Types of production

Productivity must not be confused with production. Productivity is the relationship between the physical output of a product or service and the inputs which have gone into producing that output. Input is meas­ured in the amount of people, machines, materials and money put in, and output is measured in the volume, quality and costs (not price!) of products or services produced as a result of those inputs. A firm may be producing very few goods but be very efficient and productive, whilst another may have a massive output of goods or services, but have poor efficiency and productivity.

Push and pull production

In a push production system, the owners decide to make a certain range of product - for example, garden furniture. The design of the furniture dictates the machinery to be used and the skills needed by the operators. Salespeople travel to shops and large stores which sell this type of product to pick up orders which are sent back to the factory. The factory will produce garden furniture even though orders have not been received, and this production is held in stock to await expected future orders. The salespeople are constantly being "pushed" to sell more of the standard products to keep the factory busy and to keep stock low. It is rare for this type of business to produce variations of the standard range of products described in its catalogue. Product designs do change as customers' needs change and as better materials become available; but change is a long-term process rather than an overnight occurrence.

In a "pull" production system, the business is set up to respond to customers' requirements as quickly as possible. There is often no standard product, but there is usually a well-defined production process. Products can only be made within this production process. For example, the owners of a business may decide to make plastic mouldings which can be used by other manufacturers who make cars, household appliances or even garden furniture. Such a business will only make mouldings to meet specific orders, and often does not have any stock of finished items, since the product is unique to the customer. Production processes do change over a time period to meet new types of moulding and new plastic materials, but often the cost of new machines is extremely high.

Some businesses have a combination of "push" and "pull" production systems. As well as producing a standard range of products, they produce variations on these standards for special customers. This is often not a good combination, since the production process can become inefficient if not controlled well.

Continuous and batch production

Continuous production means that the production process remains constant, and continuously produces identical goods with very little "down time" (a name given to a process which has been halted). Operators perform the same activities on the same products all the time, although some type of "job rotation" is often included in order to maintain the motivation of operators. Asking one operator to change with another doing a different job helps to maintain interest.

Continuous production also means that attention can be given to making the production process extremely efficient. Machines are purchased to do defined operations; the flow of materials both into the process and from the process can be well planned; and the training of operators is quite specific. Costs of production are low if the line is kept going because there is very little waste. Continuous production is appropriate when large volumes of output of constant product specification are required. However, difficulties and extra costs will arise if there are frequent interruptions in the flow due to poor machine maintenance, changes in product specification or high labor turnover. An example of a continuous process is the production of packets of crisps.

Batch production means the manufacture of a product in comparatively small quantities. In batch production the demand for the product is lower than the cheapest continuous production rate. For example, one hundred items per week might be needed from a production process which is capable of producing four hundred per week. Therefore, in this case, it would seem appropriate to run the line for one week and make a batch of four hundred. The extra three hundred items are then for supply over the following three weeks. The production line can then go on to produce some other item.

An example of a batch process is the manufacture of shoes. The shoe factory makes such a large range of shoes that batch production is the only possible production method. Batch production is often found in industries where the customer is given a wide choice of product variations. It is usually more expensive than continuous production because of the need to store products, and to change the production line from making one item to another. This change not only means resetting and often cleaning the machines, but also there is a learning loss - the time lost in restarting the process.