ABSTRACT
Purposeful productive activities are transformations (production) and transactions (trade). All production systems are founded on one or several production functions, bundles of technologies that accomplish transformations in the entities operated on (flow units). The production function is organized as tasks, flows, processes, and production systems.
Mass production efficiency is driven by division of labor, specialization, and standardization. These have the unintended consequences of fragmentation and loss of individual variety. These are counteracted by product integration and process coordination. Processes are organized in five basic architectures: projects, job shops, disconnected flows, connected flows, and continuous flows. Processes are subject to variability and require continuous quality assurance and improvement based on measurement and evaluation. The volume–variety dilemma hinges on the efficiency of setups.
Transformations and transactions are combined as business models that specify the value offering, customer segments, channels and relations, key activities, resources, and partners.
