A furniture manufacturer moving from batch production

Production and operation management has become an essential part of manufacturing organizations. These organizations always experience pressure in all divisions and units. Pressures are in terms of orders to be completed on due dates, breakdown of machines, absence of employees, lateness on delivery of materials, and industrial actions by employees to improve working conditions. To meet these challengers, firms usually rely on an effective production and operation manager.

The case involves a furniture manufacturer who is currently engaged in batch production primarily for stocks purposes. As such, batch production refers to the manufacturing of a quantity of products. These are produced in a ‘batch’ all at one, before the next batch is manufactured. For example, the activities of the furniture manufacturer may start form the purchase of wood and undergoes various stages till the furniture moves to stock. The time factor is important in scheduling every activity: which task to start first then proceed to the next one. A typical illustration of such processes is better provided in Figure 1 as follows:

Figure 1: Furniture Manufacturing Process

From the above diagram, we can state that the furniture manufacturer uses inputs (facilities, raw materials, labour, capital, equipment and supplies) with the view of transforming (adding value) these inputs into outputs (e.g. coffee tables). If we look deep into the process it may appear to be complex as different parts can take different paths through the process but each part will take an expected route with relatively standard activities being performed at every stage. Although the processes remain the same, each batch of furniture may differ in terms of the design, size, assembly and polishing.

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On the other hands, flow production is concerned with the process of organizing production in an assembly line so that the speed of inputs is exactly the same as the speed of output. Stated differently, production process is focused on producing in high volume and offers relatively narrow variety like the basic concepts of the product design. Flow production may also be referred to as mass production. A better notion of the flow production method of the range of 3 different sizes of coffee table for the furniture manufacturer is depicted in Figure 2 below:

Output

3 different sizes of coffee tables

Transformation Process

Flow Production

Input

Facilities, raw materials, labour, capital, equipment and supplies

Feedback

Figure 2: The flow production method for the furniture manufacturer

(Source: Tradur C. V. Architectural Manufacturing, 2011)

The decision of moving from batch production to flow production entails many factors which should be taken into consideration such as: demand, adaptability, redundancy, finance, space, suppliers, reaction of workforce and effect on other parts of the business. These will be better elaborated as follows:

Demand

Firstly, the furniture manufacturer will normally take into account the demand for the different sizes of coffee table. Let’s take the example of The Furniture People (TPF) which is one of the biggest manufacturers of furniture products in Mauritius. Suppose the market in which TFP operates is characterized by a very high demand or a ‘craze’ for coffee table over a longer period of time. In this case, the flow production might be the right choice to serve the increasing demand. The degree of certainty plays a vital factor to be considered when forecasting extra demand into the long-run. If the manufacturer takes into consideration certainty for demand, he can maintain a buffer stock so as not to run out of stock when needed. However, there is the risk that if the firm moves to the mass market, suddenly orders may starts decreasing due to the changing tastes, preferences and needs of customers. Here, it may be assumed that once a customer has purchased a coffee table, he is not going to buy more sooner, except if he need more coffee tables or has advised other persons to buy it due to his own personal delight or satisfaction derived from the product . To this effect, the firm can be subject to unsold stocks, capital tied up in stocks and even high cost of holding these stocks. It is more justifiable that the manufacturer maintain its batch production rather than shifting to flow production.

Adaptability

At times the question that arises is which method is more adapted and adopted by firms – Batch or flow production? In trying to resolve such a question, firms must consider the concept of adaptability and acceptance. In the case, the furniture manufacturer has to adapt to a rapidly changing environment which could involve technological influence. If the whole manufacturing industry is using flow production and this method is the current trend, then the manufacturer has to adapt its production to flow one. If the manufacturer does not move according to industry changes then, his business will not be able to run smoothly and its customers may shift to the company’s competitors. In addition, workers also will need to adapt to the new way of working, therefore, the production and operation manager must involve the agent change team/ staffs to encourage employees to help the organization adopt the new way of production. This can be done by providing better working environment.

Redundancy

The decision of moving from batch production to flow production may provoke large number if casualties in terms of jobs lost. The reason is that such a change requires new or more automated machinery which may lead to redundancies. This not only implies discontentment on behalf of employees because of insecurity, but also implies further costs for the manufacturer in redundancy payments. If the effects of the redundancy are very expensive and difficult, then it is better not to change to flow production.

Finance

Finance is another important factor which should be considered before implementing the change. TFP can be considered as a manufacturer earning a large amount of capital. In this context TFP can choose flow production as it can easily finance the purchase of sophisticated and expensive machines to meet the flow technique requirements. On the other hand, a firm operating within a very limited amount of finance may be restrained to continue operating in the same way, i.e. using batch production. The rational is that to operate under flow production, the enterprise will not only incur extra fixed cost but will also have to invest in the extra working capital required to operate at a high level of output.

Space

The amount of space available is another criterion for making decision. A method like flow production necessitates more space for new machines and more stocks (from raw materials to finished goods) as compared to batch production. Furniture manufacturers (e.g. TFP, Joonas Showroom Ltd., Quality Furniture, King Bros Co. Ltd) who are located in a highly dense area like Port Louis normally incur high cost in terms of rent. For such manufacturers space is a critical resource and flow production will be very expensive as it takes more space. However, it can be argued that nowadays most manufacturers have their warehouse(s) for stocks in one place and a number of showrooms just for display purposes in other regions. In this case, flow production is possible, yet they have to pay higher rent for their warehouses and showrooms.

Suppliers

There is a perception that manufacturers sometimes automatically assume that an increase in output can be easily managed. If the suppliers are at full capacity, there is the need to find out new suppliers with whom contracts will be drawn and ongoing negotiations will take place to ensure a close working relationship. With batch production, the firm might be having a wide range of suppliers offering different raw materials for manufacturing different batches of furniture. When shifting to flow production of just coffee tables, the manufacturer need to find out new suppliers as mentioned earlier but at the expense of no more needing some suppliers who currently supply for the batch production.

Reaction of workforce

If the firm changes its production method to flow production, it means the workforce may lose the team spirit that they have in the batch production. On the contrary, flow production requires individuals to work on their own as the jobs will become more specialized, and the variety of tasks and skills required will decrease. There may also be some resistance to change on the part of workers and the manufacturer needs to be ready to meet such challenges. One possible solution is to provide the employees with extra training so that they are better equipped to operate the new machines. This will obviously add to the cost of the manufacturer and even mean loss of output, as it will take time for the workforce to acquire skills and experience needed for the new machines.

Effect on other parts of the business

A change from batch to flow method will have certain repercussions on other parts of the business. A rise in the level of output may be an indication of more pressure on the promotion budget to attain the extra sales. Consequently, the business will be faced with a situation where it must find more distribution outlets and arrange for the transportation of the additional output.

Therefore, we can reach to the conclusion that there are many factors which must be considered in making the decision of moving from batch production to flow methods. The most common factors are demand, adaptability, redundancy, finance, space, suppliers, reaction of workforce and effect on other parts of the business, and these eight factors have been fully described above. However, we can suggest the furniture manufacturer to continue with batch production rather than shifting to flow methods. The strong arguments that support this recommendation are the degree of certainty and predictability of future trends. People tastes and preferences may not always be the same- at times they may need coffee tables but some other times they may need other furniture. It is better to use the technique of batch production which is geared towards production of quality and variety of furniture, than just engaging in mass production and keeping them in stocks.

Describe the principles features of job, batch and flow methods.

A manufacturing organization may use different methods such as use job, batch or flow production depending on a number of factors. However, it is important to have a clear distinction between these three production methods to know where each one is applicable. Whatever method of production is used, the objective is to produce goods and services which is highly profitable and to use the most effective and efficient method. Considerations should also be made to other aspects like producing quality products and delivering customer satisfaction.

Job production implies the manufacture of individual or unique products in order to meet the individual needs and wants of the consumer. In such a case, the quantity produced is often just one unit, though it is possible to produce in a larger quantity, and there may well be variations that make each unit an individual product. Under job production method each stage of the production process is organized and completed until the unique product is completed; it is only then another product can be started. Over and above, job production is normally undertaken by small manufacturers who specialize in meeting the needs of consumers with highly specific individual requirements so that a small company can compete with larger ones in offering just what consumers demand. Job production is proves an effective technique when being used by furniture restorers.

On the other hand, batch production involves the breaking down of production into various processes. It is vital that all items within a batch must pass through a particular process before the batch can move on to the next process.

Contrary to job and batch production, in flow or mass production we have one unit of output at each point in the assembly line, and it is more focused on commoditization. For instance, each unit of furniture will pass onto the next stage immediately after being worked on until the final process. The furniture manufacturer will adopt such a method of production in case it wants to produce standardized coffee tables. The entire process will be divided into highly specialized tasks which tend to be capital intensive as many sophisticated machines can be used to produce the mentioned range of the three different sizes of coffee table.

The principles features of job, batch and flow methods can be described with reference to the units of production, degree of capital intensive and degree of variation in production process

Units of Production

The number of furniture produced under job production is likely to be very small quantity and in many cases only one unit. However, job production can be repeated at a later date, whereas project production (e.g. manufacturing of unrepeated and prestige coffee tables for a hotel) is literally one-off. Under batch production, the number of furniture produced will be greater than job production. The size of each batch is normally determined by the demand for the product. A high demand for coffee table will involve large unit of production and vice-versa. A large volume of products can be produced using flow production leading to economies of scale and in return this allows the firm to earn a higher profit margin. Alternatively, it helps the firm to become more competitive.

Degree of capital intensive

Job production is more likely to be labour intensive than capital intensive. This could be justified by the fact that production is unique and there is less need for automation. Besides, the low volume of production does not allow the use of expensive machines which could raise the average cost of production. The fact that the quantity of production is larger in batch production, it is necessary to operate more machines, i.e. it is more capital than labour intensive. Additionally, the use of more machines which involves repetitive processes means that there will be a need to employ maintenance staff to keep the machines in good working conditions. Unlike batch production, flow production requires heavy investment in machinery. Therefore, flow production is likely to be capital intensive as opposed to labour intensive.

Degree of variation in production process

The fact that job production undertakes the making of customized coffee table, the variation will be enormous. In other words, production is tailor-made to meet the individual requirements of the customer, making the furniture different form the other ones. There can still be a wide variety in batch production, but the differences must be between the capabilities of the manufacturing processes that are necessary to produce the furniture. Using the same production processes, the manufacturer is able to meet the customers need by offering three different sizes of coffee table. Although standardized varieties are possible within the limitations of the machinery for instance, furniture are assembled using flow production, but there can be variations of colour, sizes and designs, polishing and finishing – all of them are produced within the same assembly line.

To conclude we can say that job, batch and flow are three different techniques which a furniture manufacturer may use with reference to the units of production, degree of capital intensive and degree of variation in production process as have been fully described above. A notion of each production method is important for the firm to decide which method is most applicable, effective and efficient for its organization. The wrong choice of production method can be detrimental to firm.

Using examples of your own choice from both manufacturing and service environments compare and contrast job, batch and flow methods, paying attention to

The ability to handle variety in products/services.

Ability to handle changing volumes from period to period.

Equipment utilization.

Skill requirements of workforce.

Materials management procedures.

And scheduling.

To compare and contrast job, batch and flow methods, we can analyze them using the given criteria. The idea is that if the product is a unique on-off item, then job production is best suited, unlike if the product requires standardization and mass-production, flow production is the right choice.

The ability to handle variety in products/services.

As the product should be tailor-made according to customers’ requirements in job production, so there is higher degree of variety in the products or services. When describing the job of a hairdresser, we find that everyday different people come in his saloon for haircut and other services. Obviously, each person’s requirements will differ from each other in that they will want to have a haircut in their way or style. As such, the hairdresser must have the ability to handle variety in offering such services, and adjust the hair cutting style for every customer. Similarly, the job of a tailor is to sew clothes differently in order to suit every client’s requirements in terms of the fabric, size, colour and design. The work of an architect works in same way, i.e. to design every house or building according to the expectations of customers.

There is still room for variety in batch production, provided it is within the firm’s capabilities necessary to manufacture the products. While making use of the same production process, an umbrella manufacturer can produce umbrellas for both men and women simply by varying the sizes, colours and logos. As such, the needs and wants of both groups of customers have been satisfied.

Despite in flow production there is little room for modifications, it is still possible to bring some variations while considering the limitations of machinery and the structure of processed. Mobile phones undergo flow production yet variations can be made in terms of the colour, design, casing and screen.

Ability to handle changing volumes from period to period.

Job production offers certain flexibility to handle the changing volumes in production as products are mostly made on orders. It is interesting to point out that each time a new product or service is produced. If we take the case of a solicitor, we find that each client’s situation(s) will be unique. The solicitor will study and deal with each client or case individually, and at the end provide specific advice each person. It is possible to have changing volumes from time to time in terms of the number of clients and complexity of their situation(s). The ability to handle changing volumes from period to period will depend on the competency and experience of the solicitor.

Batch production is used when the volume of production is higher than in job production but lower compared to flow production. For instance, a restaurant may be subject to ever changing volumes of meal preparation from period to period. At peak hours the restaurant should be prepared to cater for the increasing number of customers than normal hours. The restaurant should employ enough servers for taking orders and offer customer care services, and more cooks to prepare a wide variety of dishes. For better management of the changing volumes, the restaurant can adopt shift basis for servers and cooks. Thus, the restaurant can put more staffs to work on peak hours and lesser staffs on normal hours.

Due to the high level of capital-intensity in flow production, businesses need to operate at full or optimum capacity level. In the Mauritian, we can take the example of flow production from a manufacturing organization such as Pharmacie Nouvelle. If we consider the company’s production volumes we find that it can produce more goods in December period as compared to other periods in order to prevent the risk of stock-out. This is because the trends show that customers tend to spend more on the company’s product for the year end periods. As a result, the company has to make provision for good quality and quantity of goods in advance to be able to deliver its product on time.

Equipment utilization.

All the three methods of production may be using certain equipment but the degree of utilization may vary from one another. Job production is likely to entail less equipment utilization due to the individuality of the product. If the example of a potter is considered, the person can create various shaped vases only with the use of his hands and a potter’s wheel. Conversely, if we apply job production to the manufacturing firm, we find that a wide range of equipment is necessary to fulfill different and changing requests or orders. An example may include the manufacture of a specific machine (like employee time clock machine) for another business to meet a particular specification (such as monitoring the punctuality and attendance of employees).

Batch production entails the utilization of more equipment to perform the repetitive processes. For instance, Kentucky Fried Chicken (KFC) uses different special equipments for the preparation of its chicken, chips, sandwiches, salads, potatoes gravy, drinks, desserts and snacks. Similarly, Mc Donald’s and other similar firms make use of different equipments in their production processes.

Unlike batch production, flow production also requires enough workstation and even more equipment utilization. The equipments need to be running continuously in order to enable high volume production of standardized goods. Products such as Colgate toothpaste, Lux soaps, Kit-Kat, Heinz baked beans require a high proportion of equipment and machinery to sustain mass production. Another illustration could be that if suppose a motorcycle requires around 150 tasks to be performed for its final assembly, then adequate machinery and space should be available to carry out the 150 jobs.

Skill requirements of workforce.

In job production, the workforce requires a higher level of skill in order to be flexible and capable of producing ‘one-offs’. We can take a case from the manufacturing environment, notable that of a car manufacturer. Aston Martin is an example of a very expensive car that is individually produced by qualified engineers for the needs of each customer. Each engine is hand build and carries a plate with the engineers name on it.

The fact that the batch involves the repetition of same process for each batch, the level of skill required of the labour force is not as high as that required for job production. If we consider an engineering company which is involved in manufacturing small steel goods like hinges and lockers, we can find that they may produce batches of around 500 at a one go. They require less or semi-skilled workers where production flow a chain of workers until production line is completed. However, it is obvious that batch production is less flexible than job production as once a batch is in production it cannot easily be changed to produce something else.

When comparing job and batch production with that of flow production, we find that in flow production it is the system that set the pace of work and not the workers. Consequently, it is specialization that decreases the level of skill required for the tasks. In the early 20th century Henry Ford gained lots of appreciation and remembrance for his remarkable contribution to the automobile industry. He revolutionized the auto industry by significantly reducing the time involved in car assembly. His ideas for mass production of cars proved successful with the Ford Model T. He put in place a moving belt in his factory, where workers get a facility of building cars one piece at a time, instead of one car at a time, and this is referred to as “division of labour”. He believed that workers should focus their attention on doing one task very well rather than taking the responsibility for various tasks. Gradually, he also increased the wage and decreased the hours of the workers as he wanted to ensure that he could get enough and the best workers.

Materials management procedures.

The quality and quantity materials to be used in each type of production differ with reference to the nature of the firm, flow of materials, transformation process, and machinery used. Film production can be a form of job production, where there is a high discontinuous flow of materials and components between different stages (scriptwriting, location selection, shooting, choreography, editing, directing and distribution to the audience) due to difference in operation wise work content.

The flow of material in batched production is more complex, hence the quantity of material to be used for different volume of production is different in each type of production. For example, in a company offering printing and photocopy services, the volume of inks and paper to be used depend on customer’s demand. Using a batch production, the company will print and make photocopy of books for a certain period of time and according to the assessed level of demand. Thus, it will have to make provision for the quantity and better quality of materials it will need. For instance, this can be achieved by defining and monitoring the reorder level of inks and materials. Additionally, it will have to manage the ink levels both in its printing machine and photocopiers, as well the stock levels of other materials.

In a manufacturing company (if we reconsider the example of Pharmacie Nouvelle Ltd as mentioned earlier) where the company is involved in flow production of different products, there must be a stringent control and management procedures with regards to materials used in the production process. For instance, when the company has to buy materials, a purchase requisition (PR) has to be raised. This has to be approved by the authorized manager. The PR is then sent to the purchasing department which then raises a purchase order (PO). The PO is then sent to store where the store officer will search for a quotation of materials needed. When store clerk receives goods, he has to check the quality and quantity of materials ordered by cross checking supplier’s invoice with goods received note, supplier’s invoice and the purchase order.

And scheduling.

Scheduling simply refers to a plan of actions that state when certain controllable activities must be performed (Herrmann, 2002). In job production the scheduling of tasks will depend mostly on the mix of products. Tasks may not necessarily be completed based on their arrival pattern so as to reduce the costs associated in setting-up and changing-over machines. Jobs may also be scheduled based on the shortest time to get them processed and delivered to customers. The airline industry can be an appropriate example to illustrate the scheduling process in the service sector. The scheduling of airplanes for passengers starts right from check-in security procedures at the different counters prior to departure of a flight. The tickets booking, seats reservation, time for departure, duration of the trip is well scheduled according to the destination of the passengers, and arrival or destination of the airline. However, there can be delays in flights’ arrival or departure but the scheduling process remains the same. And every piece of information is communicated well in advance to the passengers for their convenience.

Batch production scheduling in the manufacturing environment can mean a finite capacity scheduling program applicable, for example, to pharmaceutical production process. A standard scheduling framework may be introduced so that the end batches are manufactured properly, consistently, and according to required specification and quality. Wrong scheduling of the tasks can be of a health hazard for people who are going to consume these pharmaceutical products, instead of providing a curative effect on people.

The manufacture of plastic bottles for various purposes (e.g. soft drinks, shampoos and ketchups) is an example of flow production mechanism which requires proper scheduling of each and every task in order to have desired bottles and avoid wastages. The scheduling process starts right where plastic materials is inserted in the molding machine for shaping according to specifications. It then move to the tube and high air pressure blowing process to get the required size, and finally the bottles are moved for working the lids, labels and packed for distribution. Scheduling of flow production necessitates a proper scheduling plan as it is easy to manufacture in large quantities but can be very costly in case of high defects or wastages.

Finally, a clear comparison and contrast was made between job, batch and flow methods with reference to examples from both manufacturing and service environments in order to meet the conditions stated in the case. We can therefore state that same approach cannot be applied to every method of production. Job production remains less complicated but very dynamic as compared to batch and flow production. The right choice of production technique, when considering the above discussed arguments, can increase the effectiveness and efficiency of any firm.