Part 1 Unit 2

PRODUCTION

AND SALE

UNIT 2

PRODUCTION AND SALE

Section 1 producing the goods lead-in

There are two main ways in which a firm can grow. Internal growth is achieved by the firm expanding on its own. The firm invests and increases its production and sales.

Production or manufacturing is the process of making goods in large quantities. Making large numbers of basically identical goods is mass production. Manufacturing is also used when talking about the sector of the economy that makes things.

Products are made, manufactured, or produced in plants. A plant may be referred to as a factory or works. Makers, manufacturers, and producers are organizations that make products.

Manufacturers produce products from raw materials or component parts, which they then sell at a profit. Companies providing raw materials and components or parts to a manufacturer are its suppliers. In modern manufacturing, suppliers are referred to as partners.

Parts are sometimes referred to familiarly as widgets, especially when their purpose is not clear, or when manufacturing is being discussed in a general way and the exact name of the part is not important.

Components waiting to be assembled are stocks, or inventories. Companies may also have stocks or inventories of work-in-progress and finished products, of course. Stocks are often kept in warehouses before delivery.

There is a tendency for manufacturers to reduce stocks, and hence the need to finance, store and handle them, by getting suppliers to make and deliver components just-in-time: just before they are actually needed. This shortens lead time, the time it takes to make and deliver goods.

JIT delivery is an example of lean manufacturing or lean production techniques.

Output is the number or type of things that a plant, company, industry or country produces.

Productivity is a measure of how much is produced in relation to the number of employees. High output per employee = high productivity.

The maximum amount that a particular plant, company or industry can produce is its capacity. If it is producing this amount, it is working at full capacity. If it is producing more than what is needed, there is overproduction, excess capacity, surplus capacity or overcapacity

Spare capacity, on the other hand, is often a good thing, implying that production can easily be increased if necessary.

If far too many things are produced, there is a glut of these things. If not enough goods are being produced, there is a shortage.

A firm can also grow by taking over or merging with other firms. This is known as growth by amalgamation.

When two companies do come together, integration is said to take place. There are three major types of integration or merger:

Horizontal integration occurs when two firms producing similar goods and services amalgamate.

Vertical integration occurs when a company amalgamates either with a company it sells products to, or with a company it buys products from. It is a situation in which a single company owns several businesses that, in combination, control all the stages in producing and selling a product. For example, a company that owns a book publisher, a film producer, and a television company can use the same basic product in all these businesses.

Conglomerate mergers occur when a firm amalgamates with another company that has little or nothing to do with its existing activities.

When a product is re-designed or a production process is organized more efficiently, it is re-engineered.

For decades companies expanded their conglomerates by buying other companies. Initially these companies were related businesses, often suppliers. Soon the conglomerates began buying companies with no relation. Profit motives and the desire to be the biggest became sufficient motivation for acquisition. Ultimately, the conglomerates began to collapse under the weight of the acquired companies. Profits started falling and companies began to retract to their "core" businesses.

Next they discovered that they could shed even core functions by hiring them out to companies that could do them more efficiently and, thus, less expensively. A formal agreement to pay someone to do some of the work that you have agreed to do is subcontracting.

Payroll processing was subcontracted. Shipping was farmed out. So was manufacturing. Companies were hired to do collections, customer call centers, and employee benefits. Collectively, this was called outsourcing.

Outsourcing made sense. Specialized companies provided their services to many client companies at lower prices than the client companies could do the work in-house. Both companies, the service provider and the client, profited from the arrangement. Unfortunately, like the building of conglomerates before it, outsourcing got carried to extremes. Companies began outsourcing work to the lowest bidder and lost sight of the effect it had on the company except for finances. Outsourcing this work to "foreign" or "offshore" companies, solely to take advantage of lower labor rates in those countries, became known as offshoring.

Offshoring can be defined as relocation of business processes to another country, especially a country overseas. This includes any business process such as production, manufacturing, or services.

VOCABULARY

manufacturing	- процесс производства; обрабатывающая промышленность; производство готовых изделий
mass production	-массовое производство; крупномасштабное (широкомасштабное) производство
product	- продукт, продукция, изделие, товар
make, manufacture, produce	- изготавливать, производить, делать, обрабатывать
plant, factory, works	- завод, фабрика, предприятие, производство
maker, manufacturer, producer	- фирма-производитель, изготовитель, поставщик
raw materials	- сырье, необработанные материалы
components, parts, widgets	- комплектующие части, компоненты, детали, узлы,
supplier, partner	- поставщик, продавец, контрагент, компаньон
stocks (BrE), inventories(AmE)	- товарно-материальные запасы
work-in-progress (BrE) work-in-process (AmE)	- незавершенное производство
warehouse	- склад, товарный склад; большой оптовый магазин
just-in-time delivery JIT delivery	- доставка "точно в срок" (поставка материалов и комплектующих на промышленное предприятие небольшими партиями с достаточно частой периодичностью, в соответствии с текущими потребностями производства, что минимизирует издержки на хранение)
lead time	- время выполнения: промежуток времени, необходимый для выполнения какой-л. операции (напр., время между подтверждением потребности в заказе и поступлением товаров, время разработки, подготовки заказа, транспортировки, приема, инспекции)
lean manufacturing lean production	- всесторонне рационализированное производство; максимально экономичное производство
output	- продукция, выпуск, выработка; объем производства; производительность, мощность, отдача
increase, step up output	- увеличивать выпуск продукции
curtail, cut back, reduce output	- сокращать выпуск продукции
manufacturing output	- продукция обрабатывающей промышленности
gross output	- валовой продукт
industrial output	- объем промышленного производства
annual output	- годовой объем производства, выпуск продукции за год
per head [per capita] output	- объем производства на душу населения
national output	- общий объем продукции, произведенной в данной стране, совокупный продукт, ВВП
productivity	- производительность (труда); выработка продукции в расчете на одного работника; продуктивность
capacity	- номинальная мощность, максимальная производительность (о технике); производственные мощности (средства производства, характеризующие максимальные производственные возможности предприятия, страны
capacity utilization	- уровень использования производственных мощностей
at full capacity	- на полную мощность
excess capacity overcapacity surplus capacity	- избыточные производственные мощности (способность производить больше, чем того требует спрос)
overproduction	- перепроизводство, затоваривание
spare capacity	-запасные, резервные, дополнительные производственные ресурсы; незагруженные производственные мощности
glut	- перепроизводство, насыщение, избыток (товаров на рынке)
shortage	-нехватка, недостаток, дефицит; отрицательный уровень запасов; некомплектность; недостаточность предложения
amalgamation	- слияние, объединение; смешение
horizontal integration	- горизонтальная интеграция: слияние компаний, занимающихся одной и той же деятельностью
vertical integration	- вертикальная интеграция: слияние компаний, специализирующихся на разных фазах производства, реализации и потребления одного продукта
conglomerate merger	- конгломеративное слияние: слияние двух или более компаний, относящихся к не связанным между собой отраслям
re-engineering business process reengineering, BPR	- перестройка, реорганизация, реинжиниринг, радикальное перепроектирование бизнес-процессов (системы ведения бизнеса): осуществляется путем удаления малоэффективных звеньев бизнес-процесса и внедрения современных технологий управления с целью достижения существенного (в десятки и сотни раз) улучшения ключевых показателей результативности компании
subcontracting	- заключение контрактов с субподрядчиками; субконтрактинг; (система наиболее характерна для сферы производства); необходимо отметить, что термины outsourcing и subcontracting не всегда выступают синонимами - истинный аутсорсинг предполагает долгосрочное сотрудничество, подряд же может быть единоразовым
subcontract farm out	- заключать субподрядный договор
payroll processing	- обработка данных по платежным ведомостям
call center	- центр телефонного обслуживания, центр обработки звонков (вызовов)
outsourcing	-аутсорсинг, привлечение внешних ресурсов: ситуация, когда организация-заказчик привлекает внешние фирмы для выполнения каких-л. работ, которые являются частью ее основной деятельности; различают три вида аутсорсинга: функциональный (передача функций управления), операционный (передача функций производства) и ресурсный (отказ от собственных ресурсов и приобретение их на стороне) ; здесь же, в свою очередь, выделяются две его составные части — аутсорсинг внутри страны и передача выполнения работ за рубеж. В последнем случае речь идет об офшоринге.
offshoring	- офшоринг, “офшорный аутсорсинг”: передача тех или иных видов деятельности или производства на основе подряда иностранному поставщику
in-house	- внутренний, собственный; внутрифирменный; собственной разработки, собственного производства
in-house work in-house production	-внутренняя работа, внутреннее производство: производство, оказание услуг или выполнение работ, которые производятся самой фирмой в своих помещениях с использованием своей техники и персонала, не прибегая к субподряду

COMPREHENSION QUESTIONS:

1. How is a company’s internal growth achieved?

2. What is mass production?

3. What techniques is JIT delivery an example of?

4. What can the output refer to?

5. What are the major types of integration?

6. What is a conglomerate merger?

7. What kind of activity is called re-engineering?

8. What is called outsourcing? offshoring?

VOCABULARY PRACTICE

Last year British manufacturing output fell by 14%.

Capacity (the amount a firm can make) depends upon the amount of buildings, machinery and labour it has available.  When the firm is making full use of all its resources, it is said to be working at full capacity or 100% capacity utilisation.

The Financial Times reported that, thanks to the deluge of investment, even a hot market like China is now stuck with overcapacity, from cars to chemicals to electronics. A couple of years back, every multinational rushed to build plants there and catch the wave of China's rising consumption. Now factories, not consumers, are overabundant.

With spare production capacity reduced to a trickle, prices have been highly sensitive to any developments which could disrupt output.

A shortage of raw materials and components is forcing many industries to close down.

Recently, US-based companies have accelerated the practice of offshoring and have extended its reach to include so called white-collar jobs. Large companies have transferred their call centers to India, for example, where labor rates can be as low as 50-80% lower than US rates.

Companies have been outsourcing work for many years. This trend has been carried to an extreme in the case of offshoring - sending work and jobs to other countries where labor is cheaper.

Merging with a company at a different stage in the production process, for instance, a car maker merging with a car retailer or a parts supplier is vertical integration.

Lean production is aimed at the elimination of waste in every area of production including customer relations, product design, supplier networks and factory management. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible.

Business Process Reengineering reduces cost and cycle times by eliminating unproductive activities and the employees who perform them.

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