2.4.1 Production, Productivity and Efficiency Flashcards
Define Production
the Transformation of Resources into Goods or Services
Land, Labour Capital and Enterprise, Factors in Production are Used in Production Process
State the 4 Methods of Production
- Job
- Batch
- Flow
- Cell
Explain what Job Production is
- firms Producing Items that Meet the Specific Requirements of Customer
- often One-Off
- Unique Items e.g. wedding dressmaker
State 3 Advantages of Job Production
+ Products usually Higher Quality
+ Producer Meets Individual Customer Needs
+ Greater Job Satisfaction - Involved in All Stages of Production
State 2 Disadvantages of Job Production
- Requires Investment in Skills and Training
- Labour Intensive
Explain what Batch Production is
- when Many Similar Items are Produced Together
- Each goes Through One Stage of Production process Before Moving Onto Next Stage
- e.g. baker uses batch production when baking bread
State 3 Advantages of Batch Production
+ making Batches Reduces Unit Costs
+ Use of Specialist Machinery and Skills can Increase Output and Productivity
+ can Adress Specific Customer Needs
State 3 Disadvantages of Batch Production
- time Lost Switching Between Bacthes - Machinery may Need to be Reset
- Need to Keep Stocks of Raw Materials
- potentially Demotivating for Staff
Explain what Flow Production is
- Large Scale Production of Standard Product, where Each Operation on a unit is Performed Continuously One After the Other, Usually on Production Line
e.g. manufacture of cars
State 2 Advantages of Flow Production
+ Very Low Unit Costs due to EOS
+ Output can be Produced Very Quickly- is Capital Intensive - means a High Proportion of Machinery in Relation to Workers
State 2 Disadvantages of Flow Production
- work Motivation can be Very Low - Repetitive Boring Tasks
- Very Difficult to Alter the Production Process due to So Much Machinery -> Makes Production Inflexible -> All Products have to be Very Similar or Standardised
Explain Cell Production
- Producing a Family of Products in a Small Self-Contained Unit (cell) Within a Factory
- Each Team (cell) is Responsible for a Significant Part of the Finished Article, Members are Skilled at Number of Roles -> provides Means for Job Rotation
State 2 Advantages of Cell Production
+ Closeness of Cell Members should Improve Communication, Avoiding Confusion Arising from Misunderstood or Non-Received Messages
+ Greater worker Motivation, Arising from Variety of Work, Team Working and More Responsibility
State 2 Disadvantages of Cell Production
- May Not Allow firm to Use its Machinery as Intensively as traditional Flow Production
- Recruitment and Training of Staff must Support this Approach to Production
Explain Productivity in terms of Output
Productivity is Amount of Output that can be Produced with a Given Input of Resources
Explain Productivity in terms of Labour Productivity and Capital Output
a Business may Measure Labour Productivity - the Amount of Output Each Unit of Labour (e.g. one worker) Produces
a Business may be Interested in Productivity of its Capital. Capital Productivity - the Amount of Output Each Unit of Capital Produces
What are 3 Factors Influencing Productivity
- Specialisation and Division of Labour
- Motivation of Workers
- Capital Productivity
Explain Factor of Productivity - Specialisation and Division of Labour
- the Production of a Limited Range of Goods by an Individual, Business.
e.g. Coca Cola
Departments Specialise in Different Activities.
Workers will also Specialise in Certain Tasks and Skills
Explain Factor of Productivity - Motivation of Workers
if People are Motivated at Work they will be More Producitive
Firms might Use Finanical Incentives, e.g. piece rates
Workers who Aren’t Motivated By Money may Respond to Other Incentives , e.g. job rotation
Explain Factor of Productivity - Captial Productivity
- Productivity usually Increased When New Technology is Introduced
- is because New Technology is More Efficient
- Productivity also Likely to Increase if Production Becomes More Capital Intensive
Explain the Link between Productivity and Competitiveness
- Raising Productivity Means More Output is Produced with Same Level of Resources
- means Costs will be Lower and Lower Prices can be Charged than Rivals
- makes Businesses More Competitive in Market Place
- therefore More Customers, Market Share
Define Efficiency
- Making the Best Possible Use of All Business Resources
- Producing a Level of Output where Average Costs is Minimised
- often use Costs as an Indicator of Efficiency
State 4 Factors Influencing Efficiency?
- Outsourcing
- Downsourcing
- Investing in New Technology
- Lean Production
Explain Factor of Efficiency - Outsourcing
- could Improve Efficiency by Outsourcing Specific Business Activites
- means that Work Currently Done by Business is Given to Specialists Outside the Business that can Do Same Job at Lower Cost
Explain Factor of Efficiency - Downsizing
involves Reducing Capacity, i.e. Laying Off Workers (delayering) and closing Unprofitable Divisiors
Advantages :
- Cost Savings and Increased Profit
- a Leaner, More Competitive Operation
- Removal of Unprofitable or Inefficient Parts of a Business
Explain Factor of Efficiency - Investing in New Technology
New Machinery may be Quicker, More Accurate , be Capable of More Tasks and Carry out Work in More Extreme Conditions than Older Equipment or Labour
Explain Factor of Efficiency - Lean Production
- an Approach Developed by Toyota
- aims to Use Fewer Resources in Production
- approach Uses Less of Everything
- results in : - Raise in Productivity - Reduces Costs and Cuts Lead Times
- involves a Range of Practises Designed to Reduce-Waste and Improve Productivity and Quality
State Distinction Between Labour and Capital Intensive Production
Labour Intensive Production - involve Using a Larger Proportion of Labour Than Capital
Capital Intensive Production - Involve Employing More Machinery Relative to Labour
