All You Need to Know About Production

The objective of any business firm is to maximize the difference between total revenue and total cost. This requires among other conditions that the firm purchases and combines factors inputs in such a way that the total cost of producing any particular level of output is the lowest possible figure, given existing technological and institutional conditions. The word production means manufacturing.

Production in the wide sense includes other activities that do not imply manufacturing of physical commodities. This is because the manufacturing of such commodities will be useless until they get to the consumers who need them for their satisfaction. This includes the process of getting goods manufactured to the final consumer such activities includes transportation, distribution and marketing. In addition , services which does not involve the “creating” of physical goods but which goes into adding to the satisfaction or utility of human beings are included in production and all these lead to the satisfaction of consumers and therefore, they are all part of production. A production process is the set of all activities that are required to convert a set of inputs (human resources, raw materials) into desired output such as finished products and services. Production therefore is the conversion or transformation of input into desire output.

WHY YOU MUST UNDERSTAND THE KEY ASPECT OF FACTORY PRODUCTION

There are major key aspects or let me say types of production namely: job production, batch production and flow production. It is possible that these keys speech of production are utilized in a factory at different stages of the production of a product. JOB PRODUCTION: is the manufacture of a single complete unit of a product by an operative or a group of operatives and a number of such products can be worked upon simultaneously by different groups of workers. Each group of workers will complete work on the unit before taking up another.

BATCH PRODUCTION: batch production requires that the work on any product is divided into parts or operations. And that each operation is completed through the individual units making up the batch before the next operation is under taken.

FLOW PRODUCTION: is the processing of the materials continuously and progressive. Thus, their is no idle time as in batch processing since work is complete on a unit at a stage of production, it is moved on to the next stage without waiting for the other Items in the batch. It is necessary each operation or manufacturing stage is of equal length, and there is no moment off the production line; inspection is located within the flow production line and the inspection function does not occupy more than the unit operation time, all stages are balance, the correct material, plant and equipment is provided on time and maintenance is by anticipation not default.

SEE THE TYPES OF GOODS IN PRODUCTION

The goods in production can be classified in various ways, such classification includes: capital goods, consumer goods, durable goods and non-durable goods.

CAPITAL GOODS: these are goods needed for the production of some other goods such as machines, equipments.

CONSUMER GOODS: are those goods that are needed for the satisfaction of immediate wants, such as food stuffs.

DURABLE GOODS: these are goods that can last for a long period of time and can therefore be used as many time as possible such as furniture, electronics.

NON – DURABLE GOODS: these are goods which have shot life spam and can therefore be used probably only once or a few number of time such as raw materials generally.

KNOW THE PRODUCTION FUNCTION

Supposing the maximum amount of any production that a firm can produce with any given collection of factor input is determined by prevailing institutional circumstances and by the existing state of technical knowledge. The relationship between the inputs and the outputs is expressed symbolically by a production function of the general form Q=F(V1 V2 Vn) where the variables V1 V2. Vn represent quantities of various factor input and the variable Q represent the maximum output that the firm can produce with a giving set of the input variables. It is assumed that the effect of an increase in any of the input variable is at least up to some limit to increase output. It is also assumed that the proportions in which various factor inputs can be combined to produce a given quantity of output are normally variable. Cases of fixed proportions (at least among ingredients) are found in certain chemical processes; but otherwise, experience indicates that input proportions can be varied significantly with output at a constant level.

FIND OUT ABOUT PRODUCTION LIFE CYCLE

The essence of successful new product introduction of simplification may lie in the appropriate timing of the action. The characteristics of a generalizing product life cycle. The product life cycle is an important tool for analysis and planning of the market activity, it shows the trends in sales and profitability of a particular product over its life cycle. This life spam further has clearly separate stages just like the life of an individual human being.

SEE MORE ABOUT STAGES IN THE PRODUCTION LIFE CYCLE

There are four major stages in the production life cycle these are: introduction stage, growth stage, maturity stage and decline stage.

INTRODUCTION STAGE: this stage will be dominated by the need to establish the product in the market by building buyers and distributors’ awareness of the product and its benefit, consumer advertising and trade promotions will be important in this initial communication process.

GROWTH STAGE: once successfully established, the new product may begin to enjoy rapid sales growth which along with the lack of competition may make this the most profitable stage of the life cycle of the product. The growth stage should be managed so that a full demand base is built in market; there is selective building of customer demand at the expense of existing or substitute product types marketed by competitors.

MATURITY STAGE: it is essential to company profitability and cash flow that , the stage be prolonged for as long as possible for well established products and brands this should be a time for consolation in the market place is mainly concerned with market share, so critical marketing activities need to be managed. To maintain product distribution and customer access to the product, to maintain customer loyalty to the brand or product and hence the race of re- purchase.

DECLINE STAGE: ether for reasons of technical obsolescence, changes in customer or Trade attitudes towards the product over familiarity with it or the emergence of a better product elsewhere in the market; a stage may be reached when sales and profitability start a consistence and perhaps irreversible decline. Once management has recognized and accepted the inevitable, he should withdraw all expenditure on the product above its variables cost of production, and perhaps raising its price.

SEE THE PRODUCTION FACTOR:

Production factors are the agents, inputs or resources used in the process of production. Without such factors, productions may not be possible. However, it is not production factors themselves that are of much importance but the services that such factors could render in production. These production factors includes: land, capital, entrepreneur and labour.

LAND: is the earth and all the natural resources found in and on it. Such resources includes: forest, rivers, minerals and even it includes such thing as sunlight. Land is the final source of all materials because any commodity can be ultimately traced back to the land. The reward of land is rent. The term land is used in the widest sense to include all kinds of natural (as distinct from man-made) resources.

CAPITAL: could be as all forms of wealth that are set aside for the production of further wealth. Thus, capital represents the collection of wealth that are not needed for immediate consumption. Capital is also described as a derived factor because capital has to be produced before being used to produce commodities.

ENTREPRENEUR: is a person who initiates, organizes, control and directs the process of production and bears the resulting risk in the production process. An entrepreneur is the business organizer and the one who combines other factors of production for maximum output. The shapes of the curves in this figure are based on a normal distribution. The actual shape of the curve and the length of duration of the four constituent stages will of course, varies for each production or brand.

Idea Businesses – Getting People to Pay For Your Ideas!

It never ceases to amaze me how much money people will pay for a good idea these days. The question is how you go about being the person who GETS paid for those good ideas. If you have an area of expertise, chances are that somebody needs it!

Think about what it is that you “specialize in”, and who would need those services. If you are great at managing inventory – say you used to manage a restaurant, you could conceivably market yourself as an inventory management consultant, and review sales figures in order to determine how much of a given product to order.

Sometimes, you can work backwards, and look for different branches of consulting-see if any of them apply to areas of knowledge which you possess. If not, feel free to create one. As long as it describes what you do, you’re fine. A word of caution – don’t be too specific, you don’t want people to think that what you offer, isn’t what they want!

You can also redesign your job title. One of my buddies from college was a graphic design artist one day, doing logos, and 2 weeks later he was an advertising consultant, doing complete media and marketing packages – but making over 3 times as much money!

All it takes is a little bit of ingenuity and a stack of business cards. With cards in hand, give them to everyone you know. The words “consultant” and “services” usually stand out.

Think about it – “graphic design artist” or “graphic consultant services.” For some reason, seeing those two words together prepares your potential clients for the added value – and cost to expect from you.

15 Ways To Find The Next Winning Business Idea

In the last post I talked about what makes a great, profitable idea: for you. Now let’s talk about how to actually find that idea. I’ll also follow this up with how to get inspiration for your ideas. Even if you don’t have a creative bone in your body, that’s fine-read on.

1. Take an existing business model and introduce it in a new location or industry. Instead of coming up with a brand new idea, why not take something that already works and implement it somewhere else? One American entrepreneur I talked to recently introduced the “agency” method of finding and managing professional baseball players to Japan. Before him, a large barrier separated talented players and professional ball clubs. Without inventing anything new, he took a successful business model and implemented it in Japan.

2. Take an existing idea to a related market. Likewise, you can take something that works in one market and introduce it to another.

3. Make an improvement to an existing product. You’re a consumer and have the opportunity to try all sorts of new products. See if you can make them better for yourself or others. Often a good resource for this is looking at customer reviews on such sites as Amazon.com. A useful tip: often times, simply making a better product is not the answer-try to see if you can make a cheaper product with less features to satisfy demand from a customer base that isn’t willing to spend as much and doesn’t need a top quality product (big companies often overlook this area). Read The Innovator’s Dilemma for more detail on this topic.

4. Create a brand new solution to a pain point in an industry. People love to complain. Go to forum boards in your business area of interest, read blog comments, and peruse Amazon.com product reviews. Listen to what people hate and develop a solution to their problems.

5. Pay attention to new trends. Don’t try to create something really cool that no one cares about. Go to where the buzz is and you’ll likely land more customers and investors. “Green technology,” “social networking,” “cloud computing…”- these are the areas that are growing the fastest and the companies within these industries need new solutions to their problems as they grow- just pay attention.

6. Figure out what the government is throwing money at. Governments (at least in the U.S. and Europe) are notorious for throwing away money at concepts they deem important but have no clue about (“climate change mitigation, anyone?”). All it takes is reading the newspaper to find out what kind of hot issues are prevailing so that you can find your niche.

7. Take something existing and put your own spin on it. What does Southwest Airlines do that U.S. Airways can’t? Nothing. If it weren’t for slight differences in service, airlines would be as similar and commoditized as coal. But Southwest chose to brand themselves as an airline that cared about customers, could make their lives less stressful by targeting less congested airports, and allowed them to choose their own seats. If they didn’t do this, they would be competing on price alone, and as a small entrant, they would get smashed by the big airlines.

8. Find out how to do something cheaper. If you can convince a CEO that her company’s spending $X thousand per month on a certain service but you can do the same thing for 50% of that with the same level of quality or better, you’ve got a business.

9. Talk to professors and read academic research on hot topics. Academics are infamous for coming up with brilliant ideas without recognizing or having the time to implement them into practical solutions. Visit some labs and interview some experts on an area of interest to you. Universities are often more than happy to supply you with the people you need to make the business happen (lawyers, VCs, experts).

10. Hobbies and passions. Need I say more? If you enjoy something enough, you probably know exactly what fellow hobbyists want.

11. Buy a business in an area of your expertise/passions. If you want to be in business but can’t come up with an idea, why not acquire an existing business in your area of expertise? You would presumably invest in something that is already proven and generating a cash flow. This offers a few benefits: it teaches you quickly how to operate one (although I would recommend having an industry mentor along the way) and it’s easier to finance because lending banks feel secure that it’s already proven.

12. Find untapped distribution networks. Distribution networks are ways for a company to get its products to its customers. A restaurant, for example, is a way for a wine company to distribute its bottles to paying customers. If you find distribution networks that may be good avenues for a product, however the product isn’t there, you may have found an opportunity to distribute a similar product, especially if demand is high.

13. Identify lazy incumbents. Incumbents are large companies that have sustaining, rather than accelerated growth in a market. Although they seem to set up insurmountable barriers to entry, their large size makes them inflexible and often lazy. They may forgo many new technologies, ignore customers, sacrifice quality, or be slow to capture social and fashion trends. If you can catch on faster and satisfy your customers’ hunger, you win.

14. Identify an existing idea/business that could use better branding, content, or service. It’s a sad thing that many great ideas die because people don’t like them or simply don’t get the opportunity to see them. If your talent is in branding products and making them more attractive, undervalued opportunities abound.

15. Add value to a process. A furniture manufacturer could use the help of a sawmill to take the chopped wood from lumberjacks and turn it into chairs and tables. Sure it could grow and cut its own trees and save money, but they may be better off paying a slight premium for the wood from the sawmill so that it can focus on what it does best-making furniture. Think about ways that you can add value in an industry’s value chain.

Inspiration for your idea

So these are some initial types of ideas, but you may want to brainstorm and drill down to what’s right for you. For that you’re going to need to be in the right state-one that gets you inspired and feeling creative. When are you at your most creative state? I want you to think about what type of setting you need to be in to have positive thought. Is it having water run down your back in a shower? Or are you like me and need the rumbling white-noise in a transatlantic flight to free your mind? Here are some more things/environments that may motivate you and allow the free flow of ideas: reading business books or autobiographies of successful entrepreneurs, brainstorming with other MBAs or entrepreneurs, attending conferences/seminars, taking baths, skiing, driving, free writing, drawing…and the list goes on. Good luck and get inspired!

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