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Introduction

This section very briefly introduces you to some of the issues in the production of products and the delivery of services.  Production is a complex business process and can involve huge investments of capital and the need for significant amounts of floor space.  Consider very carefully how you plan to produce the products you are going to sell.  If you are planning to provide a service you need to think equally carefully about how you will deliver it.  In both cases there will be a limit to how many ‘units’ of your product or service you can deliver to the required standard with your given resources.  Your sales forecast cannot, clearly, exceed this capacity.

Production – make or buy?

If you are selling a product and it requires some operation(s) performed on it in order to achieve a sellable form, you need to think about the production process.  What you will do to it can simply be to unpack it from the supplier’s packaging and put it into your own, or it can be as complicated as completely making it from raw materials.  In either case the fundamental question is, will you do it yourself or use some other production facility – the so called ‘make – buy’ decision.

The key factors you need to consider in reaching a make or buy decision are:

Providing a service

If you are providing a service your delivery capacity, the maximum number of sales in effect, will be governed by the time it takes to deliver one unit of service and the total time you have available.  If, for example, your service is installing an item into a domestic house, the time taken to complete one unit of service is the journey time there and back plus the actual installation time.  Domestic installations can only take place between certain hours.  One person is also limited in the number of hours they can sensibly work.  You have the key data to determine your ‘production’ capacity.  If your sales forecast exceeds your capacity – how do you propose delivering the service?

Logistics

Business operations, of which production is a part, involves inbound and outbound logistics.  Inbound logistics is concerned with your business receiving items it will sell or use to make items it will sell.

To get you thinking about inbound logistics, if you need to, consider the following questions:

Outbound logistics is concerned with your business sending finished goods to your customers.  To get you thinking about outbound logistics, if you need to, consider the following questions:

Do not take either of these lists as exhaustive, they are very general sets of questions and should be used as thought provoking questions.  You need to identify the specific questions for your business.

Quality

Finally, a general question about quality.  For a customer to come back to your business for more of what you have to offer, you must satisfy them.  How will you assure the quality of what you do?  In general you must be able to get to the right customers and give them: