Q&A - What is meant by the production process?

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Businesses provide goods and services.  To be able to do this, they need to be able to turn inputs into outputs. This is known as the production process.

A good way to think about the production process is to imagine a transformation that happens to a series of inputs.

Inputs into the production process include:

- Labour – employees providing their time, effort and skills
- Equipment – machinery, buildings, computers and all the other
- Raw materials - Physical substances used as inputs (e.g. steel, energy, ingredients)
- Finance – cash needed to buy equipment, pay for employees, rent a location and undertake marketing
- Enterprise – an input that is often forgotten.  Think of enterprise as the creative energy and force that gets a business started and drives it forward

Many of the inputs into the production process are provided by suppliers.

Suppliers provide the goods and services that a business needs in order for it operate.

For example, the suppliers to a Chinese restaurant would include:

- Food ingredients (likely to be from a food wholesaler)
- Energy (electricity, gas, heat & light)
- Property – the landlord
- Marketing – advertising outlets such as newspapers

The outputs from the production process are the finished goods and services.

Outputs are bought by customers – the people who pay.  Customers are often, but not always the same as consumers.

Consumers are the actual users of the goods or service.  For example, a parent might buy a PlayStation 3 console game for a child.  The parent is the customer; the child is the likely consumer.

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