Secondary production
Secondary production involves transforming raw materials into goods. There are two main kinds of goods:
Consumer goods – e.g. washing machines, DVD players. As the name implies, these are used by consumers
Industrial / capital goods – e.g. plant and machinery, complex information systems. Industrial and capital goods are used by businesses themselves during the production process.
In the secondary production sector, value is “added” to the raw material inputs. For example, foodstuffs are transformed into ready meals for sale in supermarkets; metals, fabrics, and plastics are transformed into motor vehicles.
There are many different industry sectors in secondary production. For example:
- Construction
- Electronic instruments
- Pharmaceuticals (drugs)
- House-building
Tertiary production
Tertiary production is associated with the provision of services (an intangible product). As with the secondary sector, there are many tertiary production markets. Good examples include:
- Hotels
- Private healthcare and education
- Accountants
- Tourism
The methods of production
Job production involves firms producing items that meet the specific requirements of the customer. Often these are one-off, unique items such as those made by an architect or wedding dressmaker. For an architect, each building or structure that he designs will be different and tailored to the needs of each individual client.
With job production, a single worker or group of workers handles the complete task. Jobs can be on a small-scale involving little or no technology. However, jobs can also be complex requiring lots of technology.
With low technology jobs, production is simple and it is relatively easy to get hold of the skills and equipment required. Good examples of the job method include:
- Hairdressers
- Tailoring
- Painting and decorating
- Plumbing and heating repairs in the home
High technology jobs are much more complex and difficult. These jobs need to be very well project-managed and require highly qualified and skilled workers. Examples of high technology / complex jobs include:
- Film production
- Large construction projects (e.g. the Millennium Dome)
- Installing new transport systems (e.g. trams in Sheffield and Manchester)
Advantages
The advantage of job production is that each item can be altered for the specific customer and this provides genuine marketing benefits. A business is likely to be able to ‘add value’ to the products and possibly create a unique selling point (USP), both of which should enable it to sell at high prices.
Disadvantages
Whether it is based on low or high technology, Job production is an expensive process as it is labour intensive (uses more workers compared to machines). This raises costs to firms as the payment of wages and salaries is more expensive than the costs of running machines.
Flow production
Flow production involves a continuous movement of items through the production process. This means that when one task is finished the next task must start immediately. Therefore, the time taken on each task must be the same.
Flow production (often known as mass production) involves the use of production lines such as in a car manufacturer where doors, engines, bonnets and wheels are added to a chassis as it moves along the assembly line. It is appropriate when firms are looking to produce a high volume of similar items. Some of the big brand names that have consistently high demand are most suitable for this type of production:
- Heinz baked beans
- Kellogg’s corn flakes
- Mars bars
- Ford cars
Advantages
Flow production is capital intensive. This means it uses a high proportion of machinery in relation to workers, as is the case on an assembly line. The advantage of this is that a high number of products can roll off assembly lines at very low cost. This is because production can continue at night and over weekends and also firms can benefit from economies of scale, which should lower the cost per unit of production.
Disadvantages
The main disadvantage is that with so much machinery it is very difficult to alter the production process. This makes production inflexible and means that all products have to be very similar or standardised and cannot be tailored to individual tastes. However some “variety” can be achieved by applying different finishes, decorations etc at the end of the production line.
As businesses grow and production volumes increase, the production process is often changed to a “batch method”. Batch methods require that a group of items move through the production process together, a stage at a time.
For example when a bakery bakes loaves of wholemeal bread, a large ball of wholemeal dough will be split into several loaves which will be spread out together on a large baking tray. The loaves on the tray will then together be cooked, wrapped and dispatched to shelves, before the bakery starts on a separate batch of, for example, crusty white bread. Note that each loaf is identical within a batch but that loaves can vary from batch to batch.
Batch production is a very common method of organising manufacture. Good examples include:
- Production of electronic instruments
- Fish and chip shops
- Paint and wallpaper manufacturers
- Cereal farming
Advantages
The batch method can be an advantage for businesses that produce a range of products. It is cheaper to produce a number of each item in one go because machines can be used more effectively, the materials can be bought in bulk and the workers can specialise in that task. There are two particular advantages of workers being able to concentrate their skills.
- They should become more expert at their tasks, which will in turn increase productivity (output per worker). This will lower costs, as fewer workers are needed to produce a set amount.
- Better quality products should be produced as workers are more familiar with the task and so can find ways of improving it.
Disadvantages
Batch production requires very careful planning to decide what batch will be produced when. Once a batch is in production it is difficult to change, as switching to another batch takes time and will mean a loss of output. Batch methods can also result in the build up of significant “work in progress” or stocks (i.e. completed batches waiting for their turn to be worked on in the next operation). This increases costs as it takes up space and raises the chance of damage to stock.
What do we mean by the “quality” of a product or service?
“A quality product needs to be ‘fit for purpose’.This means the product must meet or exceed the customer requirements.”
It is important to remember for the company that it is the customer who sets the “quality standards” in terms of their overall expectations of quality. There are several ways that a customer may define quality:
- Reliability
- Fit for purpose
- Design
- Safety
- Long-lasting
Quality Control
The objective of quality control is to ensure each finished product meets the standard set out by the business for a quality product. The traditional method by which a firm tries to achieve this quality standard is by having a separate Quality Control department whose inspectors check the finished items and reject defective or substandard products.
