The production system is part of a larger organization – the business entity. The production system can be viewed as a structure or skeleton of value-creating activities. In short, the difference between the value of the inputs and the value of the outputs represents the value generated by the production activities. There are inputs at one end of the production system and outputs at the other end. Combining inputs and outputs is a series of operations or processes, storage, and inspections.
The concept of the production system applies to both the production of components and the production of services. The production of any component or service can be viewed on the basis of a production system. For example, furniture making includes inputs such as wood, glue, nails, screws, paints, sandpaper, wooden pallets, and workers. After receiving these inputs, they must be stored until ready for use.
Examples of production systems include:
Firm Products: Consider the example of the manufacturing industry, such as the sugar industry. Here, the sugarcane is first used as an input, then the sugarcane extract is processed through an alternative process, finally obtaining a release known as refined sugar (used for mass consumption).
Intangibles: Consider an example from a software development company or company’s service department. Here, initially, written program codes are used as input. Some of these codes are integrated into the database and are provided with a user-friendly interface through the conversion process. Finally, an output is available in the form of an executable application program.
Input-output model of the production system:
This is one of the basic models of the production system. A production system is a set of interconnected input-output components and is made up of three component parts: inputs, process, and outputs. Various types of inputs are converted so that they provide a set of outputs. The conversion process is complex and the design of the actual input and output system for the product can be expensive and difficult.
Elements of the production system:
In any business that produces products or services, the production function is associated with market demands, as indicated by a continuous stream of customer orders. This must be done in a manner that meets the needs of the customers, while the production activities are carried out in an effective and economical manner.
The mode of production is a group of means to achieve the objective. Each organization has a specific set of goals that are expected to be achieved through precise methods and procedures. The manufacturing process therefore involves a combination of integrated processes or processes to achieve the goal of producing the required goods or providing the necessary services.
The production system has the following characteristics:
• It has a specific purpose of producing the required goods or providing the required service.
• It contains a certain amount of inputs.
• It is an organized function with good coordination among many functions.
• It does not operate independently from other systems such as marketing or financial systems.
• There is a perception of functions and processes that help to control and improve system performance.