Planning A Business Production System Part 1

Updated: March 25, 2009

Production is an integral part of a business, specially for retail ventures. Even if you have a great product, if you cannot meet the demands of your market, then your business will not enjoy optimal profits.

This is why having an efficient business production system is important. It ensures that you’re producing quality goods that can serve your customers’ needs.

Let’s say that you have a dim sum cart food stall inside a mall. At present, you’re just buying ready-to-cook siomai in the grocery. With this setup, your profit margin may be low despite a good volume in sales.

To increase your profits, you decided that you’ll just make your own siomai at home. Hopefully by doing so, you’ll have lower product expenses and have a chance to further increase your profits by venturing into distribution of your home made siomai to other client markets (such as other dimsum food cart sellers).

However, making this transition from “buying and selling” products to “producing your own” products is not as simple as setting up a production system at home. You need to carefully plan and make sure that the production processes you decide upon will meet the demands of the business, as well as your customers.

Here are the things you should consider when planning your business production system:

Human Resource
It may be ideal to just do everything yourself but it’s never good to always do so. Plan the manpower you’ll need. Determine the tasks needed to produce your goods and learn to delegate them into specific roles.

In the case of my example, some of the manpower needed may be – the one who’ll buy the raw ingredients in the market, the one who’ll make the siomai, the one who’ll do the storage and inventory of the products and the one assigned for store deliveries. You may be able to do all these at first. But what happens when the demand goes up or worse, you get sick?

Raw Materials
Since you’re now producing your own goods, there is now a need to find suppliers for your raw materials. You may want to read my previous article on where to find suppliers for your business to help you on this.

So from the supermarket grocery, you’ll now go to direct suppliers of meat and vegetables for your siomai production. At this point, you’ll have to list down all the ingredients of your siomai and determine primary and secondary suppliers for each one. In addition, you may have to also consider plastic suppliers for your packaging, among other things.

Equipment and Machinery
An essential part of any production system is the equipment and machinery. It may be easy to do it manually or with existing equipment at the start, but when the demand significantly increases, you’ll need the help of additional or better machinery to meet the production requirements.

Back to your siomai production, let’s say your current steamer at home allows you to produce 500 pieces a day, which is just enough to supply your food cart business.

Then one day, an office canteen concessionaire decides to get you as a supplier for raw dim sum, requesting that you deliver 1000 pieces every week. Before you celebrate and make a deal, determine first how this will affect your production. You may need to buy a larger or additional steamers (among other equipment) to meet the incoming production demand.

Human resource, raw materials, equipment and machinery – these are just the first few things you need to consider when planning the production system of your business. I’ll write the others in the next article so make sure you don’t miss that and subscribe to Ready To Be Rich.

Update:
Planning A Business Production System Part 2

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Photo courtesy of singrav4