Operation Management-ICAI-Inter-Classification of Industries Based on Production Process

1.5 Classification of Industries Based on Production Process
Type of Industry : The type of industry and the method of the manufacturing process exercise a significant
influence on plant layout.
Industries in this context may be broadly classified into four types:
(a) Synthetic,
(b) Analytical,
(c) Conditioning; and
(d) Extractive.
Extractive industries involving the separation of one element from another, as in the case of metal form the
ore. Air conditioning industry involves a change in the physical properties. Metal working industries,
foundries and leather tanning concerns condition their raw materials to have the end products. An oil
refinery, for example, yields naphtha, gasoline, paraffin, tar and kerosene. Similarly, a sugar mill gives,
besides sugar, bagasse and molasses. A synthetic industry, also called the assembling industry, involves
the production of a product by the use of various elements. In other words, various elements go into the
manufacture of an end-product. The chemical industry and the paper industry are synthetic industries.
Light and heavy engineering and watch-making industries, in which several components are assembled to
get the final products, also fall under synthetic industries.
Each of the above types of industries may be further classified into two types, namely:
(a) Intermittent industries; and
(b) Continuous industries.
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This classification is based on the method of manufacture. The former type of industries manufactures
different components on different machines and assembles them to get the end products. Continuous
industries uninterruptedly produce one or two products of a standardise nature. It is needless to emphasise
that the layout designer should keep in mind the type of industry and the method of the manufacturing
process while Plaining a layout.
Intermittent production system situations are those where the facilities must be flexible enough to handle
a wide variety of products and sizes or where the basic nature of activity imposes change of important
characteristics the input (change in product design). Under this system no single sequence of operations is
appropriate and therefore standardized materials or machines cannot be used. Under this type of
manufacturing, production is done in lots rather that on a continuous flow basis. It is done more often on
the basis of customer orders.
The chief characteristics of intermittent industries are that components are made for inventory but they are
combined differently for different customers. The finished product is heterogeneous but within a range of
standardized options assembled, by the producers. Since production is partly for stock and partly for
customer demand, there are problems to be met in scheduling, forecasting, control and coordination.
Examples of such industries are automobile industry, electrical goods manufacturing plants, printing presses
etc.
Intermittent system of production may further be divided into two types, namely (a) job and (b) batch
production.
(a) Job Production - In this system, goods are produced according to the orders of the customers.
Continuous demand of such items is hot assured and therefore production is done only when the
orders for the manufacturing of items are produced from the customers.
(b) Batch Production - Under this system, the manufacturing is done in batches or groups or lots either
on the basis of customer’s order or with a hope of a continuous demand of the product. Under this
system, medium scale production is warranted.
In batch production, machines and equipment are made available for the next batch as soon as the production
of first batch is completed.
Continuous production situations are those where facilities are standardized as to routing and flow since
the raw material or inputs are standardized. Therefore, a standard set of processes and sequences of processes
are adopted. Such processes are adopted by concerns which produce goods or services continuously by
putting them through a series of successive connected operations in anticipation of customer demand
rather than in response to customer orders. Examples of industries using such technology are petroleum,
chemicals, steel and sugar industry.
We can again classify the continuous industries into
(1) Mass production system and (2) Process production system.
(a) Mass Production - This system of production is used by concerns where manufacturing is carried on
continuously in anticipation of demand, though demand of the product may not be uniform throughout
the year. Standardization is the keynote of mass production. Standardized raw materials and machines
are used to produce standardized products through standardized process of production.
(b) Process Production - This system is an extended form of mass production where production is carried
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on continuously through, a uniform predetermined sequence of operations. Generally under this
system finished product of one process is used in the next process as a raw material till the last process.
Process production calls for the setting up of automatic machines and equipment as far as possible.
Large industries like petroleum refining, heavy chemical industries generally use this system of
production.