Production, Operations & Quality

Methods of production

Every business has to decide how to physically make its product or deliver its service. The method it chooses depends on the type of product, how many units customers want and the resources available. At IGCSE level you need to know three methods: job, batch and flow production.

Key terms

Job production — making a single, often one-off, item to a specific order.

Batch production — making a group (batch) of identical items, completing one stage for the whole group before moving on.

Flow production — making products continuously on a production line, usually in very large quantities.

Job production

In job production, one item is made at a time and finished before the next is started. Each job is usually unique and made to the customer's exact requirements.

Examples include a wedding dress, a tailor-made suit, a bridge, a film or a piece of bespoke furniture.

Pros: high quality; product matches the customer's exact needs; workers are motivated by varied, skilled work; the business can charge a high price.
Cons: very labour-intensive and slow; high cost per unit; needs skilled (expensive) workers; hard to benefit from buying materials in bulk.

Batch production

Here a quantity of identical products (a batch) goes through each stage of production together. Once one batch is finished, the equipment can be reset to make a different batch.

Examples include a bakery making 200 white loaves then switching to wholemeal, or a clothing factory making a run of size-10 shirts then size-12.

Pros: more output than job production; some flexibility to vary the product between batches; allows some economies of scale.
Cons: time and money lost when machines are reset between batches; partly finished work and stock build up; less individual than job production.

Flow production

Flow (or mass) production runs continuously, with the product moving along an assembly line and a stage of work added at each point. It suits standardised products made in huge numbers.

Examples include cars, soft drinks in cans and breakfast cereal.

Pros: very low cost per unit due to economies of scale; output is fast and constant; can run 24/7; easy to automate with machinery.
Cons: very expensive to set up the line; products are standardised (little choice for customers); a breakdown halts the whole line; repetitive work can demotivate staff.

Comparing the methods

Exam tip

Don't say one method is "best". The right method depends on the product and the market. Link your answer to the business in the question: a custom car restorer needs job, a national bottling plant needs flow.

Productivity and efficiency

Productivity measures output per worker (or per machine) in a given time. Efficiency means producing with the least waste of resources, time and money.

$$\text{Labour productivity} = \frac{\text{Total output}}{\text{Number of workers}}$$

Businesses raise productivity by training staff, motivating workers, introducing better technology and improving the production process. Higher productivity lowers the cost per unit, which can mean lower prices or higher profit.

Managing stock (inventory)

Stock includes raw materials, work-in-progress and finished goods. A business must hold enough stock to keep producing and meet demand, but not so much that money is tied up or goods go out of date.

Two broad approaches exist:

Just-in-case (JIC): keep a cushion of extra stock (buffer stock) in case demand rises or a delivery is late. Safer, but storage is costly and stock can be wasted.
Just-in-time (JIT): materials arrive exactly when needed, so almost no stock is held. Cuts storage costs and waste, but a single late delivery can stop production. JIT needs very reliable suppliers.

Key terms

Buffer stock — a minimum level of stock held as a safety net against delays or unexpected demand.

Reorder level — the stock level that triggers a new order from the supplier.

Lead time — the gap between placing an order and receiving the goods.

The bar-gate stock graph shows stock falling as it is used, then jumping back up when a delivery arrives. The business reorders when stock hits the reorder level, and aims never to fall below the buffer stock.

Suppliers and procurement

Procurement means choosing and buying the inputs a business needs. Picking the right supplier is vital because it affects cost, quality and reliability. Key factors when choosing a supplier:

Price — lower prices reduce costs, but should not sacrifice quality.
Quality — poor materials lead to faulty products and unhappy customers.
Reliability — does the supplier deliver in full, every time?
Delivery — speed and flexibility of delivery, especially under JIT.
Trust and payment terms — good relationships can bring discounts and credit.

Quality

Quality means meeting customers' expectations. Good quality builds a strong reputation, encourages repeat custom, allows higher prices and reduces waste and complaints. Poor quality means refunds, lost customers and damage to the brand.

There are two main systems:

Quality control (QC): inspecting products at the end of production to remove faulty items. It catches defects but does not prevent them, and wasted units cost money.
Quality assurance (QA): building quality in at every stage, with each worker responsible for checking their own work. Faults are prevented rather than found later.

Total Quality Management (TQM) goes further: quality becomes the responsibility of every employee, with a culture of getting it "right first time" and continuous improvement. It can be powerful but takes time, training and commitment to introduce.

Watch out

Students often muddle QC and QA. Remember: control = check at the end (detect); assurance = check throughout (prevent).

Using technology in production

Modern businesses use technology to improve operations: robots and automation on production lines, computer-aided design (CAD), computer-aided manufacturing (CAM) and stock-management software.

Benefits: higher productivity, consistent quality, lower long-run costs, faster output and round-the-clock working.
Drawbacks: high purchase cost, training needs, breakdowns can halt production, and machines may replace jobs, hurting staff morale.

The impact of customer service

Operations do not end when the product is made. Good customer service — helpful staff, clear information, fast delivery, easy returns and after-sales support — keeps customers loyal.

Excellent service leads to repeat purchases, positive word of mouth and a stronger reputation, allowing a business to charge more and compete on factors other than price. Poor service drives customers to rivals and spreads quickly through online reviews and social media.

Real world

Car makers such as Toyota pioneered JIT and TQM, holding tiny stocks and empowering line workers to stop production the moment a fault appears. This kept costs low while building a reputation for reliability.