What is Production? Concept, Purpose and Industrial Sectors
Students writing NIPM Certified Supervisory Management Professional CSMP and Production Operatives Certification Examinations (POCE) exams and Production Supervisors, Team Leaders and Factory Workers need to understand what production is about.
What is Production? Concept, Purpose and Industrial Sectors
By Dr. Olaniyi Opanuga, CPMP, CPM, COMP, COM, FNIPM
Students writing NIPM Certified Supervisory Management Professional CSMP and Production Operatives Certification Examinations (POCE) exams and Production Supervisors, Team Leaders and Factory Workers need to understand what production is about.
Production is a systematic process of transforming inputs (resources) into outputs (goods and services). It is a systematic process because it involves a logical sequence, a specific and organized pattern of work or a methodical approach. Every production type has its own peculiarities.
Inputs are the resources used to create goods and/or services. Examples are labour or manpower, materials, time, finance, technology, equipment, land, factory buildings, energy, customer service facilities, information and data. These resources are referred to as “factors of production” in economics. But unlike economists who prefer to state them as land, labour, capital and entrepreneurship, production managers call them ‘’five M’s” – men, machines, materials, money and methods. They are now including time, technology, information and data, market etc.
The transformation of resources into goods and services is usually systematic, hence we have production systems. Basic production systems are job, batch, mass flow or continuous and project production systems.
The Differences Between production and Manufacturing?
It should be noted that while manufacturing involves tangible or physical products as final outputs, production involves in both the creation of physical products and delivery of services.
Types of Industrial Sectors
Production is not limited to a factory or manufacturing plant. Production occurs in different industrial sectors of a nation’s economy as follows:
Primary sector (Agricultural industry)
Secondary Sector (Manufacturing, Energy (oil, gas and electricity), building and construction)
Tertiary Sector (Service Industry: Banking and Finance, Healthcare etc.)
Quaternary Sector (Information and Communication Technology (ICT) Industry)
Quinary Sector (Intellectual property, human services, professional services e.g. education, non-profit public service e.g. community service,philanthropic projects etc.)
Production in Government
Production takes place in both private and public sector organizations including government offices. Discover more!
Purpose of Production
From the definition above it is obvious that production is beyond mere converting raw materials into finished products in a factory. Production creates utility. For example a teacher or a medical doctor is a producer. Production is hinged on giving value to people-consumers or customers.
The art and science of converting raw materials, money, manpower, machinery and other inputs into finished goods and services focuses on creating jobs, income, better living standards and a more prosperous society.
The Purpose of production is to create and deliver goods and services that will satisfy the needs and wants of consumers. Government produces or provides public goods such as education, healthcare, infrastructure, national defence, fire service, environmental protection, security, law enforcement and so on. The consuming public pay for those goods in form of taxes and levies.
Private goods are provided by the private sector investors, industrialist, entrepreneurs and business operators who seek to create value with the aim of maximizing profit. In this case, organizations attempt to strike a balance between customer value, shareholder value and general stakeholder’s value.
However, certain public utilities and services are provided by public and private sector organizations.
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