Production is defined as the activity of creating or adding value to goods. Thus, the production process is a series of stages that must pass in producing goods or services. For instance, the goods in question are objects that have physical and chemical properties and have a specific time. At the same time, services do not have physical and chemical properties and do not have a period between production and consumption.
This process is also processing raw materials and auxiliary materials manually using equipment to produce a product whose value is more than the original goods. In other words, this process can also interpret as an activity combining various factors of production to create something beneficial to consumers. In conclusion, those of you in the business world are obliged to understand the correct stages of this process so that the products you do are as expected so it does not fail.
The three different factors involved in production should be considered together, and the first one is raw materials. The factors which relate to raw materials would include the cost of production, the availability of raw materials and the amount of transportation costs involved. Transporting costs include the overhead costs of the transport, the taxes and other indirect costs such as fuel and insurance.
The production process itself should also be taken into consideration. At this stage, the factors that determine production would include the amount of inputs needed to produce the final product, the nature of the products to be produced, and the scale of production. In addition, the number of units to be produced can also be considered. By doing this, you will be able to determine the number of units which will be necessary to produce your merchandise.
Lastly, the last factor to consider is batch production. This is a type of production where in a large number of units are manufactured at a given time. However, this is less profitable than mass production because there are fewer number of products produced per batch. The volume and profit margin of each batch are determined by the batch production process itself, as well as the quality of the products.
- To maintain the survival of a company.
- Provide added value to a product.
- To meet market demand, both from domestic and international markets.
- Meeting the human needs in achieving prosperity from the availability of goods and services.
- Produces export goods to increase the country’s foreign exchange sources.
- Gaining profit so that a company achieves the desired level of prosperity.
- Stimulates the growth of other production businesses so that they can attack unemployment.
Production Process Characteristics
Based on the process
Based on the process, there are two production process types based on the process:
Direct production: This process includes primary and secondary production. Primary production is a production activity taken directly from nature for example, agriculture, mining, and so on. Meanwhile, the secondary process is a production activity that adds more value to an existing item for example, wood to make houses, steel to make bridges, and so on.
Indirect production: Production activities that only provide results from expertise or products in the form of services. For example, mechanical services, health services, consulting services, and others.
Based on the characteristics of the production process
Analytical process: Production activities that separate a product into more and more similar forms to the original.
Extractive process: Production activities by taking products directly from nature.
Fabrication process: The process of converting a material into several new product forms.
Synthetic process: The process of combining several production materials into a product form. Synthetic procedures are also often referred to as assembly processes.
Based on the production period
Intermittent production: Production that does not run all the time. Usually affected by changing seasons, orders, and various other factors.
Continuous production: Production that uses various facilities to create products continuously. Meanwhile, the nature of the product is only a few types and produced on a large scale without affected by season or weather conditions, and time.
Types of Production Process
- Short-term process
It is a production activity that quickly and directly produces goods or services for consumers. For example, the production of food such as toast, fried foods, and others. In other words, consumers tend to get goods quickly in a short time and a matter of minutes for each production.
- Long-term process
This process is a production activity that takes a long time. An example of this process is when you plant rice in a field or build a house. In addition, it takes a long time to make.
- Intermediate process
This process is a production activity that processes raw materials by combining them into a finished product. An example is the car production process, where car parts are made separately, starting from the steering wheel, frame, engine, tires, and so on. After all the details of the car are complete, the parts of the vehicle are then combine into one car.
- Continuous process
This process is a production activity that processes materials sequentially with several stages in the process to become a finished product. For example, factories that produce paper, sugar, and others.