2.4.1 Production, productivity and efficiency Flashcards
name the methods of production
job
batch
flow
cell
job production
making on-off items to suit each customer’s individual requirements
-often undertaken by small, specialist businesses
benefits of job production
-can charge a higher price as products are unique and tailored to match specifications
-work should be more interesting for staff-less repetitive
-associated with higher quality
-flexible production method
drawbacks of job production
-cost per unit is high due to high level of skill and low rates of production
-finding staff with high skill can be hard and wages are high
-requires close consultation with the client
batch production
makes a group of productions to one specification at a time, allowing some variation in products, and some specialisation
-each batch goes through one stage of production process before moving onto next stage
benefits of batch production
-allows variation in the product
-faster than job production as making a batch at a time is faster
-cost savings can be achieved by buying in bulk
-allows a firm to handle unexpected orders
flow production
the continuous production of a single, standardised product
-high volumes of same product
benefits of flow production
-cost per unit of production is low through improved work and material flow
-capital intensive so production works constantly
-less need for training and skills
drawbacks of flow production
-high initial costs of installing production machinery
-products need to be identical
-less differentiation for the customer as products are mass produced
cell production
organising workers into small groups or cells that can produce a range of different products more quickly than job production allows
-teams are given responsibility of doing a part of production process as product moves through assembly lines.
benefits of cell production
-group workers allows ideas to be generated within the cell to improve the process
-highly skilled cells can adjust their products to suit customers’ needs
drawbacks of cell production
-heavily reliant on people over automation so costs are high
-production volumes will not be as high as flow production
what factors determine which production is best for a growing firm?
target market
technology - automated??
resources - finance or people
standards - quality
productivity
a measure of the efficiency of the production process, measured as output per worker per period of time
labour productivity formula
output per period (units) / number of employees at work
or
sales revenue per employee / number of workers
(selling things)
factors that influence productivity
-quality and age of machinery
-skills and experience of workers
-level of employee motivation
how does the quality and age of machinery influence productivity?
-old out dated machinery can malfunction or slow down the production process
poor quality machinery may need constant repairs (high maintenance costs)
how does the skills and experience of workers influence productivity?
low skilled or less experienced workers may be slower if they are not educated or trained in their field well
-experienced workers can be more productive, but if they have been working their for a while, they may begin to slow down
how does the level of employee motivation influence productivity?
low motivation means employees are less willing to produce at a high rate and standard
-they need to feel loyal to business
-poor working conditions or low pay can affect this
-repetitive work is boring and dull
what is the link between productivity and competitiveness?
higher levels of productivity means lower unit costs, as the labour cost per unit falls - workers make more
-these lower costs enable the business to cut prices while maintaining the same profit margin
efficiency
the extent to which the resources used in a process generate output without wastage
how does efficiency differ to productivity?
efficiency considers waste
- wasted time is reduced as productivity rises is a factor, but a highly productive system may come with a quality cost, increasing wastage on faulty items
how can quality and age of machinery influence efficiency?
high quality machines mean fewer breakdowns and malfunctions, producing more accurate products= less faulty products produced for waste
how can the skills and experience of workers influence efficiency?
skilled staff are likely to make fewer mistakes or can spot mistakes along the way to stop faults further down the line
how can the level of employee motivation influence efficiency?
motivation brings pride in work, motivated staff are careful not to make errors, and will lose concentration less often.
unit costs
measures the average cost per unit produced, measured over a set time period
-they vary over time and as the scale of a business’ operation changes
unit cost formula
total production costs in period (£) / total output in period (units)
economies of scale
the cost advantages that a business can exploit by expanding their scale of production
internal economies of scale
arise from the growth of the business itself
e.g. technical, specialisation, marketing, managerial
external economies of scale
occur within an industry
e.g. development of R&D, local authority improving transport network locally, relocation of component suppliers
-arise from the industry shifting or expanding as a whole so all competitors benefit
labour intensive production
the production process relies heavily on human input with little use of automation. high proportions of its costs relate to the employment of staff
benefits of labour intensive production
unit costs can be low in low wage locations
labour is a flexible resources- multiskilling and training
labour can facilitate continuous improvement
drawbacks of labour intensive production
high proportion of total costs
risk of poor employer-employee relationship
need continuous investment in training
capital intensive production
uses high levels of automation, reducing the role of humans as much as possible, replacing them with machines. low labour costs, high costs arise from extensive use of equipment
benefits of capital intensive production
greater opportunities for economies of scale
potential better productivity
better quality and speed
lower labour costs and running costs
drawbacks of capital intensive production
high initial costs
offers little flexibility in terms of product variation
potential for less competitiveness due to being old fashioned
