Production


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Production Check List


What are Production responsible for?


  • number of units of a specific product to be produced
  • time intervals over which production will occur
  • availability of equipment, materials and work force
  • cost effective inventory and resource management.


Production as a Goal:


resources are planned and used in the production process regardless of actual demand
often based on economies of scale, where lower cost per item is presumed to generate product demand.


Production as a Means:


resources are planned and used in the production process only because of product demand often based on economies of scope, where product demand has greater influence over production unit costs.


Scope vs. Scale


Economies of scope production assumptions:


  • responsive to demand
  • flexible production plans
  • variable cost per item
  • smaller production runs
  • increased total set up and change over costs
  • lower product/inventory obsolescence
  • minimised inventory carrying costs
  • material is pulled through the production process as needed.



Economies of scale production assumptions:


  • responsive to profit margin gains
  • fixed production plans
  • lower cost per item
  • larger production runs
  • less production set up and change over cost
  • greater risk of product/inventory obsolescence
  • higher inventory carrying costs
  • material is pushed through production process.

Management


  • Order Decoupling Points
  • How far does a customer order penetrate in the production process
  • Planning Hierarchy
  • Production Control Systems
  • Formal production control systems for inventory include
  • Economic Order Quantity (EOQ)
  • Materials Requirements Planning (MRP)
  • Just-in-Time concept (JIT)


Suggestions:


  • pull rather than push material through the production process
  • produce nothing until it is needed
  • reduce set up times
  • reduce lot sizes
  • try to move the order decoupling point to an early stage in the supply chain
  • try to remove transaction (no value add - Lean) from process.

Do you know what production you need?

Do your Production processes need a spring clean?


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