors overseeing the quality of output

Evaluating capital intensive production

Labour intensive operations

• Labour-intensive production predominantly uses physical labour in the production of goods and services

  • The delivery of services is usually more labour-intensive than manufacturing

  • In countries where labour costs are low, such as Bangladesh and Vietnam, labour-intensive production is common

  • Small-scale production is likely to be labour-intensive

  • E.g. UK schools are labour-intensive operations as teachers plan and deliver lessons and provide pastoral support

Evaluating labour intensive production

An introduction to production methods

• Production is the transformation of resources (e.g. raw materials components and processes) into finished goods or services

  • Goods are physical products, such as bicycles and T-shirts

  • Services are non-physical items such as hairdressing, tourism and manicures

The four main production methods

• The method of production used by a business depends upon a number of factors

  • The level of output required to be produced

  • The nature of the product

  • Whether the product is standardised or customised

  • The level of automation used in production

Job production

• Job production is where products are made to meet the specific requirements of individual customers

  • Each item is produced separately and the production process is tailored to the unique specifications of the customer’s order

• It is typically used for unique or specialised products that are not produced in large quantities

• Job production often requires skilled labour, such as craftsmen or technicians, as the manufacturing process may involve intricate tasks or specialised techniques

Examples of job production

Furniture made to order Where customers can choose the design, dimensions, materials and finishes	Tailored clothing Such as wedding suits, where each garment is made to fit the specific preferences of the individual customer	High-end jewellery Especially those with unique designs or personalised engravings

• Job production has the potential to add significant levels of added value and can therefore be very profitable

  • Specialised products made by skilled craftspeople can command high prices because they are unique and can be made to meet customer needs very precisely

  • This would arguably be lost if other methods of production were to be adopted

Advantages and disadvantages of job production

Batch production

• Batch production occurs when products are produced in groups or batches

  • A certain quantity of products is produced together before moving on to the next batch

  • Each batch goes through the entire production process, from raw materials to the finished product, before the next batch begins

  • Batches are usually of a standardised size and composition and follow a certain sequence of operations

Goods made using batch production