2.4 - Resource Management Flashcards
What is batch production?
A method that involves producing products in groups
What is cell production?
Producing a family of products in a small self-contained unit (a cell) within a factory
What is flow production?
Large-scale production of a product where each operation is performed continuously after the previous
What is job production?
The manufacture of one, bespoke product at a time
What is meant by capital intensive?
when products are mainly produced by machinery
What is meant by capital productivity?
The amount of output each unit of capital produces
What is efficiency?
Producing a level of output where average cost is minimised
What is meant by kaizen?
A Japanese term that means continuous improvement
What is meant by labour intensive?
Production methods that make more use of labour relative to human workers
What is labour productivity?
The amount of output each unit of labour produces
What is outsourcing?
Giving work to sub-contractors to reduce costs
What are the advantages and disadvantages of job production?
- quality is high because workers are skilled
- well motivated workforce
BUT - high labour costs (e.g. wages)
- time consuming and expensive
What are the advantages and disadvantages of batch production?
- more use of machinery
- can change production depending on demand
- unit costs are lower (bulk buying)
BUT - small batches = high costs
- complex machinery needed
What are the advantages and disadvantages of flow production?
- very low unit costs due to economies of scale
- output can be produced very quickly
BUT - huge set up costs
- low worker motivation
- difficult to change product
What are some factors that influence productivity?
- motivation of workers - higher motivation = higher productivity and vice versa
- education and training
- labor flexibility - flexible workforces mean that all workers can do multiple tasks, improving productivity
What are some factors influencing efficiency?
- outsourcing - reduces costs and allows the business to focus on other aspects of the product
- relocating - relocating may result in lower costs due to factors such as lower rent, wages and better transport links
- delayering - removing a level of hierarchy from the organisational structure may reduce costs and make a business more efficient as their will be less salaries to pay
What are the advantages and disadvantages of capital intensive strategies?
- machinery is often more precise and consistent
- machinery can operate 24/7
- machinery is easier to manage
BUT - very high set-up costs
- huge costs and delays if machinery breaks down
- can be inflexible - may struggle to meet changes in demand
What are the advantages and disadvantages of labour intensive strategies?
- more flexible e.g. can be retrained
- cheaper from small scale production
- gives an aspect of creativity and ability to solve problems and make improvements
BUT - people are harder to manage
- people can be unreliable
- people may become unmotivated
What is meant by capacity utilisation?
Refers to the use that a business makes of its resources
What is the formula for capacity utilisation?
Capacity utilisation = current output / maximum possible output (x100)
What are the implications for under-utilisation?
- working with under-utilised capacity often means the businesses unit costs are not minimised
- low capacity utilisation may affect morale of workers
- they may feel that the business is struggling to generate orders which may lower motivation
What are the benefits of under-utilisation?
- the business will be able to cope more easily with sudden increases in demand
- less likely to be less work-related stress as managers and workers will be more comfortable with their workload
- this can reduce sickness and absenteeism
What are the drawbacks of over-utilisation?
- can put a strain on some of the resources and workforce
- may increase the risk of accidents or absence
- machines may also be over worked to breaking point, which can also be expensive to repair
- business may not be able to respond to changes in demand
What are the benefits of over-utilisation?
- average costs will be lower because fixed costs will be spread across more units of output
- helps to improve competitiveness and raise profits
- staff motivation may be high if staff feel secure in their jobs
- can improve a company’s image
What are some ways to improve capacity utilisation?
- Reducing capacity - a business may do this by rationalising, which is the process of getting rid of resources that the business can do without e.g. employees, unused fixed assets
- increase sales - selling more means the business will have to produce more, leading to a rise in capacity utilisation
What is buffer stock?
Stocks held as a precaution to cope with unforeseen demand.
What factors may influence stock levels?
- demand - sufficient stocks need to be kept to satisfy normal demand, but also enough to over growth in sales and unexpected demand
- the costs of stock holding - if stock is expensive to hold then only a small quantity will be kept
- the type of stock - businesses can hold small stocks of perishable products. Stock can also become out of date when replaced by new models
What are the implications of holding too much stock?
- opportunity cost - capital used to hold stock could be used to purchase other things, such as new machinery
- storage - stock of raw materials, components and finished goods occupying pace in buildings which may be expensive. Some stock may need to kept in special conditions, which creates additional costs.
- unsold stock - changes in demand may lead to businesses being left with stocks that it cannot sell.
What are the implications of having too little stock?
- business may not be able to cope with unexpected increases in demand
- delayed stock deliveries may lead to a halt in production
What is Just-in-time (JIT) management of stock?
A lean production method where businesses only order stock just in time to be used.
What are the advantages and disadvantages of JIT?
- improves cash flow since money is not tied up in stocks
- lower stock holding costs
- reduces waste
BUT - advantages of bulk buying may be lost
- unreliable suppliers may lead to delays in deliveries of goods
- difficult to cope with sharp increases in demand
What is waste minimisation?
Managing the amount of waste a business has
What is lean production?
A waste minimisation approach that focuses on cutting out waste whilst ensuring quality
Why are lean producers likely have a competitive advantage?
Because lean production:
- raises productivity
- reduces costs and cuts lead times
- improves reliability and speeds up design time
With these improvements, businesses can charge lower prices, offer better quality and reliability and fight off rivals
What is quality assurance?
A method of working for businesses that takes into account customers’ wants when standardising quality. It often involves guaranteeing that quality standards are met
What are quality circles?
Groups of workers meeting regularly to solve problems and discuss work issues.
What is quality control?
Making sure that the quality of a product meets specified quality performance criteria.
What is Total Quality Management (TQM)?
A managerial approach that focuses on quality and aims to improve the effectiveness, flexibility and competitiveness of the business.
What is a way to remember the difference between quality control and quality assurance?
- Quality assurance aims to prevent defects with a focus on the PROCESSES used to make the product whereas quality control aims to identify defects in the FINISHED PRODUCT.
- Quality control is a REACTIVE TASK.
How may businesses gain a competitive advantage from quality management?
- improved product quality will help increase sales.
- may help to cut business costs if faults are identified before the product reaches the market
- can be used as the businesses USP = able to charge higher prices
- this will give firms the competitive advantage to win customers from rivals, increase market share, raise revenue and improve profitability.
