Production is to be understood not only as industrial production, but generally as the company's output. It can also be a combination of manufacturing, trade and service. This is another reason why it is hardly possible to develop universally valid concepts for production. More generally, it is about making the creation of operational performance more efficient and effective. This is measured by the measure of productivity.

It can be mentioned the following, most important groups of different value added:

Industry and crafts
The production in the industry and in the craft consists in the production of material products. In industrial production one can distinguish between serial production and one-off production. The series production mainly produces for an anonymous market. The customers decide on existing products and are not in a position to communicate their own wishes to the producer and to have them considered in the design of the products.

Here are the stations construction, work preparation, material procurement and manufacturing process arranged one behind the other. Only material procurement and production are partially juxtaposed. Series production can be differentiated into small and large series. The larger the series, the smaller the relative share of design and work preparation. An increase in mass production would be mass production.

By contrast, these stages largely overlap in the single-item production. Prior to placing the order, there is a plan in which a large part of the design takes place in order to negotiate prices with the customer. This results in part of the work preparation, which is the basis of planning a delivery date. The individual production requires negotiations between client and contractor. The product is tailored to the needs of the client. This is not contradicted by the fact that the contractor may have already produced a variety of similar products for other clients and he can fall back in particular in the design on a fund of plans, which are then adapted only to the specifics of the contract.

With a high level of automation, the industry has a high share of fixed costs from depreciation and interest. At a low level of automation, e.g. In the craft, the fixed costs come from the personnel employment. In craftsmanship, the labor input is the central element of pricing. For very high quality products, variable material costs and sometimes variable energy costs can play a role.
 
Wholesale and Foreign Trade
The production of the trade exists in particular in the logistics achievement as a link between producers and consumers. In the case of imports and exports, a greater distance is overcome and customs formalities are possibly completed - but this task could also be taken over by the transporter as a service.
 
Wholesaling may also include warehousing if the wholesaler intends to guarantee the availability of specialty products (such as books or pharmacies). If a customer wants a specific drug or book, the retailer can check the availability at the wholesale site via the Internet and obtain it from the wholesaler's daily delivery service. The retailers will then save their own storage costs and for wholesalers it would be acceptable for many affiliated retailers to stock a wide assortment.
 
In the wholesale cost structure, the high variable costs of goods sold are noticeable. Noticeable fixed costs arise when the wholesaler takes over warehousing for the retail trade and offers a flexible delivery service.

retail trade
The stationary retail sector needs sales rooms in which the goods are offered to customers, and sales personnel. This causes considerable fixed costs. Most retail stores rely on bulk business with a manageable number of popular items. A deep assortment, in which the customers find also unusual products, could be organized only with high prices. However, this is counteracted by intense competition in retail, even if there are individual high-priced shops for customers with unusual wishes.

The sales function is very short in retail. The customers come to the shop and pay for the goods immediately. Negotiations are not taking place. With the presentation of the goods all important information about the product must be conveyed.

agencies
Unlike retailers, who buy and sell goods on their own account, agencies act only as intermediaries. In doing so, they act outward like retailers or wholesalers. The most important example is the petrol station tenants, who sell the petrol in the name and on behalf of the oil companies and receive a commission for it. In doing so, they are obliged to comply with the price specifications of the company.

transport industry
In the transport business, a distinction must be made between the freight forwarder and the carrier. Freight forwarders organize goods transports and use them as a subcontractor for the physical execution of the carriers. Under normal circumstances, the freight forwarder also rents containers for the customer, which if necessary can also be transported combined on ships, trains and trucks. Of course, a freight forwarder can also have their own vehicles and then be carriers at the same time. Through this division of goods transport organization, each subcontractor specializes in very specific tasks and receives only small shares from the freight rate.
 
The forwarder therefore has high variable costs because he uses the subcontractors only for the specific orders. The carriers have high fixed costs for the maintenance of the means of transport and the drivers.

service
The production in the industry and in the craft consists in the production of material products. Service companies produce intangible assets. They differ, inter alia. by the fact that there can be no stocks of finished goods at service providers. A service can therefore not be produced for an anonymous market and sold through the trade. Standardized services can be provided, but the customer must contact the service provider directly. Very different services can be provided, so that no general statements can be made about the business and its cost structure.

Rental
The production of a landlord consists in the allocation of a space use. They are often made for this purpose. The buyer of a property secures itself very long-term, while the tenant is flexible within the notice periods. Providing this flexibility is formally a service, but it is not really services provided by people. Not only real estate but also movable property can be rented. Leasing is to be separated from leasing, in which the lessee is bound by the contracts on a long-term basis and, as a result, an investment is financed here.

The cost structure of landlords is almost exclusively characterized by fixed costs, mainly depreciation and interest.

hotel and gastronomy
The services of restaurants were long attributed to retail. But because the experience is increasingly the focus of the restaurant service and less the delivery of specific food and drinks, the assignment to the service sector is more useful. Likewise, the renting of rooms with hotels is only a part of the achievement, which must take care of the experience value as in the catering trade. In both branches very similar products are produced, even if the nature of their production is different. Both branches are characterized by high fixed costs.

Financial Services
Financial services are mainly provided by banks and insurance companies. Here are mainly three product groups can be called:

financial transactions
This is about the maintenance of bank accounts, cash supply, processing of card payments and the like.

Cash investments and loans
Supply and demand of chapters need to meet. If the providers themselves do not enter into a contractual relationship with the buyers and do not want to assume the associated risks, banks will be involved as intermediaries. They guarantee repayment to investors and take on the risks for which they receive compensation.

risk coverage
The institutionalized assumption of risks and their balancing over the mass of the customers is the core business of the insurance companies. However, some insurance companies have at least partially the character of an investment. On the other hand, banks also sell derivatives derivatives.

In this book, industrial production is used as a template. Nevertheless, the functions outside this section 4.4 are largely transferable to the other types of value added.
 

Consumption can be made from a direct delivery or a withdrawal from stock. In trade, the resale to the customer is considered consumption of the purchased goods. Services are always bought directly. Withdrawals for the production of goods can be specifically recorded or calculated retrograde with bills of material from the output. The result of the production over a period of time may be finished or unfinished products. Bills are unnecessary in the trade, because each sold product was previously purchased and it was not changed afterwards.

Incoming delivery can be provided for immediate consumption in production. Then it can be recorded in the warehouse system as access and simultaneous exit. Then it would be ensured that all material inputs were also recorded as warehouse receipts. There still has to be physically organized a transfer to the place of consumption. (Arrow 15)

The physical transfer to the place of consumption is a logistics task, which is why the rectangle in Fig. 23 on page 96 has been marked accordingly. The place of consumption is the place where the work is done using the material. This can be a construction site, but also a just-in-time delivery for an industrial production. In a restaurant, the place of consumption would be the kitchen, in retail the rule in the salesrooms.

When passing to the place of consumption, the cost center is defined by this location. It only has to be recorded. In most cases, the cost bearer for whom work is being done at this place can also be determined. This collection would also take place at the latest with the passing on.

Purchases that are directly related to the company's performance and that are not consumed immediately or resold are temporarily stored. (Arrow 16) The storage is associated with administrative costs for entry and removal and for the day-to-day operation of the warehouse. In this task, up-to-date data on the size of the stocks and on the turnover frequency must be generated.

The warehouse must be organized so that the stored material can be recovered quickly. There are different systematics and software solutions. In Fig. 24 on page 97 this was noted in the ERP system with "inventories" and the letter "C". The inventory should be recognizable from files. In Fig. 23 on page 96, the material store was therefore marked in color as a logistics task.

When unloading from the material store (arrow 17), data collection in addition to the quantity according to the pattern "what? Where? for what? perform. "What?" Is the article no. covered. This involves updating the current inventory and controlling the optimal order quantities and times. "Where?" Specifies the area of responsibility in which the material is used and "for what?" The manufactured product or the completed order. Withdrawals can not be registered individually. For low value goods, bureaucratization should be avoided. Recording this material on cost objects would only be based on the target consumption according to the parts lists from the design.

In Fig. 23 on page 96 the removal was assigned in color to the production as a task. In the trade with the replenishment of shelves a removal from the stock exists. This is usually preceded by a transport from a central warehouse in the store.

Also in-house and in production plants with the removal would be the internal transport to the place of consumption - pick up or bring - to clarify. (Arrow 18)

A message has to be generated that stocks must be replenished. These reports should be able to be calculated flexibly taking into account the orders already issued. A requirement message from the current production process always refers to articles that are constantly procured. A header from the request and quotation can usually be waived and ordered from the previous supplier at the previous conditions. (Arrow 20) Here, Fig. 23 on page 96 shows the complexity of this process, which, in addition to the current stocks and the current consumption, must also take into account the future consumption due to orders already received. At the same time, to reduce costs, it is not necessary to undertake adequately large procurement transactions. In the figure, the requirement message with the color of the rectangle of the procurement was assigned as a task. These are routines that can also be automated.

Nevertheless, it can be concluded from the frequency of the requirement notifications whether a search for alternative sources of supply makes sense for cost reduction. Then, exceptionally, the whole sequence of purchasing activities would be triggered.

The material used at the place of consumption enters the product. (Arrow 21)

In production, the combination of the factors of production capital and labor takes place to a new commodity. This does not just have to be a physical production in industry or craft. Trade also creates value with its mediation between the producer and the buyer. The production can also consist in a service. Capital distinguishes between potential factors that are slow to wear off and repetitive factors that are constantly being replaced.

For the organization of the operational achievement there are the most different industry solutions. In Fig. 24 on page 97, the production in the graphic of the ERP system was designated with the letter "B".

Mostly waste also arises from production. (Arrow 22) For their disposal service providers can be commissioned, which are found through the procurement process. (Arrow 20) Separation of hazardous waste and compliance with environmental requirements must be ensured. This function would also require recycling of waste or recovery as a waste product.

In a world where environmental awareness is on the rise, companies must also view environmental protection as a factor for success. The violation of environmental regulations threatens not only fines, but also a loss of reputation. Waste recycling avoids disposal costs, avoiding waste also saves material and energy and thus reduces costs.

In Fig. 23 on page 96, disposal was marked with the color of the rectangle as a logistics task. The task is more complex. In an environmental controlling, an inventory of environmental pollution is to be made, then ideas for the reduction must be developed and their implementation monitored.

Finished goods are first stored and kept ready for sale (arrow 23), unless they are individually made for this customer on his order and then shipped immediately. The inventory must be constantly kept up-to-date with stock information and the next additions from ongoing production in order to be able to provide accurate information on customer inquiries about deliverability.

The goods master data (1) are also used by the warehouse. The article no. The goods constitute a classification criterion. Another is the storage locations. Here, as with the material warehouse, it must be possible to read which goods can be found at which location. The goods master data can be found next to Art. and designation specifications, e.g. to the temperature, humidity or other conditions. (Arrow 35)

Part of the production can be unfinished. (Arrow 24) Work in progress is already consuming resources. They are therefore output of the current and input of the next period. Only the finished products are available for sale. A central task of the valuation of work in progress is to compare the costs of manufacturing and distributing the products, as well as the proportionate administrative costs to the sales and thus to assess the different profitability of the different products. The measurement and evaluation of unfinished products is fraught with difficulties, because not only their number but also the degree of completion should be determined. Here is to look for suitable simplifications.

The products can also be produced in several stages, whereby initially individual parts are built and assembled at the end. In other cases, there is always something "in the pipeline". There are no unfinished products in the trade. For services, work in progress may be in the pipeline.

In the case of multi-level production, the unfinished products are listed in the material master data under their own article no. detected. At the same time, they are also defined as a product to be produced. For this, a bill of materials is also created, from which parts they consist. This means that the unfinished products are in production planning, but the quantity produced is included in the material stock and not in the inventory. A double definition is possible if these parts are sold at the same time as spare parts to customers.

In order to record the products "in the pipeline", the difference method can be used between inventory delays (see W. Müller, Cost Accounting, Norderstedt 2012, pp. 142 ff.). The direct costs (material and work) are determined directly and at the same time derived retrogradely from the output. If then the damaged products are deducted, the difference between input and output can only be explained by fluctuations in work in progress. This method can be applied automatically.

Work in progress, apart from construction of buildings or ships, will normally be completed in the next period. (Arrow 25) After completion of the previously unfinished products, these are also available for sale. (Arrow 26) In the case of a multi-stage, final assembly, the chain from arrow 24 to 26 replaces the arrow 23. In cases of "pipeline", this chain is a variation variable, the smaller the longer the accounting period lasts.

In addition to the use of materials, labor is also used for the company's performance. The worker flows into the production and should be recorded in quantity. (Arrow 27) The manpower can be counted among the potential factors because the recruitment took place a long time before and the workers also had to be trained or trained. Thereafter, the company has a time-limited amount of manpower of certain qualifications available.

The labor force can be either individual or overhead. The classification does not depend on the quality. Working hours paid directly by customers (for example, for repairs) are direct costs. The same applies if the product is paid, but there is a direct relationship between the labor input and the quantity produced, e.g. for factory deliveries. In both case groups a recording of the labor input is to be organized by cost unit. In other cases, you will classify labor as overheads and record them only by cost center.

In times of minimum wages, increasing work density and cost pressure, but also in the overhead costs better cost control is desired. The job descriptions of the employees list the tasks that have to be fulfilled here. It should be recorded, how much time a task requires and how often it is incurred. A good documentation offers starting points to check a more effective organization of the processes or an automation and thus also to save personnel costs.

The master data contain beside a personnel no. and other data, in particular the hourly rate at which the work is evaluated. The master data also contains the necessary payroll data that is transferred. (Arrow 29) The employee master data will be supplemented by data on the hours worked.

The employee master data must be treated confidentially. Only the part of the data needed for the division of work and the payslips may be accessible at all. For the division of the work it must be known which tasks the worker in question can fulfill with his qualifications and experience and for what he is well suited. Often a simple database helps as feedback from the work results. With these observations, it can be seen which employee can do which tasks better than his colleagues - in other tasks colleagues may be better. If these data are determined and constantly updated, gaps can also be identified for which qualification measures should be planned. But they are not part of the ongoing processes.

The production factor of work is evaluated by wages. The hourly rate can be multiplied by the working hours used and what the personnel costs result. (Arrow 28) Staffing in value added as well as overhead costs is recorded, evaluated and recorded as the basis for payroll accounting. Here, the salary and deductions for taxes and social security are calculated and later disbursed. These processes take place in the personnel administration.

The utilization of the personnel is an important basis for the personnel planning. (Arrow 31) Employee master data are also used for this purpose. (Arrow 32)

Personnel planning is primarily understood as quantitative planning, while qualitative planning is defined as personnel development. Personnel planning is a system of individual plans that consolidates into personnel requirements planning. Staffing requirements can be read mainly as summarization from resource planning, if more frequent bottlenecks are detected or it is noticeable that some of the employees are underutilized.

In addition to the quantitative, there is also the qualitative personnel planning, which is also referred to as personnel development. Its core is education and training. However, special training (eg training on new technologies) should be used very purposefully to fill in gaps between target and actual competence, e.g. but not just found in the staff assessment to close.

On the other hand, general training (for example, preparation for the master's examination) tends to strengthen the motivation of employees who want to earn the employer's support in making career moves with above-average performance.

"Machine" is far to define here. In a restaurant, the layout of the cooking plates in the kitchen would be appropriate, even if it is not longer-term, but must be planned very spontaneously.

Analogous to the working time potential [(division of workers (24)], the available machine working time must also be planned and allocated to the products The procedure corresponds to arrow 27. (arrow 33) The classification of the machines shows their utilization and information Time-critical orders are given priority if capacities are available shortly thereafter.There should be as continuous a capacity utilization as possible.Neither capacity bottlenecks nor overcapacities are in the interests of the companies. This goal must be supported by the information systems.

The machines also have master data that includes capacity, energy consumption and other attributable costs. The machine master data is intended to achieve the most cost-effective machine utilization possible. (Arrow 34)

For the effective use of operational resources, it has to be determined which machines are suitable for the production of which products and how effective and efficient they are. In order to do this, it has to be observed over time and then also recorded, whether and how much the output of a product on different machines fluctuates, as well as whether and how much the input differs. From this rankings and relative distances to the next best machine occupancy can be calculated. The division according to the size of the distances leads to the highest efficiency.