Factors influence choice of production

Factors influence choice of production or manufacturing type

Production system is a transformation process of converting input into output. Input consists of raw material or spare part (semi-finished products). Companies select the type of production or manufacturing based on type, quantity, and variety of product.

               Prime objective of production management is to produce product with less cost and better quality. Economic and effective production play’s vital role in achieving the objective of production management. Selection of right type of production or manufacturing is depending upon the study of following factors.

Impact of Volume and variety of products

               Selection of Production or manufacturing system is primarily based on the quantity and variety of products which required to produce. Following fig. 1 shows the graph between product’s quantity to produce and variety.

Fig. 1: Classification of product based on product varieties and product volume.

On x-axis the variety is given whereas on y-axis volume or production quantity is given. The graph shows how varieties and quantity are responsible to select the appropriate production or manufacturing type. Every type of production or manufacturing is useful to produce required quantity and variety.  

Continuous production type is at ground level of x-axis which shows less or one variety. Whereas on y-axis the project production is at very lower level of quantity. That shows quantity or volume of projects is low where as it is high incase of electricity and other products such as TV, electronic devices, electrical devices.  

For example,

               Product varieties are changes frequently and changes with customers/clients requirements. To produce or manufacture the product according to customers given specification it is essential to select the suitable and appropriate manufacturing type.

Cost

Production management’s prime objective is to produce the product with good quality and less cost. Production management focuses on selecting the Production type or manufacturing system which is economic and efficient to produce the product at less cost and easy to maintain the quality.

Cost associated with manufacturing of product changes with respect to the change in volume and varieties of product. The process of reducing of cost per unit product by producing in huge quantity is known as economies of scale. Whereas cost reduction is done using variety of products is known as economies of scope.

For example,

               Chinese manufacturing companies have been producing the products in huge quantity. Increased quantity allows company to reduce cost per unit products as fixed cost is more than variable cost. Utilization of appropriate and suitable production type enable the company to reduce cost through economies of scale.

Flexibility

Flexibility in production or manufacturing system enable the system to make improvement or technological advancement as per requirement. Emerging Technology can enhance the efficiency, accuracy and convenience in the execution of various production activities.

The adopted production system should flexible enough to make advancement the existing technology. Replacing emerging technology requires huge capital. It is better to make advancement with existing technology by means of flexibility.

 Lead Time

Lead time is the passed time or allowed to pass the time between start and end of any operation or project. it is useful in the field of project, manufacturing, and distribution supply chain management.

For example,

               During Covid19 pandemic situation most of the FMCG companies had successfully implemented their Distribution-supply-chain management. They maintained the production capacity appropriately. The factors which made this possible is Lead Time. Effectively they practices the lead time for excellency in the activities such as distribution supply chain, inventory management, manufacturing etc.

Efficiency

Production type or manufacturing system can determine how efficiently the manufacturing is possible. It always desired to produce the product efficiently. The efficiency of all the factors of production or manufacturing increases by selecting appropriate production type.

Effective utilization of Land: optimum utilization of available space is the prime requirement of production management. It can possible when firm adopt right type of manufacturing or production. Suitable manufacturing means machinery and other physical facilities selected for production are easily installed in available space.

Efficiency of Labour: Existing labour should capable to work on selected technology and production type. Actually product’s quantity and variety are the prime factors which determine the production type. The way the production type implemented and run decides the efficiency of labour.

Effectiveness of Capital: Firm may have more capital or less capital depends upon how much expansion or production capacity required to increases. Existing firm may expand their capacity as they have enough market to sell the product. Whereas for new firm it is very difficulty to decide how much capital they should spend of manufacturing. Right production type or manufacturing facility enable firm to make optimum utilization of available capital for setting up manufacturing facility.

Efficacy of Entrepreneurship: Entrepreneurship deals with risk taking and innovation which are essential factors for business. These factors ensure the survival of business in the crowded market. Right production type can determine the effective or expected result of entrepreneurship.

Ability to meet the change

Organization required to make innovation in the production and advancement in the production technology to offer expected product. The expectations or need of customers changes due to advancement in the technology, changing trend, fashion, change in taste and preferences.

Selected production type should capable to meet expected change. The expected change consist of change or improvement in quality, features and many other attributes of product. It also includes the improvement in the production technology.  

For example,

               Invention of new technology push the companies to adopt it. Touch screen technology in mobile phone. As soon as the technology opened, most of the companies adopted and offered variety of mobile phones with touch screen technology. Whereas some companies such as Nokia couldn’t do this at right time. Due to delay in adopting touch screen technology of Nokia, other companies captured their market such as Samsung.

               Invention in new technology in manufacturing can influence the choice of manufacturing system. It is essential to meet the required change as per new technology.

Example,

               Technology or production type required for production of few (one or two) variety and more variety (two to 10). For few varieties mass of line production can possible to implement whereas the batch production is suitable for more varieties.