2.3 Flashcards
Labour productivity =
Total output ÷ Number of Workers
What is productivity
Productivity assesses how efficient a business is by measuring how much output each worker produces over a period of time.
Unit cost =
total costs / total output
Impact of technology on production - lower costs
Initial costs of buying new machinery or robots will be expensive
However the business will soon make these costs back with the improvement in quality and reduction of wastage
Robots don’t need to be paid so the savings on wages will soon build-up
This is the process of using more capital intensive (machinery) work instead of labour (human) intensive work
Impact of technology on production – improvement in quality
Design used to be on paper, now with CAD (computer-aided design) designs can be completed on the computer and seen in 3D
Machinery and robots ensure there is no human error in production
Impact of technology on production – improvement in productivity
Robots and machines can work 24/7
They do not need breaks, lunch hours, time off or holidays
This will increase the productivity of a business producing products
Productivity is a measure of output per hour
Impact of technology on production – improvement in flexibility
Using CAM computer-aided manufacture means that a business can use computers to very precisely control, monitor and adjust tools in manufacturing
It also means that a business producing products can be more flexible and produce a wide variety of products
What is job production
Job production is where a single product is made at a time
Advantages of job production
Products made are high quality, which means higher prices can be charged
Bespoke, unique, one-off, to customers measurements or specifications e.g. a kitchen
Very motivated workers who can see one item made from start to finish
Motivated workers are normally more productive and have lower rates of absenteeism
Disadvantages of job production
Labour intensive - Skilled labour and craftsmen are expensive
Wide range of tools may be required
Production process can be slow - Time taken to produce product/service
What is batch production
Batch production is where small quantities of identical products are made
This is the production method used when a business wants to make more than one item at a time
Advantages of batch production
More flexibility because production/machines can be changed to meet customer needs or fluctuations in demand
Standard production of items means it can be mechanised with less labour involved than job production
Employees specialise so become good at their job
Disadvantages of batch production
Workers may be less motivated with repetitive work
Idle (waiting) time between batches needs to be managed as this is wastage because work stops while the machines are changed to make the next product
If one batch takes too long the other batches will all be held up too – slower process
What is flow production
Flow production uses production lines with continuous movements of items through the process.
Advantages of flow production
A business can make larger quantities which means they can bulk buy raw materials and save money (economies of scale)
Automated and computerised production means improved quality and more complex designs can be made in shorter times
As production is continuous, stocks of parts and raw materials don’t need to be held this means a business can use the JIT system – order when needed and not keeping a supply all the time
Disadvantages of flow production
High costs to buy the factory and machinery
This is a very capital intensive process (lots of machines)
Low motivation of staff due to repetitive tasks
Break downs and lost production can be costly
Very inflexible, hard to change the factory machinery to make different products, the production process will be set up to make just one item e.g. bottled cola
Procurement
To source, to acquire, to get hold of
In business, it is used to describe the process of getting goods and/or raw materials from the supplier/manufacturer
Logistics
Transportation of goods and/or raw materials
In business, it is used to describe the process of getting goods/raw materials from one location to another
What are the 3 types of stock
Raw materials
Work-in-progress
Finished goods
Just in Case (JIC)
always have a supply of available stock to offer to customers.
Just in Time (JIT)
order more stock only when a current stock reaches a certain level
Why can’t the business just hold loads more stock?
High stock holding (JIC) is expensive and adds to the cost of a business which will reduce profits e.g. extra storage, insurance, etc.
A business can be left with lots of unwanted stock.
e.g. cat food that is out-of-date
Makes it more difficult to compete on price, due to stockholding costs
What is maximum stock level
This is the most amount of stock you can store at one time.
You can’t store more as you don’t have the space and it will go out of date/perish
What is maximum stock level
This is the least amount of stock that you can store – any less and you will run out and not be able to meet customer demand
What is re-order level
Re – order level - This is the amount at which a business should now order more stock – anything below this should keep you in stock until the delivery turns up
What is Delivery or lead time
How long it takes for an order to arrive - This is called the delivery or lead time
There are 2 types of quality checks in production. What are they
Quality assurance
Quality control
What is Quality Control?
At the end of the production process, a team/individual inspects the goods to make sure all goods meet certain standards
Quality control- advantages
Does not slow/stop flow production
Those in charge of quality control do it well, that is their sole purpose (specialised)
Quality control- disadvantages
Difficult to check every item (especially for large businesses)
Wastage (goods aren’t checked until the end, could result in lots of faulty products)
Quality Assurance
Builds quality checks into every stage of the production process – not left until the end. Every worker is responsible for making sure that the work they do meets quality standards
Quality Assurance Benefits
Costs are reduced because there is less wastage and re-working of faulty products as the product is checked at every stage
It can help improve worker motivation as workers have more ownership and recognition for their work
Stops customer complaints/gives better customer satisfaction
Quality Assurance Drawbacks
Time-consuming
Costs a lot of money to train staff
Time-consuming to train staff
what are the stages of the sales process
- Customer interest
- Speed & efficiency of service
- Customer engagement
- Post-sales service
- Customer loyalty
Why is Customer interest - Product Knowledge important
Understanding the products’ features allows the salesperson to present their benefits accurately and persuasively gain customer interest
Customers respond to enthusiastic sales staff who are passionate about theirproductsand eager to share the benefits with them
Why is Speed and efficiency of service important
Speed and efficiency of service keep customers happy and encourages them to return again.
What is customer engagement
Customer engagement is the relationship that the customer has with the brand
This can be improved with:
Loyalty schemes/social media accounts
Why is customer engagement important
This will show the customer that the business is interested in their needs/wants/opinions and is willing to adapt to accommodate them.
What is post-sales service
Post-sales service (or after-sales)refers to various processes which make sure customers are satisfied with the products andservicesof the business.
What are the problems of having bad customer service
○ Bad reputation ○ Bad publicity ○ Lose sales → lower market share ○ Brand image ○ Customer loyalty will fall ○ Customer can switch brands
