2.4 Flashcards
What is production
The process of making or manufacturing goods and products from raw materials
What is job production + adv, dis
Manufacturers produce one product at a time as ordered by the customer
High quality product
Motivated and highly skilled workers
Customised products can be produced
Production is slow
Labour costs are high
Flow production defintion + adv dis
Continuous manufacturing of standardised products, usually on a production line
Low unit costs due to economies of scale
Rapid production
Usually highly automated (capital intensive)
Customisation is difficult
Capital equipment can be expensive to purchase
Batch production defintion + adv dis
Groups of the same product are produced as a batch e.g. 1000 Blueberry muffins
Workers can specialise
Production can take place as the previous ‘batch’ starts running out
Requires careful coordination to avoid shortages
Money is tied up in stock
Completed products need to be stored
Cell production def + adv
Invloves producing a familt of products in a small contained unit (cell) within a factory eg Tailor made suits
Group working allows ideas to be generated within cell to improve effieceny -kaizen + group work motivation - mayo
What is productivity / labour productivity definitions
Productivity is the output per input (person or machine) per hour
The labour productivity of a business is measure of the output per worker during a specified period of time
Labour productivity is calculated using the formula-
Output /Number space of space Workers
how motivation of employees affects productivity
Motivated workers tend to be more productive
Financial incentives linked to output may increase worker productivity
Non-financial incentives may include workers in decision-making, increase their commitment and productivity
How capital productivity influences productivity
Increased automation can improve levels of output and quality
Well chosen machinery is less likely to make mistakes than humans
Machinery and technology can operate for long periods without a break as long as it is properly maintained
How specialisation influences capital productivity
Workers are able to focus on a few or even one task so becoming more effienct and so productive
How education and training influences productivity
Skilled staff can produce things faster, while experience brings knowledge of how to complete tasks effiently to a high quality
How labour flexibility influences productivity
Allows companies to make decisions about their labour force in response to market changes and help boost production
How working practices influences productivity
Practices such as flexible working hours increases workers motivation and so productivity
What is standardisation + how it affect efficiency
Occurs when all staff use the same components and techniques in the production process
Training of workers is minimised
Bulk-buying of components reduces variable costs
Production lead time is reduced
BUT customisation of products is not usually possible
What is relocating or downsizing and how does it affect efficiency
Moving production to a cheaper or smaller location can reduce fixed costs
Labour-intensive businesses may look for lower wage locations
Capital-intensive locations may look for lower rents or land costs
However, relocation is very disruptive and will incur significant short-term costs
What is investing in new machinery + how it affects efficiency
Purchasing or upgrading machinery and technology can increase the rate of output, lower costs and improve quality
What is organisational restructuring and how does it affect efficiency
Reducing the level of staff or reorganising staff can better match labour to output needs
Delayering reduces labour costs as levels of management are removed
Redeployment can motivate workers by providing opportunities for staff to take on a new role which will develop their skills and experience
What is outsourcing and how does it affect efficiency
Tasks may be given to other specialist businesses that can complete it at a lower cost
Outsourcing allows a business to focus on improving the efficiency of its core competences
What is adoption of lean techniques and how does it affect efficiency
An approach to production that involves the reduction of all types of wastage (time, resources and space)
Kaizen means that improvements are made continuously
Just in Time involves the holding little or no stock which minimises storage costs
What is kaizen and how does it affect efficiency
Kaizen is about decreasing waste by eliminating overproduction, improving quality, being more efficient, having less idle time, and reducing unnecessary activities. All these translate to cost savings, and can turn potential losses into profits.
What is JIT and how does it affect efficiency
By recieving inventory as they are needed for production, thus cost of storage falls and so efficiency increases
Difference between labour and capital intensive
Labour-intensive production predominantly uses physical labour in the production of goods/services
The delivery of services is usually more labour-intensive than manufacturing
In countries where labour costs are low (e.g. Bangladesh) labour-intensive production is common
Small-scale production is likely to be labour-intensive
Capital-intensive production predominately uses machinery and technology in the production of goods/services
Large-scale production of standardised products is likely to be capital-intensive
Manufacturing in developed countries where labour costs are relatively high is likely to be capital intensive
Capital intensive pros and cons
Low-cost production where output is high
Machines are usually consistent and precise
Machines can run without breaks
Significant set-up and maintenance costs
Breakdowns can severely delay production
May not provide flexibility in production
Labour intensive pros and cons
Low-cost production where labour costs are low
Provides opportunities for workers to be creative
Workers are flexible (e.g. they can be retrained)
Workers may be unreliable and need regular breaks
Incentives may be needed to motivate staff
Training costs can be significant
What is capacity utilisation + formula
Capacity utilisation is measure of the level to which a businesses assets are being used to produce output
It compares current output to the maximum possible output a business can produce using all of its assets and is expressed as a percentage
( Current output/ Maximum Possible Output ) x 100
Drawbacks of over utilisation
Staff will be under a lot of pressure to produce high levels of output
Overworked staff may be inclined to leave increasing staff turnover
Machinery may be pushed to its limits and prone to breakdowns which disrupts production and increase costs
Benefits of over utilisation
High capacity utilisation will minimise average total costs and increase business competitiveness
If workers are busy they are likely to feel secure in their employment
A business that is busy is likely to be well thought-of and is likely to attract customers who are willing to wait for products to be delivered
3ways of improving capacity utilisation
- Increase usage - encouraging sales when demand is usually lower stabilises capacity utilisation - but prices may need to be lowered
- Outsourcing - subcontracting some tasks to outside business can increase the level of output - but profit margins may be reduced
- Reduce capacity - sell fixed assets or reduce staffing to remove excess capacity - but flexibility to respond to increased demand is reduced
On a stock control diagram what is the -
Maximum stock level
The reorder level
Minimum stock level
Lead time
he maximum stock level is the maximum amount of stock a business is able to hold in normal circumstances
The reorder level is the level at which a business places a new order with its supplier
The minimum stock level is also known as the buffer stock level and is the lowest level to which a business is willing to allow stock levels to fall
The lead time is the length of time from the point of stock being ordered from the supplier to it being delivered
adv and dis of buffer stock
Stability in supply
Buffer stocks ensure a stable supply of goods which is able to respond to unexpected customer demand leading to competitive advantage of having a reputation for being reliable
BUT
Cost
Holding buffer stocks can be expensive, as it requires storage facilities and inventory management systems
Opportunity cost
Holding buffer stocks ties up capital that could be invested in other areas of the business
2 adv and 2 dis of JIT
Stockholding costs including storage costs are minimised
Cash flow is improved as money is not tied up in stocks
BUT
Bulk buying economies of scale are not generally possible
The ability to respond to unexpected increases in demand is reduced
How does lean production lead to competitve advantage
Lower unit costs are achieved due to minimal wastage so prices may be lower than those offered by competitors
Better quality of output is likely as a result of supplier reliability and carefully managed production processes
What is quality control + 2adv and dis
Inspecting the quality of output at the end of the production process
ADV
Quality specialists are employed to check standards
An inexpensive and simple way to check that output is fit for purpose
DIS
The rejection of finished goods is a significant waste of resources
There is little focus on the cause of defects
Quality assurance def + 2adv 2 dis
Inspecting the quality of production throughout the process
ADV
Quality issues are identified early so products may be reworked rather than rejected
The cause of defects is the focus so future quality issues may be prevented
DIS
Staff training and a skilled workforce is required so labour costs may be increased
Reworking may lengthen the production process
Quality circles def + 2adv 2 dis
Groups of workers meet regularly to solve quality problems identified in the production process
ADV
Workers may be motivated as they are involved in decision making
Relevant and focused solutions are likely as workers are familiar with processes
DIS
Management need to have trust in workers’ views and solutions
Meetings and structures must be organised regularly
Define Total quality management 2 adv 2 dis
Organisation of the business with quality at its core and with every worker responsible for quality
ADV
Quality in all aspects of the business improves efficiency
A culture of constant improvement exists within the business
DIS
All workers must be committed and receive significant continued training
Careful monitoring and control is required
2 competitve advantages from quality management
Unit costs are likely to be low if a business takes a preventative approach through the use of quality assurance or TQM
Low costs may allow a business to reduce its selling price to better compete with or undercut its rivals
Successfully developing a USP for quality can ease expansion into new markets as a result of the positive reputation it creates
