The basic managerial strategies adopted for the productive system must be related to the product strategies. Obviously, it would be inappropriate to use a high-volume process capable of producing millions of gallons to produce an experimental chemical. Again, we should think in terms of alternative strategies for the extremes as well as for the middle ground.
A productive system for custom products must be flexible. It must have the ability to produce according to customer or client specifications. For example, an aerospace manufacturer must fabricate special component part designs. The equipment and personnel must be capable of meeting the individual component specifications and of assembling the components in the special configurations of the custom product.
Physical facilities are organized around the nature of the processes, and personnel are specialized by generic process type. For example, in a machine shop we might expect to find milling machine departments, lathe departments, drill departments, and so on. The flow of the item being processed in such productive systems is dictated by individual product requirements, so the routes through the system are variable.
The nature of the demand on the productive system results in intermittent demand for the systemâ€™s facilities and each component flows from one process to the next intermittently. Thus, the process focused system with intermittent demand on process types must be flexible as required by the custom product, and each generic department and its facilities are used intermittently as needed by the custom orders. This physical arrangement of the departments by generic type is often called a â€œjob shopâ€ because it is designed to accommodate the needs of individual job orders.
A productive system of considerable significance is designed to deal with custom products and that is the project system.
By contrast, the nature of the demand on the productive system that produces high-volume, standardized products results in continuous use of the facilities. Also, the material flow may be continuous, as in petroleum refining, or approaching continuous flow, as with automobile fabrication and assembly. Because of the high volume requirement of such systems, special processing equipment and entire dedicated producing systems can be justified as a productive system strategy Processing is adapted completely to the product. Individual processes are physically arranged in the sequence required, and the entire system is integrated for a single purpose, like one giant machine. Thus, continuous systems have a product focus. Under these extreme conditions of high demand for standardization products, the production process is integrated and makes use of mechanization and automation to achieve standardization and low cost. Inventories of standardization products may be an important element of production as well as marketing strategy.
Between the two extremes of process focused (intermittent demand) and product focused (continuous demand) systems, we have systems that must deal with low volume multiple products and relatively high-volume multiple products. The low volume multiple product situations usually involve a process focused system where products are produced in batches. This allows certain economies of scale in comparison to the job shop system, which is designed to deal with custom products.
The high volume multiple product situations is likely to employ a mixed production strategy that combines both the process-focused and product focused systems. In manufacturing, parts fabrication is often organized on a batch intermittent basis and final assembly is organized on a line or continuous basis. Because parts fabrication output volume may be substantial but not large enough to justify the continuous use of facilities parts are produced in economical batches, and the resulting inventories provide an important producing strategy. On the other hand the nature of assembly makes possible continuous lines dedicated to certain products.