2.4 resource management Flashcards
4 types of method production
job
batch
flow
cell
job production - what, pros, cons
producing one item at a time - as ordered by the customer
PROS
- high quality
- motivated highly skilled workers
customised products
CONS
- slow
- high labour costs
batch production - what, pros, cons
groups of same product produced before moving onto a different group of products
PROS
- workers can specialise
- production can take place a the last batch starts to run out
CONS
- requires careful coordination
- money tied up in stock as completed products have to be stored
flow production - what, pros, cons
continuous manufacturing of standardised products - production line
PROS
- low unit cost bc of economies of scale
- rapid production
- highly automated - capital intensive (using machinery)
CONS
- customisation difficult
- expensive equipment to buy
cell production - what, pros, cons
organised into multi-skilled teams - each responsible for a specific part of the production process
PROS
- more efficient - workers have specific skills and expertise in their areas
- higher motivation bc workers go in teams
CONS
- large extensive reorganisation of production process
- the whole group could be slowed down by a weak worker
labour productivity equation
output / number of workers
capital productivity equation
output / number of machines
factors that influence productivity
- employee motivation financial incentives, non financial incentives
- skills &education - well trained employees r able to make useful contributions - more autonomous
- adaptable work places - flexible hours, locations etc
- investment in equipment - machines don’ t make mistakes or need breaks etc
what is competitiveness
the ability of a business to maintain or grow its sales and market share given the presence and actions of rivals
2 links between competitiveness and productivity
- business that are more competitive have more financial resources to invest in improvements to their productivity
- businesses that increase their productivity levels are likely to be more competitive
what’s efficiency
the ability of a business to use its production resources as cost-effectively as possible
whats efficiency measured in
average cost per unit
equation for average cost per unit
total cost / number of units
maximum efficiency
- achieved when cost per unit is at its LOWEST
- happens when economies of scale are maximised
- when total costs are spread across the optimum level of output
- diseconomies of scale are minimised
factors that influence efficiency
- standardisation of production process - all staff use the same components and techniques in production process - training of staff less, bulk-buying, faster but no customisation.
- relocation/ downsizing - reduces fixed costs like wages and rent
- investment in capital equipment - increase output, quality and reduce costs
- organisational restructuring - motivation etc…
- outsourcing - lower costs of production
- adoption of lean production techniques - no wastage
LABOUR intensive production pros and cons
PROS
- low cost of production
- opportunities for workers to be creative
- workers flexible - they can be retrained
CONS
- small scale
- workers unreliable or need breaks
- incentives needed for motivation
- high training costs
CAPITAL intensive production pros and cons
using machinery and technology
PROS
- large scale
- low costs of production
- machines consistent and precise
- machines don’t need breaks
CONS
- large set up and maintenance costs
- breakdowns cause large delay
- no flexibility
what is capacity utilisation
- measure of the level to which a businesses assets are being used to produce outputs.
- compares current ouput to max possible output
capacity utilisation formula
(current output / max possible output) X 100
what does it mean if a business is UNDER utilisation of capacity
CONS - not making the most of resources - likely to have high unit costs
- fixed costs are spread over less units of output -> higher average total costs
- workers under deployed - not being used much - fear of redundancy
PROS
- under capacity does give flexibility
what does it mean if a business is OVER utilisation of capacity
CONS
- no flexiblity to respond to new orders
- staff under pressure
- staff overworked - increases staff turnover (the no. staff leaving)
- machinery under pressure - breakdowns
PROS
- minimise average total costs
- increase competitiveness
ways to improve capacity utilisation
- OUTSOURCING - give tasks to others - cheaper, faster
- REDUCE CAPACITY - sell fixed assets or reduce staff which gives FLEXIBILITY to respond to increased demand
- REDEPLOYMENT - move underused resources to other parts of business that need them, but re training of staff £££
- INCREASE SALES
- INCREASE USAGE - encouraging sales when demand lower but prices might need to be lowered
definition how to improve capacity utilisation
Reducing its overall capacity will improve the level of capacity utilisation
what does a stock control diagram show (rest on one note)
flow of stock into and out of a business overtime
what is buffer stock and why
- quantity of goods/ raw materials kept in case of stock shortages
- ‘just in case’ stock
pros and cons to buffer stock
PROS
- STABILITY
- PRICE STABILISATION - prevents extreme price fluctuations bc avoids shortages in the market (which would lead to rapid price increase)
- RAW MAERTIAL SECURITY
- COMPETITIVE ADVANTAGE - get a good reputation - never out of stock etc.
CONS
- COST - holding stock is ££
- RISK OF OBSOLESCENCE (not needed) - if demand declines its a huge waste
- OPPORTUNITY COST - holding buffer stock ties up capital that could be invested in other areas
what is JIT stock management
- just in time - raw materials are NOT stored on site
- stock is ordered when required and delivered by suppliers just in time for production
- requires careful coordination
pros and cons to JIT stock management
PROS
- storage costs are lower
- small number of suppliers - can make more trusted relationships - reliable etc
- cash flow improved - no ££ tied up in stocks
- unused storage space available
CONS
- bulk buying economies of scale - not always possible
- difficult to respond o large unexpected increases in demand
- administrative costs related to frequent ordering increases
- unreliable suppliers ?
3 ways to MINIMISE WASTE
- STORAGE
- refrigeration
- effective security
- careful stock rotation - PLANNING
- diligent forecasting
- staff training
- computerized stock control - SALES TACTICS
- reduce prices to encourage purchases
- alternative uses for obsolete stock
methods of quality control
- INSPECTION AT END - inspect the quality at end of PP (production process). P - cheap, employ specialists to check. C - rejection = waste, difficult to tell where the problem went wrong - cant fix the problem
- INSPECTING THROUGHOUT - P - identified early so product can still b used, u can see where problem happened - fix it.
C - lengthens process, ££ - QUALITY CIRCLES - workers meet often and solve quality problems
P - motivated, teamwork, relevant and focused solutions
C - trust in workers, meetings regularly = time-consuming - TQM (total quality management) - organization of business with quality at its core - every worker responsible for quality. P - better efficiency. C- monitoring difficult
what is Kaizen - continuous improvement
- taking continuous steps to improve productivity through elimination of all types of waste in production process.
- changes are small and ongoing rather than large one off changes
- constantly reviewed
- TQM ( total quality management)
- JIT stock management
