Production Systems

A production system can be defined as a transformation system in which a saleable product or service is created by working upon a set of inputs. Inputs are usually in the form of men, machine, money, materials etc.

Production systems are usually classified on the basis of the following

• Type of product,
• Type of production line,
• Rate of production,
• Equipments used etc.

They are broadly classified into three categories:

• Job shop production
• Batch production
• Mass production

Job Production

In this system products are made to satisfy a specific order. However that order may be produced-

• only once
• or at irregular time intervals as and when new order arrives
• or at regular time intervals to satisfy a continuous demand

The following are the important characteristics of job shop type production system:

• Machines and methods employed should be general purpose as product changes are quite frequent.
• Planning and control system should be flexible enough to deal with the frequent changes in product requirements.
• Man power should be skilled enough to deal with changing work conditions.
• Schedules are actually non-existent in this system as no definite data is available on the product.
• In process inventory will usually be high as accurate plans and schedules do not exist.
• Product cost is normally high because of high material and labor costs.
• Grouping of machines is done on functional basis (i.e. as lathe section, milling section etc.)
• This system is very flexible as management has to manufacture varying product types.
• Material handling systems are also flexible to meet changing product requirements.

Batch Production

Batch production is the manufacture of a number of identical articles either to meet a specific order or to meet a continuous demand. Batch can be manufactured either-

• only once
• or repeatedly at irregular time intervals as and when demand arise
• or repeatedly at regular time intervals to satisfy a continuous demand

The following are the important characteristics of batch type production system:

• As final product is somewhat standard and manufactured in batches, economy of scale can be availed to some extent.
• Machines are grouped on functional basis similar to the job shop manufacturing.
• Semi-automatic, special purpose automatic machines are generally used to take advantage of the similarity among the products.
• Labor should be skilled enough to work upon different product batches.
• In process inventory is usually high owing to the type of layout and material handling policies adopted.
• Semi-automatic material handling systems are most appropriate in conjunction with the semi-automatic machines.
• Normally production planning and control is difficult due to the odd size and non-repetitive nature of order.

Mass Production

In mass production, same type of product is manufactured to meet the continuous demand of the product. Usually demand of the product is very high and market is going to sustain same demand for sufficiently long time. The following are the important characteristics of mass production system

• As same product is manufactured for sufficiently long time, machines can be laid down in order of processing sequence. Product type layout is most appropriate for mass production system.
• Standard methods and machines are used during part manufacture.
• Most of the equipments are semi-automatic or automatic in nature.
• Material handling is also automatic (such as conveyors).
• Semi-skilled workers are normally employed as most of the facilities are automatic.
• As product flows along a pre-defined line, planning and control of the system is much easier.
• Cost of production is low owing to the high rate of production.
• In process inventories are low as production scheduling is simple and can be implemented with ease.

Another way to think of three types of production systems which are as

• Continuous production: – It refers to the production of standardized products with a standard set of process and operation sequence in anticipation of demand. It is also known as mass flow production or assembly line production. This system ensures less work in process inventory and high product quality but, involves large investment in machinery and equipment. The system is suitable in plants involving large volume and small variety of output e.g. oil refineries reform cement manufacturing etc.
• Job or Unit production: – It involves production as per customer’s specification each batch or order consists of a small lot of identical products and is different from other batches. The system requires comparatively smaller investment in machines and equipment. It is flexible and can be adapted to changes in product design and order size without much inconvenience. This system is most suitable where heterogeneous products are produced against specific orders.
• Intermittent Production: Under this system the goods are produced partly for inventory and partly for customer’s orders. E.g. components are made for inventory but they are combined differently for different customers. . Automobile plants, printing presses, electrical goods plant are examples of this type of manufacturing.

Manufacturing Strategies

Manufacturing Strategy	Description
Make-to-stock	The manufacture of end items that meet the customer demand, which occurs after the product, is completed.
Assemble-to-order	The manufacture of subassemblies that meet customer option selections.
Make-to-order	The manufacture of raw materials and components that are stocked to reduce lead-time.

Make-to-stock (MTS)

In MTS environments, products are created before receipt of a customer order. Customer orders are then filled from existing stock, and then those stocks are replenished through production orders. MTS environments have the advantage of decoupling manufacturing processes from customer orders. Theoretically, this enables customer orders to be filled immediately from readily available stock. It also allows the manufacturer to organize production in ways that minimize costly changeovers and other disruptions.

However, there are risks associated with placing finished goods into inventory without having a firm customer order or an established need. These risks tend to limit MTS environments to simple, low-variety, or commodity products whose demand can be forecasted readily.

Assemble-to-order (ATO)

In ATO environments, products are assembled from components after the receipt of a customer order. The key components in the assembly or finishing process are planned and stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful when a large number of end products based on the selection of options and accessories can be assembled from common components.

When products are too complex or customer demand is unpredictable, manufacturers may choose to hold subassemblies or products in a semi finished state. The final assembly operation is then held until a firm customer order is received. In this environment, manufacturers theoretically cannot deliver products to customers as quickly as MTS environments, since some additional time is required to complete the final assembly.

Make-to-order (MTO)

In MTO environments, products are made entirely after the receipt of a customer order. The final product usually is a combination of standardized and custom items to meet the customer’s specific needs. MTO environments are more prevalent when customers are prepared to wait in order to get a product with unique features—usually customized or highly engineered products. This is analogous to the difference between a fast-food restaurant and a full-service chain restaurant. MTO environments are slower to fulfill demand than MTS and ATO environments, because time is required to make the products from scratch. There also is less risk involved with building a product when a firm customer order is in hand.

Engineer-to-order (ETO)

In ETO environments, customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings. ETO environments theoretically are the slowest to fulfill: Time is required not only to build the product, but to custom design it to meet the customer’s unique requirements.