Production is a conversion function by which goods and services are produced. A typical production system comprises of three main components: Inputs, Transformation process and Output.
- Inputs are men, materials, machines, instructions, drawings, and paper work and instructions.
- The Transformation Process involves operations, mechanical or chemical, to Change/convert inputs into outputs. It also includes activities that assist conversion,
- Output is goods and services (e.g. products, parts, paper work, served customers etc.)
The combination of operations and activities stated above employed to create goods and services are known as manufacturing system. A manufacturing system therefore may be looked upon as an independent group of sub-systems, each sub-system performing a distinct function. Different sub-systems may perform different functions, yet they are inter-related and require to be unified to achieve overall objectives of the organization.
Manufacturing system needs to interact with both internal and external environment. The internal environment is the combination of engineering, marketing, personnel and accounts activities whereas external environment comprises of customers, competitors, suppliers, labor unions etc.
The selection of the manufacturing system is a strategic decision for most organizations since changes at a later date arc very expensive to make. The systems selected should be such that it can give the desired output, required quality and is cost-effective.
Factors influencing the choice of the manufacturing systems:
There is no best manufacturing system for any product. The choice of the system depends on various circumstances but it must meet two basic objectives, namely:
- It must be able to meet the specifications of the final product, and
- It must be cost effective
The product specifications can be met by choosing the right technology but that is not always an easy task. Since stricter specifications add to the cost of the product, there is always a trade off between the desired specifications and the cost to achieve such specifications. For example, sophisticated injection moulding machines and high quality plastics can produce excellent dolls cheaply provided they are produced in volume. However, if their demand is limited, they may not be able to compete with “home made” dolls produced in small quantities and sold at a fraction of the price of the moulded version. Various factors which determine the choice of the manufacturing process are as follows:
- Effect of volume/variety: One of the major considerations in the process selection is the volume/variety of the products. High product variety require highly skilled labour, general purpose machines, detailed production planning and control system. On the other hand low product variety (i.e. one or few products produced in large volumes) enables the use of low skilled labor, highly automated mass production processes using special purpose machines and simple production planning and control systems.
- Capacity of the plant: The projected sales volume is a major influencing factor in determining whether the firm should go in for intermittent or continuous process. Fixed costs are high for continuous process and low for intermittent process while variable costs are more for the intermittent process and less for continuous process. Intermittent process therefore will be cheaper to install and operate at low volumes and continuous process will be economical to use at high volume.
- Flexibility: Flexibility implies the ability of the company to satisfy varied customers requirements. Flexibility and product variety are inter-related. If more variety is to be manufactured, the manufacturing facilities will have to be commonised and depending upon the volume, the extent of commonalities will require to be justified. Greater commonalities demands intermittent manufacturing which is associated with higher inventories, large manufacturing lead times and elaborate planning and control.
- Lead time: Lead times more appropriately called delivery lead times expected by the customers (i.e. how soon the demand has to be met without losing on sales) is another major influencing factor in a competitive market. As a general rule, faster deliveries are expected in a competitive market. The product, therefore, may require to be produced to stock using principles of batch production/mass product
- Efficiency: Efficiency measures the speed and the cost of the transformation process. Efficiency is the greatest when the product is mass producted. But to mass produce a product, greater sales volumes are required. Therefore, depending upon the sales volume, product variety will have to be considered and the process which will give the best efficiency in terms of machine and manpower utilization will have to be selected.
- Environment: Environment brings in new technologies and forces the adoption of new process of manufacturing. For example, wooden furniture is gradually being replaced by metals and plastic. A furniture manufacturing unit will have to change its technology (i.e. change from one off production to batch production) to fall in line with changing times. Similarly, as market preferences change due fashions or other reasons, the manufacturing process has to be changed accordingly.