Producing Goods & Services (AQA GCSE Business)

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Written by: Lisa Eades, Business Content Creator

Reviewed by: Steve Vorster, Economics & Business Subject Lead

An Introduction to Production Methods

Production is the transformation of resources (e.g. raw materials components and processes) into finished goods or services
- Goods are physical products, such as bicycles and T-shirts
- Services are non-physical items such as hairdressing, tourism and manicures

This process of transforming inputs into outputs (goods and services) adds value to the raw materials
- Competitive businesses combine these inputs of resources efficiently, making the most of the resources so as to minimise costs and generate a profit
The method of production used for this transformation process depends upon a number of factors
- The level of output required to be produced
- The nature of the product
- Whether the product is standardised or customised
- The level of automation used in production

Job Production

Job production is where products are made to meet the specific requirements of individual customers
- Each item is produced separately (a job) and the production process is tailored to the unique specifications of the customer's order

Examples of Job Production

Furniture made to order

Where customers can choose the design, dimensions, materials and finishes

Tailored clothing

Such as wedding suits, where each garment is made to fit the specific preferences of the individual customer

High-end jewellery

Especially those with unique designs or personalised engravings

Custom furniture is usually made by job production

Bespoke clothing is often made using job production

Bespoke jewellery is often made using job production

Job production can add significant levels of added value and can therefore be very profitable
- Specialised products made by skilled craftspeople can command high prices because they are unique and can be made to meet customer needs very precisely
- This advantage could be lost if items were made on a larger scale

An Evaluation of Job Production

Advantages	Disadvantages
Allows for high levels of customisation This allows businesses to cater to the unique needs of consumers It provides the flexibility to adapt to changes in customer demands and market trends Job production allows for great attention to detail and quality control This often means products can be sold for a premium price Job production offers a personalised customer experience as they can be actively involved in the design and creation process This is likely to lead to customer loyalty	Tends to be more expensive and takes longer than other production methods This may not be suitable for customers requiring products to be delivered quickly Job production can be complex and challenging to manage compared to other production methods Coordination between the production team and the customer is needed so that the final product meets expectations Low-volume production is unlikely to allow a business to achieve economies of scale

Advantages

Disadvantages

Allows for high levels of customisation
- This allows businesses to cater to the unique needs of consumers
It provides the flexibility to adapt to changes in customer demands and market trends
Job production allows for great attention to detail and quality control
- This often means products can be sold for a premium price
Job production offers a personalised customer experience as they can be actively involved in the design and creation process
- This is likely to lead to customer loyalty

Tends to be more expensive and takes longer than other production methods
- This may not be suitable for customers requiring products to be delivered quickly
Job production can be complex and challenging to manage compared to other production methods
- Coordination between the production team and the customer is needed so that the final product meets expectations
Low-volume production is unlikely to allow a business to achieve economies of scale

Flow Production

Flow production involves the manufacture of a product in a continuous sequence of operations on a production line
- It involves the movement of materials or components through a series of workstations or machines
  - Each workstation performs a specific task or operation
- As a product moves along the production line, it undergoes a series of operations, such as assembly, testing, packaging or quality control, until it is completed

Diagram: An Olive oil Production line

Olive oil production line with numerous workstations

Large olive oil producers use flow production to manufacture standardised products

This method is commonly used in industries that produce high volumes of standardised products, such as vehicles and consumer electronics

An Evaluation of Flow Production

Advantages	Disadvantages
The continuous flow of production eliminates the need for frequent equipment start-ups and shutdowns This reduces energy consumption and minimises waste Unit costs are low due to automation and processes that can be carried out by unskilled workers, and costs are spread across a large volume of output It is often easy to identify and address any defects early on in the production process It enables fast production, resulting in short lead times, which help companies respond quickly to customer demands	Installing production lines often requires significant capital investment It relies on the reliability and efficiency of equipment and machinery If any part of the production line breaks down, it can disrupt the entire process, leading to costly down time If a defect is detected, the entire production line may need to be stopped, resulting in substantial losses and delays Relies on a steady supply of components and raw materials Any disruption in the supply chain can have a severe impact on production

Advantages

Disadvantages

The continuous flow of production eliminates the need for frequent equipment start-ups and shutdowns
- This reduces energy consumption and minimises waste
Unit costs are low due to automation and processes that can be carried out by unskilled workers, and costs are spread across a large volume of output
It is often easy to identify and address any defects early on in the production process
It enables fast production, resulting in short lead times, which help companies respond quickly to customer demands

Installing production lines often requires significant capital investment
It relies on the reliability and efficiency of equipment and machinery
- If any part of the production line breaks down, it can disrupt the entire process, leading to costly down time
If a defect is detected, the entire production line may need to be stopped, resulting in substantial losses and delays
Relies on a steady supply of components and raw materials
- Any disruption in the supply chain can have a severe impact on production

Examiner Tip

In the exam, you may be asked to recommend an appropriate production method. You should consider factors such as the cost of production, customer expectations and the level of demand. Your answer will need to refer to the business context.

Last updated: 24 April 2024

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