2.4 Flashcards
Define job production
Job production- production of a single unit that is unique. Custom product made to specific order eg wedding cake
Adv and dis of job production
ADv of Job production
- High quality
- Skilled labour
- Highly flexible production
- High profit margins due to premium price
DIS of job production
- Labour intensive = increased costs of labour due to high skill
- High unit cost
- Production= slower= longer lead times= maybe decrease satisfaction
- Wide range of specialist tools needed
Define batch production
- Standaridised components can be made in relatively large quantities but system can be adjusted for specification. Made in groups
Adv and dis of batch
ADV of batch
- Lower unit cost than job production (due to economies of scale)
- Flexibility to produce different batches of products
- Machines not producing 24/7 like flow = increased choice for customers
DIS of batch
-Downtime when switching between batches as machines have to stop and change for next batch
- Reduced quality from job
- Decreased motivation due to boring task
Define flow production
Flow production- highly automated,standardised and continuous production of goods eg cars, bottled drinks
Adv and dis of flow
ADV of flow
-High productivity (large-scale, continuous production)
-Lower unit cost (due to economies of scale and automation)
-Consistent quality (thanks to automation)
DIS of flow
-Inflexible — limited ability to change product design quickly
-High initial investment in equipment and machinery
-Monotonous work for employees, potentially leading to low motivation
-Breaks in production= expensive
Cell production
Cell production- team of workers work together to produce an entire product or part of it eg phones,electronics
Adv and dis of cell
ADV of cell
- Workers are more motivated and engaged (teamwork, job rotation)
- Flexibility in product changes
- Reduced waste and shorter lead times
DIS of cell
- Time-consuming setup for each product change
- Higher labour costs if not managed effectively
- Can be difficult to maintain coordination across cells
Define productivity and give formula for labour productivity
Productivity is Output per unit of input in a specific time period
Labour productivity= total output/ number of employees
Ways to increase productivity
- Motivate workers= increased willingness to work hard
-Educationa nd training= increased skill set - Working practise eg teamwork, quality management
- Introduce machines = increased output, decreased mistakes
- Specialisation= workers become professionals in their roles
Problems of increased labour productivity
- Decrease motivation
- Stress and burnout
- Reduce customer service
- Costly as increased mistakes made = decrease quality
Link Between Productivity and Competitiveness
- Increased output= EOS= decrease unit cost in SR = increased competitiveness as they can offer lower price or comp price
Define efficiency
Efficinecy is about making the best use of resources meaning that waste is minimised and average costs will be at their lowest
> It’s about maximising output with minimal waste.
Factors Influencing Efficiency
- Employee skills
- Communication
- Management decision making
- Effective systems (machines)
- EOS
- Lean production techniques
Benefits of increased efficiency
- Increased labour productivity
- Decreased unit cost
- Increased profit margins
- Increased flexibility
- Increased competitiveness
Define labour and capital intensive
Labour intensive- high levels of human input in production process eg job production
Capital intensive- high level of capital investment eg machinery eg flow production
Adv and dis of labour intensive
Advantages:
-Flexibility in adjusting to changes in product or demand
-Lower initial investment compared to capital-intensive methods
-Higher quality (especially in services)
Disadvantages:
-Higher ongoing costs (wages, training, recruitment)
-Productivity may be lower than capital-intensive methods
Adv and dis of capital intensive
Advantages:
-High productivity due to automation and machinery
-Consistent quality (due to machine precision)
Disadvantages:
-High initial investment (for machinery and technology)
-Less flexible (difficult to change production quickly)
-Maintenance and repair costs for machinery
-Risk of over-reliance on machines if there’s a technical failure
Ways to reduce wastage
Reduce:
-Inventory
-Defects
-Waiting times
-Overprocessing eg adding too many features to products
-Overproduction
-Transport- unnecessary movement of goods
Define capacity utilisation and give formula
Capacity utalisation measures the extent to which productive capacity is being exploited
Capacity Utilisation = (Current Output ÷ Maximum Possible Output) × 100
Implications of under capacity
Under- Capacity (When a business is producing less than its maximum potential)
Implications:
- Idle resources=inefficiency= not exploting EOS= increased average costs and unit costs
- Loss of market share due to them not operating at full capacity= may see a fall in sales = decreased percentage
-Lower profitability: Since capacity is not fully utilised, the business is not making the most of its resources and generating maximum revenue.
-Reduced competitiveness
Implications of over capacity
Over-Capacity (When a business is operating at or beyond maximum output)
Implications:
-Maintenance issues: Machines or equipment may break down more often if constantly pushed beyond their limits= delays = decreased satisfaction
-Staff= excessive pressure= increased mistakes due to burden= lower product quality or increased defects = increased cost per unit= decreased profitability and increased labour turnover
- Increased variable costs: To meet demand, the business may need to pay for overtime or use additional resources.
-Reduced flexibility: The business may struggle to adapt to sudden changes in demand
Ways of improving capacity
- Overtime payments eg zero hour or temporary contracts = increased productivity
- Outsource production from other firms = increased current output
- Decrease machine maintenance times = help decrease lead times and increase SR output
- Invest in technology
-Lean production: Implementing lean practices can reduce waste, improve process flow, and make full use of available capacity.
-Staff training
Ways to decrease capacity
- Rationalisation- redundancies of workers or sell assets
- Subcontract work from other firms meaning
Key elements of a stock control diagram:
Re-order level: The point at which stock levels fall low enough to trigger a new order before running out completely.
Lead time: The time taken from placing an order with suppliers to receiving the goods.
Maximum stock level: The highest amount of stock the business can hold.
Minimum stock level: The lowest acceptable stock level before more needs to be ordered.
Buffer stock diagram
Define buffer stock and what is the importance of it
Buffer stock is the lowest amount of stock a business can store on site whilst being able to operate effectively
Importance:
-Protection against supply chain disruptions: Delays from suppliers, natural disasters, or demand spikes.
-Prevents production halts: Ensures that operations can continue without stopping due to lack of materials.
-Safety net: Keeps production flowing when lead time is longer than expected.
Risk of too much buffer stock
-Increased storage costs (warehousing).
-Outdated stock (e.g., perishable goods can spoil).
-Tied-up capital in stock that could be used elsewhere.
Cost and waste minimisation of poor stock management
Cost of poor stock management
-opportunuty cost as tying up cash that could be used somewhere else
-shrinkage-stock being stolen,damaged,lost
-financail cost of people managing warehouse
-too little stock= orders cant be met= decreased satisfaction= decrease loyalty= decreased sales
Waste mnimisation of poor stock management
- Store in appropriate condition eg perishables in fridges
-rotate stock -old stock gets used/sold first
-pricing strats-adjust price to clear stock through promotion
-computerised stock management=tracks inventory
Define JIT
JIT-supply of products and raw materials is triggered by demand of customers
Benefits and drawbacks of JIT
Benefits:
-Reduced storage costs: Less stock means fewer warehousing and handling costs.
-Cash flow improvement: Less money tied up in stock.
-Reduced risk of obsolescence: Stock is fresh and less likely to become outdated.
Risks:
-Dependence on suppliers: If the supplier fails to deliver on time, the entire production process can be delayed.
-Lack of flexibility: Businesses might struggle to meet sudden surges in demand.
-Supply chain disruptions: JIT relies on perfect timing, and delays can cause severe disruptions.
Define lean production
Lean production involves practice of reducing waste in operational process
Adv and dis of lean production
ADV of lean
- decreases waste and AC = increased competitiveness as can charge lower prices and profits rise
- Improved Efficiency= faster production= decreased lead times= increased satisfaction of customers
- Improved Cash Flow
DIS of lean-
-Employee Pressure-Lean systems often require employees to work more efficiently with fewer mistakes — this can increase stress or dissatisfaction.
- Initial Costs
Define quality and quality control
Quality- the extent to which a product or service meets customer needs and if its fit for purpose
Quality control- check quality at the end of production
> 1 person may be involved
Adv and dis of quality control
✅ Advantages:
Ensures defective products don’t reach customers.
Can be quicker to implement than other quality systems.
❌ Disadvantages:
Problems are caught too late (wasteful).
Employees may not take responsibility for quality.
Define quality assurance
Quality assurance- quality is checked at every step of production
>all employees involved
Adv and dis of quality assurance
✅ Advantages:
Reduces waste by identifying faults early.
Encourages staff responsibility for quality.
❌ Disadvantages:
May slow down production if too many checks are needed.
Requires training and commitment from all employees.
Define quality circles
Quality circles are small groups of employees 6-12 who meet regularly to discuss quality problems and solutions.
Adv and dis of quality circles
✅ Advantages:
Improves morale and teamwork.
Encourages innovation and continuous improvement.
❌ Disadvantages:
Time-consuming.
May not always lead to actionable ideas.
Define TQM
Total quality management- system of management based on quality being the priority through the organisation meaning quality is the responsibility of all employees
Adv and dis of TQM
✅ Advantages:
Creates a quality-focused culture.
Reduces waste, improves efficiency, and boosts customer satisfaction.
Prevents defects at all staged
Empowers employees as it gives them a responsibility= increased motivation
❌ Disadvantages:
Requires long-term commitment.
Expensive and time-consuming to implement and train staff.
What’s kaizen
> continuous improvement
Involves all employees.
Focuses on gradual improvement rather than large, sudden changes.
Helps reduce waste, improve productivity, and increase employee engagement.
Adv and dis of kaizen
✅ Advantages:
Encourages innovation and teamwork.
Can lead to big improvements over time.
❌ Disadvantages:
May take a long time to see major benefits.
Requires full commitment from all staff.
Good quality chain of reasoning
Good quality= increased customer satisfaction → Repeat business and brand loyalty → Improved reputation → Attracts new customers → Reduced costs → Less waste, fewer returns, and lower repair costs → Higher efficiency → Streamlined operations, better productivity → Premium pricing → High-quality products can justify higher prices
Link between quality and competitiveness
Adds value to products (usp)= increased price or premium price = increased customer satisfaction as their standard is met =repeat purchase= increased competitive advanatge
Difficulties in improving quality
-perception of quality is changing
-bif firms experiencing no comp could reduce quality
-increased quality=more work for workforce= avoidance
- measuring can be expensive and difficult
Consequences of bad quality
-if products needs recalling = can be expensive
-damage reputation
-legal cots if product not fit for purpose
-expensive
