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What are the factors that must be considered by a firm before changing from a batch to a flow method of production.

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Introduction

Amna Qayyum What are the factors that must be considered by a firm before changing from a batch to a flow method of production. There are three different types of production methods; job, batch and flow production. If a firm is considering changing its batch to a flow method, it must keep various factors in mind before doing this. The change from batch to flow requires investing in new capital so the financial, marketing, HR and operations department all play an important role in this decision. First of all a company will have to decide if there is enough demand for the flow method of production. The demand can increase for various reasons, there may be a boom in the economy, the company may be targeting a larger segment now, it may be going from a niche to mass market and the product may be gaining popular appeal. The company will have to see whether the type of product is one where standardization will work, or whether providing customization and variety is the essence and charm of the product. ...read more.

Middle

This will not be a large problem for financially stable firms, but those who are not can adopt the 'Just In Time' method of production, where raw material will only be ordered before the production. Increased production will also lead to increase costs in the insurance and storage department, and the machines will have repair and maintenance costs. So the finance department will have to see if it has necessary finance for all this too, and if the spare parts are easily available. HR is an imperative factor to consider before deciding to change the method of production. Batch production is less tedious and repetitive than flow production, so there is a chance that workers may get demotivated. However the HR managers can adopt cell method of production, where workers are grouped together in a cell for more interaction, this also increase productivity. As the company may change from labour to capital intensive this may lead to redundancies and job insecurity, social groups may be broken, the workforce may feel alienated, there may be more absenteeism, and the element of closure will be missing. ...read more.

Conclusion

A firm may als0 consider its competitors mode of production, because if its competitors have adopted the flow method and are now achieving economies of scales, selling products at lower prices, and gaining more market share, then they should change too. If there is intense competition and the elasticity of a product increases, the company will have to lower its price to maximize revenue, and this can be done by achieving economies of scale through the flow method of production. The company will have to see if adopting the flow method is in-line with its corporate objective. If the company's corporate objective is growth and market development then changing to the flow method is inevitable, however some companies do not want to change because the want more control over production and do not want to increase workload. Moreover if the government is providing grants and subsidies for industrialization then the opportunity should be capitalized upon. Keeping all these factors in mind a firm should carry out a Cost Benefit Analysis (CBA) where both the qualitative costs and benefits are weighed, and then change its mode of production if the benefits outweigh the costs. ...read more.

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