2.4 Resource Management Flashcards
What is job production?
Involves making one- off items to suit each customer’s individual requirements
Pros of job production
Higher quality
Flexible production method
Employees can be better motivated meaning more job satisfaction
Cons of job production
Cost per unit is very high
Reliant on staff with high skills
Relies on close consultation with the client
What is Batch production?
Makes a group of products to one specification at a time, allowing some variation in products, yet some specialisation.
Pros of batch production
Allows variation in the product being made.
Lower skilled workforce means lower wages can be paid.
Faster than job production as making a batch of identical products speeds up the production process.
Cons of batch production
More costly as specialist machinery will be needed.
Workers may be less motivated with repetitive work.
Cost per unit will be high as machinery will need to be adjusted between batches.
What is flow production?
Refers to the production of a single standardised product.
What is automation?
Means using machines to complete tasks within a process.
Pros of flow production
Unit labour costs are extremely low.
High volumes allow huge demand in mass markets to be met.
Consistent quality
Cons of flow production
High initial costs of installing production machinery.
Products need to be identical.
Repetitive work leading to low motivation.
What is cell production?
Involves organising workers into small groups/ cells that can produce a range of different products more quickly than job production allows.
Pros of cell production
Less time moving from place to place
Group working allows ideas to be generated within the cell for improvements to processes
Motivating for workers to see a completed product
Cons of cell production
Heavily reliant on people rather than automation meaning costs are high
Production volumes will not be as high as in flow production
Huge investment in machinery for each cell
When is cell production most effective?
When there is a need for flexibility but also high production volumes.
What is productivity?
Output per unit of input per time period
Formula for productivity
total output divided by no. of workers
Factors influencing productivity and efficiency
Quality/ age of machinery
Skills/ experience of workers
Level of employee motivation
Efficiency
Measures the extent to which the resources used in a process generate output without wastage leading to failing average cost of production
What is Labour intensive production?
A production process that relies heavily on human input with little use of automation
Issues with Labour intensive production
High proportion of total costs
Managing labour costs becomes critical
What is capital intensive production?
A production process that uses high levels of automation reducing the role of humans as much as possible replacing them with machines.
Issues with Capital intensive production:
Initial costs will be very high due the need of specialist machinery
Running costs will be relatively low
May offer little flexibility in terms of product variations.
What is capacity?
The term used to describe the maximum possible output of a business.
What is capacity utilisation?
The proportion of maximum capacity being used by the business.
What is the formula for capacity utilisation?
Actual output
——————— times by 100
Maximum output
What are the implications of under utilisation?
Fixed costs per unit will be higher
Leads to fears for job security among staff, damaging morale
Causes poor morale among managers
What are the implications of over utilisation?
Firm may be unable to accept new orders, potentially turning customers away to rivals.
There will be little to no time to carry out maintenance on machines/ train staff.
How to improve capacity utilisation:
Increase current output by boosting volume of sales through advertising/ cutting selling price.
Reduce maximum capacity by selling off assets/ laying off staff.
What is stock?
The materials, partially made products or finished goods owned by a business that have not been sold.
What is a stock control diagram used for?
To control/monitor the flow of stock
What are the key features of a stock control diagram?
Maximum stock level
Re order level
Minimum stock level (Buffer stock)
Lead time
What is buffer stock?
Stock that is held just in case there is a problem with delivery of new stock or a sudden increase in demand.
Why would a business keep buffer stock of raw materials?
Can continue with production even if there is a problem with stock deliveries.
If a batch of supplies is found to be faulty, buffer stock can be used to continue production.
What would a business keep a buffer stock a finished goods?
Allows the firm to accept rush orders from customers.
Helps ensure the business can always supply customers when they need a product.
What are the disadvantages of holding buffer stock?
Costs associated with stock holding e.g storage, insurance
Risk of wastage e.g out of date, damaged of obsolete
What are the drawbacks of having too much stock?
Opportunity cost
Cash flow problems
Increased storage costs
Increased financing costs
Increased wastage
What are the drawbacks of holding too little stock?
Lost customers
Delays in production
Loss of reputation
What is just in time stock management?
A Japanese rooted approach to stock management that aims to eliminate buffer stock completely.
What are the benefits of using JIT?
Less costs in holding inventory
Less working capital required
Avoids having unsold stock
Less obsolete/ ruined inventory
What are the drawbacks of JIT?
Little room for error
Very reliant on suppliers
High initial set up costs
Unexpected orders harder to meet
Any delays in delivery cause production to stop
What is waste minimisation?
Reducing the amount of raw materials used.
What is lean production?
A collective term for a range of Japanese techniques designed to eliminate waste from business processes.
What is the competitive advantage from lean production?
Higher levels of productivity, reducing labour cost per unit
Less space of stock, reducing fixed costs
Higher quality, giving repetitional advantages/ greater repeat custom
Faster development of new products
What is quality?
The ability of a good/service to meet customers expectation.
What factors may influence customers interpretation of quality?
Price
Brand
Nature of good or service
Customers personal expectations/experiences
How can quality be measured?
Function
Aesthetics
Performance e.g durability
Reputation
What are methods of improving quality?
Training/ motivating employees
Working closely with suppliers
Understanding customers expectations
Using technology
Quality systems e.g QC,QA,TQM
What is quality control?
Involves checking a good/service before it is delivered to a customer i.e at the end of the process to ensure it meets specified quality performance criteria
What are the strengths of quality control?
Quality can be monitored
Stops faulty products reaching customers
Common problems can be identified
Often a robust system
Inspector takes responsibility
What are the weaknesses of quality control?
Problems only identified at the end of the process
Waste levels may be high
Takes responsibility away from operatives
What is quality assurance?
The checking of a product or service at each stage of its production e.g as it travels along a production line
What are the strengths of quality assurance?
Spots any faults early saving resources being wasted at the next stage of the production process
Ensures clear systems are in place
Enhances the reputation of the business as less chance of faulty goods reaching the end customer
Motivates workers who are responsible for ensuring quality standards are met
What are the weaknesses of quality assurance?
Requires staff training/ high levels of staff commitment
May demotivate workers who feel under pressure
Can slow the production process and labour productivity leading to higher unit costs
Opportunity cost of managers time when initially implementing systems and procedures
What is total quality management?
A way of encouraging staff to think about the business.
What are the strengths of total quality management?
Not paying for inspectors
Empowered employees are motivated
Improved quality = more satisfied customers
More involved workers
More effective management and decision making
What are the weaknesses of total quality management?
Takes time to introduce
Some staff will be resistant to change
Will cost to train staff
Employees may not welcome extra responsibility
What are quality circles?
Groups of staff (5-20) who meet regularly to find quality improvements.
What is Kaizen?
A system that concentrates of small but frequent improvements in every aspect of the production process.
Key features of continuous improvement and eliminating wastage.
How can you get competitive advantage from quality management?
Can help achieve lower unit cost (less wastage)
Positive image to consumer and distributors
USP
Motivated workforce
Premium prices
