The Golden Gate Bridge, San Francisco, USA, was built using job production

Job production is the output of a customized good or service that meets the specific needs of a specific customer. This production method involves the output of unique or one-off orders. It is a flexible production method that allows customers to request and make changes to the product during the production process.

What examples of job (customised) production can you think of?

Job production tends to be highly labour intensive as it is reliant on using highly skilled workers. Labour intensive refers to the manufacturing of a good or provision of a service that relies mainly on the use of labour inputs (physical and intellectual effort), so the cost of labour accounts for the largest proportion of a firm’s overall production costs.

It is common that employees in service-based industries (such as doctors, lawyers, teachers, bespoke tailors, management consultants, and chartered accountants) provide a personal and unique service for customers, catering for the specific needs of their clients.

However, labour-intensive output is an expensive method of production due to the high costs of skilled labour and limited opportunities to exploit economies of scale. However, customers are prepared to pay higher prices for the individuality and exclusiveness of the product that meets their personal requirements.

Watch this short video clip about how Kashket and Partners dressed Prince William for his royal wedding back in 2011. Many thanks to IB educator Rebecca Graham for suggesting this video clip for this topic.

 Advantages of job production

• It is the most flexible production method, allowing output to be catered to the specific requirements of the customer.

• Due to its uniqueness and exclusivity, the production of the good or service is of an exceptional quality standard.

• This also means that a premium price can be charged (because of the product’s originality and exceptional quality). This means the profit margin will be higher.

• Workers are likely to be highly motivated as they are exceedingly skilled workers who produce work that is original and which they can be proud of.

 Disadvantages of job production

• High labour costs (due to the need to hire highly skilled and experienced employees) and limited opportunities for economies of scale mean that job production can be very expensive.

• Long production times as job production cannot rely on technologies used for mass produced, non-standardised output in order to meet specific needs of individual customers, e.g. time needed to meet and consult with the individual client.

Bread is often made using batch production

Batch production is a method of production that involves producing a set of identical products, with work on each batch being fully completed before production switches to another batch, which may have slightly different specifications.

For example, a clothes manufacturer might make a batch of 200 medium-sized white t-shirts, and then switch production to a different batch consisting of 200 large-sized black t-shirts. Batch production is used where the level of demand for a product is frequent and steady. It relies on the use of capital intensive output.

What examples of batch production can you think of?

 Watch how Whoopie Pies, an American baked product, are made in batches:

 Advantages of batch production

• Average costs of production are lower than if job production is used, because batch production enables the organization to have greater economies of scale. Fewer workers are needed as there is a reliance on machinery and mechanisation.

• As a variety of products are made, rather than just one product in the case of job (customized) production, customers have a greater choice. This is likely to lead to more sales.

• It reduces the risks associated with concentrating on the output of a single product. For example, not all customers like or want brown leather shoes or chocolate chip cookies. Batch production enables firms to make a variety of different products, thereby spreading risks.

• It is suitable for making products when the level of demand for them is not enough to justify using mass production.

 Disadvantages of batch production

• There is less flexibility for customers, compared with job production, as they can only select from a range of standardised output.

• There is a greater need for capital expenditure, such as the purchase of machinery and capital equipment. There is also a greater need for working capital as the business needs to purchase a lot more stocks (inventory such as raw materials).

• There is idle time the machinery needs to be cleaned and/or changed (reconfigured) in order to produce another batch of products. This reduces productivity and can be costly.

• Similarly, reliance on machinery and automation for batch production means that technical problems or breakdowns would be costly to the organization.

Ever wondered how the burgers at McDonald’s are made? Take a look at the UK’s official website for McDonald’s, and watch the video here to find out more.

 How are burger really made?

“You can have any colour you want… as long as it’s black.”
- Henry Ford (1863-1947), Founder of the Ford Motor Company

Mass production (or flow production) is an operations method whereby different operations are continuously and progressively carried out in sequence, with a very large output of standardized products. It relies on using an automated production process, so is highly capital intensive.

Capital intensive refers to the manufacturing of a good or provision of a service that relies mainly on the use of machinery and capital equipment, e.g., conveyer belts and automated production systems. This helps to maximise output and cut unit costs of production due to economies of scale. Mass production uses relatively unskilled workers as the production process is largely automated.

It is used for products that require large-scale production of standardized products for mass market products, such as bottled water sold to supermarkets and other retailers or windscreen wipers sold to different car manufacturers. Standardization means that products are mass manufactured to an identical standard, with all output being homogeneous.

Bottled water is made using flow production

What other examples of products can students think of that are made using mass production methods?

Watch this Business Insider video to see how Heinz baked beans are made in the largest baked bean factory in the world. Heinz's factory in Wigan, UK was opened in 1959 and currently produces over 3 million cans of baked beans per day. Over 2.5 million cans of Heinz Beanz are sold every day in the UK alone.

 Advantages of mass production

• As products are mass produced, the business benefits from economies of scale, i.e. lower costs per unit of output. This means it can charge lower prices and/or enjoy higher profit margins. Therefore, customers benefit from better value for money.

• Automation results in lower labour costs as fewer people need to be hired, and for shorter periods of time. Labour intensive output (as with job production) requires workers to have rest breaks and to be paid for their overtime.

• As production is capital intensive, a large volume can be created, and often continuously on the production line. Hence, the business benefits from a faster rate of production.

 Disadvantages of mass production

• Due to the standardised (homogenous) output of mass produced goods and their relatively low prices, the firm earns lower profit margins. This means the business has to rely on selling a large volume of output in order to break even.

• Unlike job production, or batch production to some extent, there is almost no flexibility with mass production because large quantities of standardised (identical) goods are produced.

• Flow/continuous production requires effective stock management systems. This may involve stockpiling of raw materials, semi-manufactured goods, and finished goods for sale. Inventory and storage costs can be very expensive for a business.

• Start-up costs are likely to be high, especially for new businesses because of the amount of capital expenditure needed. For example, the business may need to invest in specialised capital equipment, robots, machinery, and production systems.

• Technical breakdowns will cause major problems for a business, as all production on the assembly line will come to a complete halt.

• Staff, who are mainly unskilled workers, can become easily demotivated as the tasks they perform are unchallenging, unexciting and repetitive.

• Mass production on its own does not sell the physical goods that are produced. It still requires marketing support in order to inform and persuade people to buy these products on a large scale.

Mass customization is an operations method that combines the benefits of mass production (such as economies of scale) with the personalization of job production or customized production (such as bespoke features to meet the individual needs or preferences of customers). Mass customization involves large-scale mass production of goods but with the flexibility to adapt the output to the varying needs of different customers.

For example, some branches of McDonald's in Hong Kong operate a Create Your Taste menu that enables customers to create their own burgers from a range of over 20 ingredients, such as the type of bun, meat, vegetables, cheese, and sauces.

Another example is the growing number of car makers that offer customization options for their mass produced cars. For example, in addition to the base model of a car, many manufacturers offer their customers numerous options, such as choice of leather seats, alloy wheels, sunroof option, dash cam, rear view camera, car tracker, alarm, keyless entry, sports package, and so forth. These additional options enable the owner to customize their car from the many optional extras that car manufacturers offer their customers.

A third example is Coca-Cola produced personalised cans and bottles, with people's first names printed on the packaging. Customers can visit the Coca-Cola website to create and order custom names and phrases on Coca-Cola, Diet Coke, and Coke Zero Sugar bottles. Customers simply choose their preferred choice of drink, a theme or special occasion, and their name or a short phrase.

Mass customised Coca-Cola drink bottle

 Advantages of mass customization

• Mass customization offers greater choice for customers and a higher degree of customer satisfaction, and hence can create competitive advantages for the business.

• The flexibility of mass customization enables far more customers to have their individual needs and preferences met, without the high costs associated with job production.

• It enables the business to enjoy higher profit margins due to the premium prices charged for mass customized products.

• Mass customization involves elements of job rotation, which can be motivational. Job rotation is a form of non-financial reward used to maintain motivation and productivity amongst workers in order to avoid repetition of work.

 Disadvantages of mass customization

• Mass customization relies on creating more options (or additional extras) to entice customers, but such investments can be highly expensive for the business.

• It requires a greater need for effective stock control (inventory management), which can be both time consuming and costly for the business.

• It can be challenging to forecast sales and trends due to the wide range of options made available to customers.

• The flexibility of customization means this operations method is more expensive than mass production. This means that prices will be higher than otherwise. This was a key reason why most McDonald's restaurants no longer operate the "Create Your Taste" option in their restaurants (see Case Study below).

 Watch this video clip to see how Hasbro, one of the world's largest toy makers, uses mass customization.

 Case Study - McDonald's Create Your Taste

Customers initially responded well to McDonald's Create Your Taste initiative that enabled them to customise their own burgers from a broad range of ingredients. However, within a relatively short period of time, these mass-customized produced burgers proved to be too expensive for McDonald's to run in a profitable and sustainable way.

Read more about this by reading the Business Insider article here and answer the questions that follow.

Questions

 Teacher only box

Answers

1.  What was the name of McDonald's custom-burger menu?

"Create Your Taste"

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2.  How many different premium ingredients were available to choose from the custom-burger menu?

More than 30

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3.  Create Your Taste was arguably the biggest menu change for McDonald's since the introduction of what?

Breakfast

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4.  Approximately how much did franchises invest in the McDonald's custom-burger campaign?

Roughly $125,000

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5.  In mid-2015, how many restaurants were planned to roll out "Create Your Taste" in the US?

2,000 restaurants nationwide

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6.  What were some customer complaints about the campaign's burgers?

The burgers (meals) were too expensive the cooking times were excessive (for a fast food chain)

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7.  How long did Business Insider's Hollis Johnson's order take upon ordering a $10 burger?

Eight minutes (longer than the time for non-custom made burgers)

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8.  What did McDonald's replace Create Your Taste with?

Signature Crafted Recipes

Identify from the following list of characteristics those that apply to job, batch, flow, or mass customization methods of production. Be careful as there may be some trick questions.

• Batch production involves producing a set of identical products, with work on each batch being fully completed before production switches to another batch, which may have slightly different specifications.

• Job production is the output of a customized good or service that meets the specific needs of a specific customer. This operations method involves the output of unique or one-off orders.

• Mass customization combines the benefits of mass production with the personalization of job production in order to meet the individual needs and preferences of customers.

• Mass production (or flow production) involves different operations  continuously and progressively carried out in sequence, with a high volume of output of standardized products.

(a)  Explain two features of job production.  [4 marks]

(b)  Explain the difference between batch production and mass production.  [4 marks]

(c)  Explain two drawbacks of using batch production for a bakery.  [4 marks]

 Teacher only box

Answers

(a)  Explain two features of job production.  [4 marks]

Possible answers could include an explanation of any two of the following points:

• Highly skill labour is used to create bespoke products that meet the requirements of each customer.

• Typically, there is high quality output as this operations method strives to meet the product specifications of the customer.

• Similarly, it is a highly flexible method of production, with customers being able to customize most, if not all, aspects of the product.

• Workers are likely to be highly motivated to produce a unique product due to the variety of roles and the skills involved as wel as the quality of the final output.

• Products are unique rather than standardized.

• Accept any other relevant feature that is clearly explained.

Mark as a 2 + 2

For each point, award [1 mark] for a valid feature and [1 mark] for an accurate explanation.

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(b)  Explain the difference between batch production and mass production.  [4 marks]

Batch production is a method of production that involves producing a set of identical products, with work on each batch being fully completed before production switches to another batch. It is used where the level of demand for a product is frequent and steady, relying on capital-intensive technologies.

By contrast, mass production as an operations method that uses an automated production processes and specialist machinery to produce a high volume of standardized output. The various operations are continuously and progressively carried out in sequence, enabling the firm to benefit from huge economies of scale.

Award [1 - 2 marks] for an answer that shows some understanding of the difference between batch and mass production.

Award [3 - 4 marks] for an answer that shows a clear explanation of the distinction between batch and mass production, There is accurate use of business management terminology throughout the response, similar to the example above.

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(c)  Explain two drawbacks of using batch production for a bakery.  [4 marks]

Possible answers could include an explanation of any two of the following:

• Downtime occurs between different batches of breads, pastries, and other bakery food items as machines and equipment may need switching around and/or maintenance (such as cleaning).

• Batch production can involve large levels of stock, such as flour, salt, and yeast. This increases the cost of inventory, e.g., storage and maitenance costs.

• The repetitive nature of work that arises from the division of labour in batch production can mean that workers in the bakery may lack motivation. This can reduce labour productivity and increase labour turnover, both with their associated costs to the bakery.

• Accept any other relevant drawback that is clearly explained.

Mark as a 2 + 2

For each point, award [1 mark] for a valid drawback of batch production and [1 mark] for an accurate explanation.