Production Inputs: Two main groups

Lead Manufacturing Firms have two forms of inputs: A) Factors of Production B) Supply Chain.

In the photo above, can you identify the different elements described below, that are required for producing the meal (a product or service)? See the answers at the end of this section.

A) Factors of Production

The first form of inputs, the ‘left leg’ in the main linear value chains map, are the Factors of Production:

  • Land Space
  • Entrepreneurship & Management
  • Specialised Labour
  • Capital Goods & Technology

These inputs are not consumed within the direct process of manufacturing and delivery of the final good. All businesses need all four of these factors of production to create and run a business to provide products and services. It is often asked "where is 'money' - isn't that a minimum factor for a business?" The answer is no: Money is a means of facilitating trade, it is not in itself a productive resource (like all the rest) - you can't use money to hammer in a nail for example; and it is possible to produce services and products without money (i.e., in the commons), but it is not possible without these four factors of production. See more about this in the blue bar to the upper right entitled 'Factors of Production’ (linear value chains).

Every company and start-up has to be able to bring these four fundamental elements together to deliver a product or service to it’s customers. And just as start-ups often focus on the minimum viable product, that they can get to the market to start making revenues, here the factors of production also highlights a company’s need to also manage a minimum viable space, minimum viable entrepreneur, minimum viable team and or labour, and minimum viable technology (which can also include a process or ‘recipe’).

B) Supply Chain

The second form of inputs, the 'right leg’ in the main linear value chain map, is the Supply Chain, which consists of two main subgroups, Raw Materials and Intermediate Goods:

Raw Materials (shown as the green icon):

  • Biotic Materials (organic, or living/once living)
  • Abiotic Materials (minerals and gases)
  • Air
  • Water

Intermediate Goods (the three black icons):

  • Energy
  • Transformed Materials
  • Components

These inputs are consumed during the production and delivery of the final product. This 'leg' is an organised network of contracted, and sub-contracted suppliers (B-to-B companies).

Answer to question at the top of this section: The Land Space is the kitchen, and more specifically can be the kitchen work-surface area; the Entrepreneur & Management and the Specialised Labour can be both of the people - unless one of them is the boss (a professional environment or a teacher for instance); the Capital Goods & Technology is the frying pan, the oven, the cooking hob, knives… and the recipe; the Raw Materials includes the vegetables (biotic), the salt (abiotic), air to breath and to take away odours and steam, and water for boiling, washing, and drinking; the Intermediate Goods are the electricity or gas used to power the cooking and lighting equipment for instance (Energy), the wine (Transformed Materials), and the Components are not so obvious in the photo, but this could include a pasta sauce for instance.

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