PRODUCTION SYSTEMS SLIDE 2

WHAT IS IT? Decides how the manufacturer will produce the goods for the consumer Design of it: Decide the layout of the factory Where each part of production will take place by which workers/machines How many machines/workers (division of labour) will be needed for each part SLIDE 2

SUCCESS! Will require a flow of stocks from one job to another This ensures there is no delays in production due to shortages or bottlenecks SLIDE 2

FACTORS THAT AFFECT THE DECISION ON WHAT TYPE OF PRODUCTION SYSTEM TO USE Nature of the final product Market size Resources available Stage of development of the business The quantity to be produced Labour Intensive V Capital Intensive production Availability of Technology - automation SLIDE 2

NATURE OF THE FINAL PRODUCT Different products are produced in different ways eg products in farming are tied to the land they are produced on Producing a new bridge will require different production processes (iron, construction, welding etc) SLIDE 2

THE MARKET SIZE Where the firm is producing large numbers of standardised products such as cans of Irn Bru the production process is put into a number of stages When producing customised software for individual clients, the process is more complicated as the customer has more input in the final product SLIDE 2

RESOURCES AVAILABLE Restricted by the factors of production Is there enough finance? – capital Is their enough workers and do they have sufficient skills? – labour Are the premises large enough? – land Are the machinery and tools available? - capital SLIDE 2

STAGE OF DEVELOPMENT OF THE BUSINESS When first set up, businesses tend to produce small amounts and have limited production systems As the firms grow, they are able to increase their capacity, therefore, their production system increases and they are able to produce a greater variety of goods SLIDE 2

THE QUANTITY TO BE PRODUCED Production of large numbers of standardised products is best suited to one type of production In comparison, producing a unique stained glass window for a church will need a different one SLIDE 2

LABOUR INTENSIVE Vs CAPITAL INTENSIVE Where the cost of labour is greater than the cost of machinery (labour intensive). This is very rarely used in this country because of the high labour costs. Therefore capital is used instead because machines are much more cost effective In countries where the labour costs are low eg India, Pakistan, then firms will use cheap labour as this is more cost effective SLIDE 2

LABOUR INTENSIVE SYSTEM Used in organisations where:- Labour is cheap relative to cost of machinery Production requires skilled craftsmen Use of machinery is impractical (due to working environment, lack of mobility/flexibility of use) High quality production depends on the ability to think, reason, act on initiative and make decisions SLIDE 2

CAPITAL INTENSIVE SYSTEM More emphasis is placed on machinery and other capital equipment. Durable goods are made in this way eg cars, washing machines Most common where:- Supply of labour is limited Production processes benefit from machine efficiency and consistency of output Use of equipment offers cost benefits Use of equipment offers higher quality or improved accuracy in production Production process is routine and repetitive SLIDE 2

AVAILABILITY OF TECHNOLOGY - AUTOMATION Computer Aided Manufacture (CAM) Computer Aided Design (CAD) Automation (robotics to replace workers) These allow firms to design, develop and produce products quickly Firms are also able to produce a larger variety of similar products to appeal to different segments of the market SLIDE 2

ADVANTAGES OF TECHNOLOGY Machines can carry out very complicated tasks very quickly with a high degree of accuracy Machines can perform in seconds jobs that a skilled worker could take days to achieve (carver) Machines can do jobs which are impossible for human workers Less wastage and quality is consistent SLIDE 2

HOWEVER Machines are more likely to break down than humans Each machine can only carry out a very narrow range of tasks SLIDE 2

OTHER FACTORS TO CONSIDER WHEN DECIDING ON SYSTEM TO BE USED Methods of production system Quality assurance (standards, methods of application) Stock control Purchase of materials Payment systems Distribution and delivery (warehousing, transport systems) Scheduling Only once these have been assessed and considered can the organisation make a decision on the best system for them at any particular point in time SLIDE 2