Production and products - Just-in-time production

Production and products

Vocabulary

a. Match up these words with the definitions which follow.

Capacity  component inventory lead time plant

Location subcontractor outsourcing or contracting out

any company that provides goods or services for another one

any of the pieces or parts that make up a product, machine, etc.

buying products or processed materials from other companies rather than manufacturing them

the (maximum) rate of output that can be achieved from a production process

the buildings, machines, equipment and other facilities used in the production process

the geographical situation of a factory or other facility

the stock of any item or resource used in an organization (including raw materials, parts, supplies, work in process and finished products)

the time needed to perform an activity (i.e. to manufacture or deliver something)

b. After it has been decided what to manufacture, operations managers have to decide where to manufacture the different products, how much productive capacity their factories and plants should have, and how much inventory to maintain. Read the 15 sentences below, and classify them under the following six headings. Some sentences may fall under two headings.

A The consequences of insufficient capacity

B The consequences of excess capacity

C The advantages of large facilities

D The disadvantages of large facilities

E The advantages of having a large inventory

F The disadvantages of having a large inventory

A long lead time may allow competitors to enter the market.

Average fixed cost per unit drops as volume increases because each succeeding unit absorbs part of the fixed costs, giving economies of scale.

Finding staff and coordinating material flow become expensive and difficult.

If lead time increases, some customers may go to other suppliers.

Lost sales and market share are usually permanent.

The working environment might worsen and industrial relations deteriorate.

There are costs of storage, handling, insurance, depreciation, the opportunity cost of capital, and so on.

You can be more flexible in product scheduling, and have longer lead times and lower cost operation through larger production runs with fewer set-ups.

There is always a risk of obsolescence, theft, breakage, and so on.

You can meet variation in product demand.

You may be under-utilizing your work force.

You have protection against variation in raw material delivery time (due to shortages, strikes, lost orders, incorrect or defective shipments, etc.)

You may be forced to produce additional less profitable products.

You can take advantage of quantity discounts in purchasing.

You may have to reduce prices to stimulate demand.

Just-in-time production

Read the text below, and insert the eight words defined in vocabulary a) in the spaces.

Capacity component inventory lead time

Location outsourcing plants subcontractor

Manufacturing companies are faced with a make-or-buy decision for every item or (1) . they use (as well as for every process and service). Do they make it themselves or do they outsource (a contracta lucrari in afara companiei), and buy from a (2) ? If a company assembles products supplied by a large number of subcontractors (furnizor intermediar), they face the problem of how much (3) . they require.

In Just-In-Time (JIT) production also called lean production, stockless production, and continuous flow manufacture nothing is bought or produced until it is needed. Each section of the production process makes the necessary quantity of the necessary units at the necessary time which is when it is required by the next stage of the manufacturing process, or by distributors or customers.

The JIT system is usually credited to Taiichi Ohno, who was vice-president for manufacturing with Toyota in Japan in the early 1950s although he stated that he got the idea from American supermarkets! JIT is wholly contrary to the European and American logic of encouraging greater productivity, and welcoming production that exceeds the agreed schedule or quota, and stocking extras in case of the future problems.

JIT minimizes the cost of holding inventories, which are regarded negatively, as avoidable costs, rather than as assets. The large Japanese manufacturing companies have long practised (4), and generally use extensive networks of small subcontractors. Of course, if a single subcontractor fails to deliver a component on time, the whole production process is sabotaged, but the Japanese industrial system relies on mutual trust and long-term relationships. Small suppliers often attempt to situate their facilities close to the (5). of a larger company with which they work.

The Japanese also prefer small, specialized production (6). with a limited (7).. , in which, wherever possible, all the machines required for a certain job are grouped together. This avoids all the waiting and moving time involved in sending half-finished item from one department to another, although it often requires flexible, multi-skilled employees.

JIT thus greatly reduces transportation and inventory costs, and should ensure that there is no waste from overproduction, or from idle workers waiting for parts. It allows increased productivity because of shortened throughput time (timpul de prelucrare a materialelor). If factories are equipped so that set-up times are short, very small production runs (etape de productie) are possible. Any quality problems or product defects should be noticed more quickly, production (8) (timpul de conducere a productiei) are reduced, and the firm can react more rapidly to demand changes.

Products and brands

Read the following text, and write a brief heading for each paragraph.

Marketing theorists tend to give the word product a very broad meaning, using it to refer to anything capable of satisfying a need or want. Thus services, activities, people (politicians, athletes, film stars), places (holiday resorts), organizations (hospitals, colleges, political parties), and ideas, as well as physical objects offered for sale by retailers, can be considered as products. Physical products can usually be augmented (a spori, a creste) by benefits such as customer advice, delivery, credit facilities, a warranty or guarantee, maintenance, after-sales service, and so on.

Some manufactures use their name (the family name) for all their products, e.g. Philips, Colgate, Yamaha. Others, including Unilever and Procter & Gamble, market various products under individual brand names, with the result that many customers are unfamiliar with the name of the manufacturing company. The major producers of soap powders, for example, are famous for their multi-brand strategy, which allows them to compete in various market segments, and to fill shelf space in shops, thereby leaving less room for competitors. It also gives them a greater chance of getting some of the custom of brand-switchers (cei care schimba marcile pe care le cumpara).

Most manufactures produce a large number of products, often divided into product lines. Most product lines consist of several products, often distinguished by brand names, e.g. a range of soap powders, or of tooth-pastes. Several different items (different sizes or models) may share the same brand name. Together, a companys items, brands and products constitute its product mix. Since different products are always at different stages of their cycles, with growing, stable or declining sales and profitability, and because markets, opportunities and resources are in constant evolution, companies are always looking to the future, and re-evaluating their product mix.

Companies whose objectives include market share and market growth generally have long product lines, i.e. a large number of items. Companies whose objective is high profitability will have shorter lines, including only profitable items. Yet, most product lines have a tendency to lengthen over time, as companies produce variations on existing items, or add additional items to cover further market segments. Additions to product lines can be the result of either up-market or down-market, i.e. making items of higher or lower quality. This can be carried out in order to reach new customers, to enter growing or more profitable market segments, to react to competitors initiatives, and so on. Yet, such moves may cause image problems: moving to the lower end of the market dilutes (a slabi, a dilua) a companys image for quality, while a company at the bottom of a range may not convince dealers and customers that it can produce quality products for the high end. Line-filling adding further items in that part of a products range which a line already covers might be done in order to compete in competitors niches (nisa), or simply to utilize excess production capacity.

Vocabulary

Find words or expressions in the text which mean the following.

1 the possibility of paying for a product over an extended period

2 a promise by a manufacturer or seller to repair or replace defective goods during a certain period of time

3 a surface in a store on which goods are displayed

4 consumers who buy various competing products rather than being loyal to a particular brand

5 the standard pattern of sales of a product over the period that is marketed

6 the extend to which an activity provides financial gain

7 possibilities of filling unsatisfied needs in sectors in which the company can produce goods or services effectively

8 the sales of a company expressed as a percentage of total sales in a given market

9 the set of beliefs that the public at large holds of an organization

10 a small, specialized, but profitable segment of a market