Supply and Production Function: Production Systems and Forms


Production is the process of creating products or services to meet the needs and desires of people. To manage this complex process successfully, supply and production functions are the fundamental building blocks of businesses. In this article, we will delve into the importance of the supply and production function, production processes, and various production systems.

Production and Key Concepts

Production refers to the process of transforming inputs into outputs in the form of products or services. The basic elements in the production process are inputs, processes, and outputs. Inputs represent the materials, labor, equipment, and other resources involved in the production process. Processes involve the transformation of inputs in a specific order and within a timeframe, while outputs symbolize the emergence of a product or service.

Structure of the Production System

  1. Product and Service: Represents the main outputs produced by the business.
  2. Factory: Represents the physical production area.
  3. Transportation: The logistic process facilitating the movement of products from the warehouse to the customer.
  4. Equipment: Encompasses the machinery, equipment, and other tools used in production.
  5. Raw Materials: The primary materials used in the production process.
  6. Labor: Human resources and the contribution of employees.
  7. Material: Secondary materials used in the background.

The interaction of these elements shapes a business’s production process.

Production Process

The production process involves transforming elements entering the system into a product or service in a beneficial way. This process includes various stages, from the physical or chemical transformation of raw materials to the storage of products and quality control processes. Effectively managing the production process can enhance a business’s competitive advantage.

Production Systems

Businesses can utilize different production systems when carrying out production. These systems vary based on levels of sophistication, economic structures, and production characteristics. The four fundamental production systems are:

  1. Craft Production System: A production system that works on an order basis and is often seen in small businesses. Production relies on personal expertise and division of labor.
  2. Cottage Industry System: Production takes place independently in the homes of individual workers. It is widespread, especially in sectors like crafts, textiles, and decorative arts.
  3. Job Shop System: Based on craftsmanship but occurs in independent workplaces. Products are usually produced according to general demands rather than specific orders.
  4. Factory System: A system used by large enterprises capable of mass production. Production is supported by special machinery and equipment, resulting in the production of large quantities of products.

Forms of Production

Production forms are closely related to the production quantities and equipment of businesses. The primary forms of production can be classified as follows:

  1. Primary Production: Involves the extraction of natural resources, such as minerals, coal, and forest products.
  2. Analytical and Synthetic Production: Production forms where materials are separated or combined to obtain different products.
  3. Fabrication Production: A system that increases the value of materials by changing their shape and produces standard products, such as clothing, furniture, and shoes.
  4. Assembly Production: Involves bringing together different raw materials and semi-finished products to create new products. Production of items like automobiles, refrigerators, and televisions falls into this category.

These production forms can vary according to the business’s areas of operation and market demands.


The supply and production function play a critical role in a business’s successful operation. This process encompasses a series of stages from raw materials to the point where the product reaches the customer. By selecting production systems and forms that align with their characteristics and industries, businesses can gain a competitive advantage. Therefore, effective management of supply and production processes contributes to sustainable success for businesses.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button