2.4 resource management Flashcards
What is production?
Transformation of resources into finished goods and services
What are the methods of production?
Job
Batch
Flow
Cell
What affects the methods of production used by a business?
- Level of output
- Nature of the product
- Whether the product is standardised or customised
- Level of automation
What is job production? And advantages and disadvantages?
Manufacturers produce one product at a time
(+ve)
- high quality
- skilled workers
- customised products
(-ve)
- slow production
- high labour costs
What is flow production? advantages and disadvantages?
Continuous manufacturing of standardised products on a production line
+VE
Low unit costs due to economies of scale
Rapid production
Usually highly automated (capital intensive)
-VE
Customisation is difficult
Capital equipment can be expensive to purchase
What is batch production? Advantages and disadvantages?
Groups of the same product are produced as a batch
+ve
workers can specialie
production takes place when previous batch runs out
-ve
requires careful coordination to avoid shortages
money tied up in stock
completed products need to be stored
What is productivity?
the output per input (person or machine) per hour
What is labour productivity?
Output per worker during a specified period of time
What is capital productivity?
Measure of output of capital employed during a specified time period
What factors influence productivity?
Employee motivation
Skills, education and training
Business organisation and working practices
Investment in capital equipment
What is the link between productivity and competitivenes?
Increase levels of productivity are more likely to be competitive
What is efficiency?
Ability of a business to use production resources as cost effectively as possible
What is efficiency measured in?
Average cost per unit
When is the most efficient level of production achieved?
- Economies of scale maximised
- Total costs spread across optimum level of output
- Diseconomies of scale minimised
What factors influence efficiency?
Standardisation of production process
Relocation or downsizing
Investment in capital equipment
Organisation restructuring
Outsourcing
What is the difference between capital and labour intensive production?
Labour-intensive production predominantly uses physical labour in the production of goods/services
Capital-intensive production predominately uses machinery and technology in the production of goods/services
What is the advantages and disadvantages of capital intensive?
Low cost production when output is high
Machines are constant and precise
Machines run without breaks
Set up and maintenance costs
Breakdowns can severely delay production
May not provide flexibility in production
What is the advantages and disadvantages of labour intensive?
Low cost production when labour costs are low
Provides opportunities for workers to be creative
Workers are flexible
Workers unreliable and need breaks
Incentives to motivate staff
Training costs to be significant
What is capacity utilisation?
measure of the level to which a businesses assets are being used to produce output
What are the issues and benefits with under utilisation?
- fixed costs spread out over fewer units so higher average costs
- workers may be under deployed so fears of redundancy
- meet demands
- engage workers in maintenance tasks
What are the issues and benefits of over utilisation?
- can not respond to demands
- higher staff turnover
- machinery can be pushed to limits
- minimise average costs
- increase competitiveness
- secure in employment
How to improve capacity utilisation?
- increase sales
- increase usage
- outsourcing
- reduce capacity
- redeployment
What is a stock control?
illustrates the flow of stock (inventory) into and out of a business over time
What is in a stock control diagram?
- maximum stock level
- reorder level
- minimum stock level
- buffer stock
- lead time
what is the advantages and disadvantages of holding buffer stock?
advantages
- stability in supply
- price stabilisation
- raw materials security
- competitive advantage
disadvantage
- cost
risk of obsolescene
- opportunity cost
What are the implications of poor stock control?
- storage costs
- price reductions
- risk of stockout
- loss of potential sales
What is JIT? advantages and disadvantages?
a process in which raw materials are not stored onsite but ordered as required and delivered by suppliers ‘just in time’ for production
advantages
- storage minimised
- cash flow improved
- work with a small number of trusted suppliers
- unused storage space
disadvantages
- bulk buying economies of scale not possible
- cant respond to demand
- administrative costs with frequent ordering
- unreliable suppliers
How to minimise waste?
storage
planning
sales tactics
What is lean production?
Minimisation of resources used in production
What does lean production involve?
Less time as production is organised
Fewer materials
Less physical labour
The space required for production is reduced as a result of just in time stock management
A small number of trusted suppliers work closely with the business
How can lean production lead to a competitive 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 are the methods of checking quality?
quality control
quality assurance
quality circles
tqm
what is quality control? advantages and disadvantages?
Inspecting the quality of output at the end of the production process
Quality specialists are employed to check standards
An inexpensive and simple way to check that output is fit for purpose
The rejection of finished goods is a significant waste of resources
There is little focus on the cause of defects
What is quality assurance? advantages and disadvantages?
Inspecting the quality of production throughout the process
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
Staff training and a skilled workforce is required so labour costs may be increased
Reworking may lengthen the production process
What is quality circles? advantages and disadvantages?
Groups of workers meet regularly to solve quality problems identified in the production process
Workers may be motivated as they are involved in decision making
Relevant and focused solutions are likely as workers are familiar with processes
Management need to have trust in workers’ views and solutions
Meetings and structures must be organised regularly
What is TQM? advantages and disadvantages?
Organisation of the business with quality at its core and with every worker responsible for quality
Quality in all aspects of the business improves efficiency
A culture of constant improvement exists within the business
All workers must be committed and receive significant continued training
Careful monitoring and control is required
What is kaizen?
Kaizen involves a business taking continuous steps to improve productivity through the elimination of all types of waste in the production process
Changes are small and ongoing rather than significant one-off’s and are constantly reviewed to ensure that the desired positive impact on productivity is achieved
What does kaizen include?
Total Quality Management
Just in Time stock management
Team Working and quality circles
Zero defects in manufacturing
High levels of automation
High levels of cooperation between workers and management
