Three products, three ways of making them: At 2 a.m. at Mill Lane, Priti's bakers bake 1,450 loaves in batches: white, then wholemeal, then sourdough, one oven load after another.
In the afternoon, one of her team pipes a name onto a cake a customer ordered three days ago.
In Goldcrust's factory in Seren, Marovia, a line runs all day, turning out the same sliced loaf for 400 bakeries.
You met the methods in 5.2.1: one item at a time (job production), groups of the same item (batch production) and a continuous line (flow production). In 5.2.2 you met the fourth, mass customization.
This micro is about choosing between them. No method is best on its own. Each one fits some products and some businesses, and four questions show which.
| The question | A celebration cake | Mill Lane's loaves | Goldcrust's sliced loaf |
|---|---|---|---|
| 1. The product: one-off or standard? | Different every time: a name, a size, a colour | A range of similar loaves, the same recipes every night | One loaf, identical every time |
| 2. The volume: how many, how steady? | About 48 a week, each one ordered | 1,450 a night, but the mix of loaves changes day to day | Huge and steady: 400 bakeries, every day |
| 3. The market: what do customers pay for? | Their own design, and they pay more for it | Fresh bread, baked that morning, at $3 a loaf | A low price and a loaf that never changes |
| 4. The business: what can it afford and do? | Skilled decorators and simple tools | One deck oven, Priti and six bakers, a second oven planned | A factory, machines, and the money to run them |
| So the method is | Job production | Batch production | Flow production |
Four questions: The product, the volume, the market, the business. Ask them in that order.
One business can get different answers for different products. Lena's uses job production for its cakes and batch production for its bread, under one roof.
The fourth question often settles it. A method must suit the product, but the business also has to afford it and staff it.
A flow line costs millions before it makes a single loaf. Lena could not pay for one, and her bakers are trained to bake by hand, not to watch a machine. The method also has to fit what the business wants to be known for (its aims): Lena's sells itself on bread baked by bakers.
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Goldcrust's line makes a sliced loaf far more cheaply than Lena's ovens can. But it makes only that loaf. Lena's can switch from white to rye between one oven load and the next, and a cake decorator can write any name a customer asks for.
The trade-off: Moving from job to batch to flow, each item gets cheaper and quicker to make: the cost of the equipment is spread over far more items, the idea you met in 1.5.3.
What you give up is choice, the personal touch and the ability to change quickly. You also need more money up front and demand that is high and steady enough to keep the equipment busy.
Job production
- Gives: a product made for one customer, who will pay more for it
- Gives: varied, skilled work that staff can take pride in
- Gives up: a high cost per item and slow output
- Gives up: easy growth, since every extra order needs more skilled hours
Batch production
- Gives: a range of products from the same equipment
- Gives: a lower cost per item than making each one separately
- Gives up: time lost cleaning and changing over between batches
- Gives up: stock waiting between stages, which needs space and can go stale
Flow production
- Gives: the lowest cost per item and a fast, steady output
- Gives up: choice, because the line makes one standard product
- Gives up: a huge cost up front, and a fault anywhere stops the whole line
- Gives up: repetitive work that can bore the people on the line
Cheapest per item is not the same as best: A flow line is cheap per item only when it runs full. If demand falls, the machines still have to be paid for, and the cost of each item rises.
A low cost also counts for nothing if customers wanted something else. A cake with no name on it is cheaper to make, and it is not what a customer ordering for a birthday came for.
Mass customization from 5.2.2 is an attempt to have both: the low cost of a line with the customer's own choices added at the end. It suits products built from standard parts and needs flexible machines and a way to take each customer's order, so it is a choice with its own price.
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Lena's bread, then and now: In her first year, Lena and her two bakers baked behind the shop, a few trays at a time.
Today Priti and six bakers bake 1,450 loaves a night at Mill Lane, and a second $45,000 deck oven is planned. The method is still batch production. The batches are simply bigger.
As a business grows, the answers to the four questions change. More customers means more volume. The product often becomes more standard. Money for equipment becomes available.
So growing businesses tend to move from job towards batch, and from batch towards flow. But the move is a decision with costs, not something that happens by itself.
What a change of method costs
Money for new equipment
A second oven is $45,000. A flow line for bread costs many times that, and it has to be paid for before it makes anything.
New skills, or fewer of the old ones
Staff who made things by hand must be retrained to run machines, and some craft skills are no longer needed. That can cost jobs and goodwill.
Disruption while it changes
While the new method is set up and learned, output falls and mistakes rise. Orders can be late or missed.
Demand that may not come
A bigger, cheaper method pays only if the extra items sell. If demand stays flat, the business has paid for equipment it cannot fill.
Losing what customers came for
If customers paid for a personal or hand-made product, a more standard one may lose them to a rival, and with them the reason to charge a higher price.
Should Mill Lane move to flow production?: For: Station Road added 250 loaves a night, and a line would cut the cost of each loaf.
Against: Mill Lane bakes a range of loaves, rolls and crackers, and the mix changes every night. At 600 loaves an hour, 1,450 loaves take one oven about 2 hours 25 minutes, so a line would stand idle most of the day. It would cost far more than Lena has, and her customers pay for bread baked by bakers.
So bigger batches, with the second oven, fit how Lena's is growing. Flow would fit only if it won an order for thousands of identical loaves every day, the kind of steady volume Goldcrust's 400 bakeries give its factory.
Growing does not mean dropping the old method. Lena's keeps job production for its celebration cakes while its bread is baked in batches. Large firms often run a small batch line for seasonal products beside their flow lines. The four questions are asked product by product.
How this comes up: Short questions ask why a business uses one method rather than another. Explain why a tile maker uses batch rather than flow production, for two marks: one for why batch suits a range of similar products, one for the detail in the case, that it sells tiles in four sizes.
Longer questions give you figures and ask you to evaluate a switch, such as a dressmaker moving from job to batch production, for ten marks.
The pattern for a switch question
- Say what changes. From one cake to each order, to a standard range baked in batches.
- Strengths, with the figures. More money a week, far less decorating time, cakes on the shelf today.
- Limitations, with the case. Waste if the forecast is wrong, and the personal cake customers paid more for.
- What it depends on. The forecast, the customers, whether both methods can run side by side.
- A judgement that follows. Go ahead, don't, or go ahead in part, and say why.
The trap: judging the method instead of the switch: 'Batch production is cheaper but less flexible' is true of every business. It says nothing about this one.
The question is whether this business should change. Use its numbers, and remember the customers who chose it because of the old method: a switch that loses them can cost more than it saves.
Using the case, evaluate Marco's plan to switch Lena's celebration cakes from job production to batch production.
Model answer plan
See the mark-by-mark plan — for / against / judgement, with marking guidance — in study mode.