Understanding Production Methods and Concepts

the main point of this class is to understand how different methods of production work [Music] there are four parts in this class job production pitch production mass or flow production and mass customization and only one assessment objective to discuss operations or production methods in order to achieve this objective you are supposed to understand a few things about every method of production so I'm suggesting again to keep you busy and to fill in this table for each method of production please understand and make a note of how it works of some examples of the most likely product perception map category if you forgot what product perception map or PPM is then please review class 4.2 and also understand and make a note of pros and cons of each production method now one more important reminder all businesses provide products products can be tangible and intangible tangible products are called Goods intangible products are called services in this class we're only talking about manufacturing of goods so we are only talking about tangible products something that can actually be produced be manufactured with the help of different production methods like this video subscribe to my channel tell your friends about me and enjoy 5.2 job production refers to manufacturing of a one-off item something that is really special something that is only one of a kind for example Batmobile or wedding cake or a spaceship technically you can produce like several identical Batmobiles wedding cakes or spaceships but the way it will work is not like a production line where identical Batmobiles or spaceships or wooden cakes are produced by mainly machines the way that would work is first you produce one then you produce another and each of them is special and there is no production line that produces identical products so that is what job production is if we're trying to put products that are produced using job production into one of product perception map categories or PPM then it would most likely to be premium products the ones with high quality and high price if you have no idea what I'm saying right now if you don't know what PPM or product perception map is then it means that you missed class 4.2 where we learned PPM so please review it or watch it for the first time if you have never heard about PPM on the one hand job production is super flexible and it allows for customization so everything can be produced up to customers needs and wants again when we learn mass production in the third part of this class there is just a production line and identical items totally identical totally the same items are produced at a very high speed in high volumes this is not the case with job production here you produce only one thing at a time and you can customize it you can change it you can make something special like Batmobile or a wedding cake or a spaceship All Things One of a Kind if you want another thing then you have to order it and it will be produced specifically for you even if it's the same as the one before it is still special one-of-a-kind production in addition to that since it's so special and flexible and customizable organizations at huge job production are able to charge higher prices and thus enjoy High markups which is basically the difference between the sell and price and costs if you want to learn more about markups then class 4.5 is something you gotta watch and lastly from employees perspective job production is super motivating employees are in charge of everything of the entire production process from the very beginning to the very end this process highly relies on them and they feel like they are real professionals they're really responsible for the output and they are in charge of everything which is of course really motivating unlike mass production where job is very boring but we'll talk about it in part 3 of this class with regards to drawbacks the price that you have to pay as a customer for job production is usually really high and also production times are really long that is the price you pay for all the flexibility and customization and one-of-a-kind status compared to other production methods job production is the least efficient one because the process is not automated and it's highly labor intensive speaking of Labor there is very high Reliance on employees in job production this of course can be a good thing but on the other hand if something happens to employees or they decide to quit or leave the organization for some reason then it would be very hard to find a replacement for them because they're highly qualified super specialized in what they are doing and it's really hard to find an alternative for them the opposite of that is again mass production where everything is mostly produced by the machines and people don't really matter much at all but again we'll talk about that in part 3 of this class when we learn mass or flow production now here's a picture that illustrates some of the examples of job production batch production refers to manufacturing of a group or batch of identical products basically you use the same machine the same equipment to produce different kinds different batches of output the typical example is bakery that has only one oven but one in the same oven is used to produce bread cupcakes croissant and anything else that is produced in a bakery so you produce batches or sets or groups of identical products using the same equipment in addition to Bakery some other examples could be pharmaceutical industry where the same machines are used to produce different batches of medicine pills drugs and Brewery where different kinds of beer is produced using the same equipment if we put items that are produced using batch production onto product perception map they're most likely to fall into any category except for the premium category so it means they can be economy products or bargain products or Cowboy products of course they can be premium as well but the three categories that I mentioned are the most likely ones with regards to advantages Beach production is similar to job production it's also customizable but in job production you can customize every single item because there is no production line there is no oven there is just one thing that is being produced at a time with batch production there is a batch there is a a group a set of products that are produced at the same time so if you want to customize something you customize the entire batch not every single item additionally batch production is quite efficient because compared to job production you don't produce only one thing at a time you're producing the entire batch which allows organizations to use economies of scale when your average costs your cost per unit decrease as you increase the output however the price that you have to pay for batch production is keeping higher stock levels of raw materials and components so these costs would be higher compared to job production additionally if you want to customize something as I've already mentioned you customize the entire batch not every single item like in job production additionally job production was labor intensive it mainly relied on labor but batch production that we're talking about now is more Capital intensive it relies on Machinery on equipment more than job production which means that the price that you have to pay for it is higher maintenance costs more equipment it means that it's more likely to break down or it needs some maintenance so that's why these coasts would be higher and here's a picture that illustrates some of the examples of batch production Mass slash flow production what does that mean in IB business management you can use those two words interchangeably however you have to be aware of the fact that in literature those words are not always used interchangeably so even though you can use them interchangeably it's fine for IB business management exam or internal assessment or extended essay however you should be aware that when you say mass production you are emphasizing the high quantities of output produced you say that the massive amount of products are produced that's the main feature but when you say flow production what you're emphasizing is that there is a Non-Stop production line and there is a flow of products that are manufactured 24 7 non-stop so essentially mass and flow production it's the same thing but it emphasizes different features of this production method and once again you can use those two interchangeably that is okay so what is mass slash flow production this refers to large-scale manufacturing of identical products on a Non-Stop production line whereby a product is built up on every stage so the keywords here are large scale it's huge there are massive amounts of output the output is identical there is a production line or a flow that is divided into several stages and the product is built up if we're talking about a car then first you start with a body then you add Wheels then you add seeds and other elements and then it's done so at every stage of production process the output gets heavier and heavier you add more and more elements until it's finally done some of the examples of mass production are Coke or mass Market cars like Great Wall Motors or Toyota and fast moving consumer goods or fmcgs for example toilet paper and toothbrush if you forgot what fmcgs are and what other types of products there are then class 4.1 is something that you gotta review if we put mass-produced Goods on a product perception map PPM that we learned in 4.2 then they are least likely to be premium products because they're mass-produced identical cheap available to everyone so the two most likely categories are bargain and economy products on the one hand mass or flow production is the most efficient of all because average costs are low production time is Fast and the process is highly automated also those organizations that use mass or flow production they also use economies of scale that we learned in unit 1.5 which allows them to for example purchase higher levels of stocks in exchange for a discount so this way they are able to lower their average costs and lastly there is no needs to hire qualified super skillful Workforce for mass production the tasks that employees do are really routine basic simple and monotonous so you do not have to be super qualified for that on the downside this method of production is the least customizable of all because it produces huge amounts of identical totally identical products again think of the examples that I provided Coke or toothpaste or toothbrush or mass-produced cars all the same not like Batmobile if you want to customize something in mass production you have to stop the production line completely readjust it and then start producing customized products again but they again will all be identical so the only way to customize mass or flow production is to customize the production line so that it produces another thing which will still be in high quantities and totally identical additionally mass production only makes sense if it works on a large scale if there is high demand and if there is a need to produce High volumes of output if you do not have high demand if you only want to produce a very very few things and charge high prices for that then mass production is definitely not the way to go additionally setting up Master Flow production is really expensive it requires a lot of time and also significant investment because basically you're building a factory that is supposed to work 24 7. and lastly from employees perspective mass production is a really demotivating because you are doing really simple really boring tasks all day one way to overcome that by the way is job rotation which we learned in 2.4 if you forgot what that is please review that class now here are some pictures that illustrate some of the examples of mass production one more thing since we're talking about mass production we just have to mention Henry Ford Henry Ford the founder of Ford the car brand is also considered to be the developer of the assembly line method of mass production this may method completely changed the business World let me just give you an example do you think you can buy a helicopter or how many of your friends are able to purchase a helicopter not too many right or maybe none of your friends are able to do that if they're able I'm really happy for you and for them but I don't know anyone who can purchase a helicopter personally so cars were as expensive and as luxurious as helicopters are today and guess who changed it Henry Ford because he started mass producing cars and he was also kidding that customers can have Ford T that model of Ford that was mass produced they can get it in any color under one condition this color has to be black I'm not going to overwhelm you with a big story about Henry Ford I just encourage and inspire you to learn more about him and about assembly line because it was a complete Game Changer foreign Mass customization is not really a new method of production it kinda refers to mass or flow production but it has one very big and important feature so what is mass customization it is the same as mass or flow production but it is flexible and allows for customization so it allows to alleviate the main drawback of mass and flow production now how does mass customization work this is a relatively new concept and there is no one way to explain how exactly it is done however the two examples that I usually provide are Volkswagen group and mini both of them are car manufacturers and both of them customize their output but they do it in different ways with regards to Volkswagen as you probably know Volkswagen group owns a lot of brands in addition to Volkswagen seat Lamborghini Audi Ducati and etc etc please visit their website if you want to see full list of the Brands they own in their case Volkswagen produces the same components but combines them differently in different cards of different sizes Brands and appearances in order to achieve customization very often you can find for example the same engine in Volkswagen and seat in the same time so this is their way to manufacture mass-produced cars and at the same time allow customers some flexibility allow them to choose the engine the color or some other elements that are also actually mass produced so you combine both things together mass production High volumes of output and customization with regards to mini they actually put customization as one of their core values in one of their main marketing strategies and unique selling point if you forgot what that is then unit 4 is something that you definitely have to watch so in their case what they do is they manufacture the base product the car in this this case and then customization happens only at the very very final stage they can change the colors they can add some elements which is really nice which is something that makes customers happy because they feel that their car is special and at the same time it still allows to mass produce those cars so these are two of the ways how Mass customization can be achieved first either by mass producing different elements different components and combining them differently in order to achieve customization and second way to produce the base product that can be customized at the very very last stage if we are trying to put Mass customized products into one of the categories of product perception map then it would be a hard thing to do because it's a relatively new concept and actually it's so nuanced it can easily be any category with regards to advantages Mass customization has all the benefits of mass or flow production but it also has one big fat huge Advantage which is customization and flexibility this is something that mass production cannot provide but Mass customization can this is not only the main advantage but also the main feature and it's even in its name it's called Mass customization now with regards to drawbacks even though mass and flow production are already dependent on design and Technology Mass customization is even more dependent and reliant on design and Technology it takes a lot of time it takes significant investment it takes really good Engineers to develop such a process that allows to produce massive amounts of output and at the same time allows for customization so the main drawback is that it would be expensive and time consuming to set up mass production that is customizable this picture illustrates some of the examples of mass customization oh yeah yeah this is the end of 5.2 as a summary of all production methods that we learned I would like to show you this chart here you can see three methods of production job batch and mass or flow and five spectrums with two ends let's talk about the first one so on the left side we have labor intensive on the right side we have Capital intensive job production is mostly labor intensive it relies on labor and employees mass production is mostly Capital intensive it relies on machinery and equipment and batch production is somewhere in between now you can use the same logic to the Romanian four spectrums efficiency cost per unit production time and setup costs if you want to get back to this diagram then please remember that I have an online textbook levinsky.com please visit it anytime and find class 5.2 there now before you like this video And subscribe to my Channel if for some reason you have not yet done so also tell your friends about me and make sure you have achieved the assessment objective for this class [Music] thank you

the main point of this class is to understand how different methods of production work [Music] there are four parts in this class job production pitch production mass or flow production and mass customization and only one assessment objective to discuss operations or production methods in order to achieve this objective you are supposed to understand a few things about every method of production so I'm suggesting again to keep you busy and to fill in this table for each method of production please understand and make a note of how it works of some examples of the most likely product perception map category if you forgot what product perception map or PPM is then please review class 4.2 and also understand and make a note of pros and cons of each production method now one more important reminder all businesses provide products products can be tangible and intangible tangible products are called Goods intangible products are called services in this class we're only talking about manufacturing of goods so we are only talking about tangible products something that can actually be produced be manufactured with the help of different production methods like this video subscribe to my channel tell your friends about me and enjoy 5.2 job production refers to manufacturing of a one-off item something that is really special something that is only one of a kind for example Batmobile or wedding cake or a spaceship technically you can produce like several identical Batmobiles wedding cakes or spaceships but the way it will work is not like a production line where identical Batmobiles or spaceships or wooden cakes are produced by mainly machines the way that would work is first you produce one then you produce another and each of them is special and there is no production line that produces identical products so that is what job production is if we're trying to put products that are produced using job production into one of product perception map categories or PPM then it would most likely to be premium products the ones with high quality and high price if you have no idea what I'm saying right now if you don't know what PPM or product perception map is then it means that you missed class 4.2 where we learned PPM so please review it or watch it for the first time if you have never heard about PPM on the one hand job production is super flexible and it allows for customization so everything can be produced up to customers needs and wants again when we learn mass production in the third part of this class there is just a production line and identical items totally identical totally the same items are produced at a very high speed in high volumes this is not the case with job production here you produce only one thing at a time and you can customize it you can change it you can make something special like Batmobile or a wedding cake or a spaceship All Things One of a Kind if you want another thing then you have to order it and it will be produced specifically for you even if it's the same as the one before it is still special one-of-a-kind production in addition to that since it's so special and flexible and customizable organizations at huge job production are able to charge higher prices and thus enjoy High markups which is basically the difference between the sell and price and costs if you want to learn more about markups then class 4.5 is something you gotta watch and lastly from employees perspective job production is super motivating employees are in charge of everything of the entire production process from the very beginning to the very end this process highly relies on them and they feel like they are real professionals they're really responsible for the output and they are in charge of everything which is of course really motivating unlike mass production where job is very boring but we'll talk about it in part 3 of this class with regards to drawbacks the price that you have to pay as a customer for job production is usually really high and also production times are really long that is the price you pay for all the flexibility and customization and one-of-a-kind status compared to other production methods job production is the least efficient one because the process is not automated and it's highly labor intensive speaking of Labor there is very high Reliance on employees in job production this of course can be a good thing but on the other hand if something happens to employees or they decide to quit or leave the organization for some reason then it would be very hard to find a replacement for them because they're highly qualified super specialized in what they are doing and it's really hard to find an alternative for them the opposite of that is again mass production where everything is mostly produced by the machines and people don't really matter much at all but again we'll talk about that in part 3 of this class when we learn mass or flow production now here's a picture that illustrates some of the examples of job production batch production refers to manufacturing of a group or batch of identical products basically you use the same machine the same equipment to produce different kinds different batches of output the typical example is bakery that has only one oven but one in the same oven is used to produce bread cupcakes croissant and anything else that is produced in a bakery so you produce batches or sets or groups of identical products using the same equipment in addition to Bakery some other examples could be pharmaceutical industry where the same machines are used to produce different batches of medicine pills drugs and Brewery where different kinds of beer is produced using the same equipment if we put items that are produced using batch production onto product perception map they're most likely to fall into any category except for the premium category so it means they can be economy products or bargain products or Cowboy products of course they can be premium as well but the three categories that I mentioned are the most likely ones with regards to advantages Beach production is similar to job production it's also customizable but in job production you can customize every single item because there is no production line there is no oven there is just one thing that is being produced at a time with batch production there is a batch there is a a group a set of products that are produced at the same time so if you want to customize something you customize the entire batch not every single item additionally batch production is quite efficient because compared to job production you don't produce only one thing at a time you're producing the entire batch which allows organizations to use economies of scale when your average costs your cost per unit decrease as you increase the output however the price that you have to pay for batch production is keeping higher stock levels of raw materials and components so these costs would be higher compared to job production additionally if you want to customize something as I've already mentioned you customize the entire batch not every single item like in job production additionally job production was labor intensive it mainly relied on labor but batch production that we're talking about now is more Capital intensive it relies on Machinery on equipment more than job production which means that the price that you have to pay for it is higher maintenance costs more equipment it means that it's more likely to break down or it needs some maintenance so that's why these coasts would be higher and here's a picture that illustrates some of the examples of batch production  Mass slash flow production what does that mean in IB business management you can use those two words interchangeably however you have to be aware of the fact that in literature those words are not always used interchangeably so even though you can use them interchangeably it's fine for IB business management exam or internal assessment or extended essay however you should be aware that when you say mass production you are emphasizing the high quantities of output produced you say that the massive amount of products are produced that's the main feature but when you say flow production what you're emphasizing is that there is a Non-Stop production line and there is a flow of products that are manufactured 24 7 non-stop so essentially mass and flow production it's the same thing but it emphasizes different features of this production method and once again you can use those two interchangeably that is okay so what is mass slash flow production this refers to large-scale manufacturing of identical products on a Non-Stop production line whereby a product is built up on every stage so the keywords here are large scale it's huge there are massive amounts of output the output is identical there is a production line or a flow that is divided into several stages and the product is built up if we're talking about a car then first you start with a body then you add Wheels then you add seeds and other elements and then it's done so at every stage of production process the output gets heavier and heavier you add more and more elements until it's finally done some of the examples of mass production are Coke or mass Market cars like Great Wall Motors or Toyota and fast moving consumer goods or fmcgs for example toilet paper and toothbrush if you forgot what fmcgs are and what other types of products there are then class 4.1 is something that you gotta review if we put mass-produced Goods on a product perception map PPM that we learned in 4.2 then they are least likely to be premium products because they're mass-produced identical cheap available to everyone so the two most likely categories are bargain and economy products on the one hand mass or flow production is the most efficient of all because average costs are low production time is Fast and the process is highly automated also those organizations that use mass or flow production they also use economies of scale that we learned in unit 1.5 which allows them to for example purchase higher levels of stocks in exchange for a discount so this way they are able to lower their average costs and lastly there is no needs to hire qualified super skillful Workforce for mass production the tasks that employees do are really routine basic simple and monotonous so you do not have to be super qualified for that on the downside this method of production is the least customizable of all because it produces huge amounts of identical totally identical products again think of the examples that I provided Coke or toothpaste or toothbrush or mass-produced cars all the same not like Batmobile if you want to customize something in mass production you have to stop the production line completely readjust it and then start producing customized products again but they again will all be identical so the only way to customize mass or flow production is to customize the production line so that it produces another thing which will still be in high quantities and totally identical additionally mass production only makes sense if it works on a large scale if there is high demand and if there is a need to produce High volumes of output if you do not have high demand if you only want to produce a very very few things and charge high prices for that then mass production is definitely not the way to go additionally setting up Master Flow production is really expensive it requires a lot of time and also significant investment because basically you're building a factory that is supposed to work 24 7. and lastly from employees perspective mass production is a really demotivating because you are doing really simple really boring tasks all day one way to overcome that by the way is job rotation which we learned in 2.4 if you forgot what that is please review that class now here are some pictures that illustrate some of the examples of mass production one more thing since we're talking about mass production we just have to mention Henry Ford Henry Ford the founder of Ford the car brand is also considered to be the developer of the assembly line method of mass production this may method completely changed the business World let me just give you an example do you think you can buy a helicopter or how many of your friends are able to purchase a helicopter not too many right or maybe none of your friends are able to do that if they're able I'm really happy for you and for them but I don't know anyone who can purchase a helicopter personally so cars were as expensive and as luxurious as helicopters are today and guess who changed it Henry Ford because he started mass producing cars and he was also kidding that customers can have Ford T that model of Ford that was mass produced they can get it in any color under one condition this color has to be black I'm not going to overwhelm you with a big story about Henry Ford I just encourage and inspire you to learn more about him and about assembly line because it was a complete Game Changer foreign Mass customization is not really a new method of production it kinda refers to mass or flow production but it has one very big and important feature so what is mass customization it is the same as mass or flow production but it is flexible and allows for customization so it allows to alleviate the main drawback of mass and flow production now how does mass customization work this is a relatively new concept and there is no one way to explain how exactly it is done however the two examples that I usually provide are Volkswagen group and mini both of them are car manufacturers and both of them customize their output but they do it in different ways with regards to Volkswagen as you probably know Volkswagen group owns a lot of brands in addition to Volkswagen seat Lamborghini Audi Ducati and etc etc please visit their website if you want to see full list of the Brands they own in their case Volkswagen produces the same components but combines them differently in different cards of different sizes Brands and appearances in order to achieve customization very often you can find for example the same engine in Volkswagen and seat in the same time so this is their way to manufacture mass-produced cars and at the same time allow customers some flexibility allow them to choose the engine the color or some other elements that are also actually mass produced so you combine both things together mass production High volumes of output and customization with regards to mini they actually put customization as one of their core values in one of their main marketing strategies and unique selling point if you forgot what that is then unit 4 is something that you definitely have to watch so in their case what they do is they manufacture the base product the car in this this case and then customization happens only at the very very final stage they can change the colors they can add some elements which is really nice which is something that makes customers happy because they feel that their car is special and at the same time it still allows to mass produce those cars so these are two of the ways how Mass customization can be achieved first either by mass producing different elements different components and combining them differently in order to achieve customization and second way to produce the base product that can be customized at the very very last stage if we are trying to put Mass customized products into one of the categories of product perception map then it would be a hard thing to do because it's a relatively new concept and actually it's so nuanced it can easily be any category with regards to advantages Mass customization has all the benefits of mass or flow production but it also has one big fat huge Advantage which is customization and flexibility this is something that mass production cannot provide but Mass customization can this is not only the main advantage but also the main feature and it's even in its name it's called Mass customization now with regards to drawbacks even though mass and flow production are already dependent on design and Technology Mass customization is even more dependent and reliant on design and Technology it takes a lot of time it takes significant investment it takes really good Engineers to develop such a process that allows to produce massive amounts of output and at the same time allows for customization so the main drawback is that it would be expensive and time consuming to set up mass production that is customizable this picture illustrates some of the examples of mass customization oh yeah yeah this is the end of 5.2 as a summary of all production methods that we learned I would like to show you this chart here you can see three methods of production job batch and mass or flow and five spectrums with two ends let's talk about the first one so on the left side we have labor intensive on the right side we have Capital intensive job production is mostly labor intensive it relies on labor and employees mass production is mostly Capital intensive it relies on machinery and equipment and batch production is somewhere in between now you can use the same logic to the Romanian four spectrums efficiency cost per unit production time and setup costs if you want to get back to this diagram then please remember that I have an online textbook levinsky.com please visit it anytime and find class 5.2 there now before you like this video And subscribe to my Channel if for some reason you have not yet done so also tell your friends about me and make sure you have achieved the assessment objective for this class [Music] thank you

Transcript for:Understanding Production Methods and Concepts

Transcript for:
Understanding Production Methods and Concepts