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

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.