Topics: Inventory, Management, Good, Forecasting, Production and manufacturing, Manufacturing / Pages: 2 (466 words) / Published: Mar 31st, 2014
Types of Production Organizations
Definition & Examples
Major Risks
Related Controls
Organizations that Produce to Stock
Organizations that produce standard goods for an impersonal market with generally applicable wishes. Example: beer breweries, brick manufacturers or producers of consumer goods.
1. Unauthorized production
2. Insufficient alignment between production and demand
3. Inefficient production
4. Complex flow of goods
5. Theft of work-in progress
6. Insufficient product quality
Authorization by sales or warehouse department (Risk 1)
Production orders are based on sales forecasts and/or inventory levels (Risk 1,2)
Adequate market research and production planning and cash planning (Risk 2)
Segregation of duties; documentation of actual usage and actual production output; tight and detailed product and production standards (Risk 3)
Permanent check; progress controls; uniquely identifiable production orders (Risk 4)
Physical access control; grant discharge when WIP is transferred; periodic inventory counts (Risk 5)
Independent quality checks; and customer satisfaction measurement system (Risk 6)
Organizations with Mass Customization
Organizations that produce goods by assembling standard parts according to individual customer wishes. Example: computer manufacturers that assemble computers according to customers’ preferences.
1. Misalignment between goods produced and customer orders
2. Insufficient quality of components
3. Insufficient inventory of components
4. Fluctuation in product demand
Adequate recording (Risk 1)
Independent checks on alignment and quality (Risk 1,2)
Customer complaints procedure and customer satisfaction measurement (Risk 1,2)
Adequate planning of inventory, capacity and cash (Risk 3,4)
Reliable inventory records and sales forecast (Risk 3,4)
Agrarian and Extractive Organizations
Similar to produce-to-stock organizations, but the yields are more difficult to predict due to environmental circumstances

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