2.4.1. Production, Productivity,Efficiency Flashcards
Job production
-Making tailor made products to suit customer tastes. Great way to add value
+ves:
Can charge higher price as customers less price sensitive
Work more interesting for staff
-ves:
Costs per unit is very high due to high level of skill and low rates of production
Finding staff with sufficient skills can be hard and pay will have to be high
Batch production
Makes a group of products to one specification at a time, allowing some variation in products yet some specialisation. Usually food production
+ves:
Allows variation in product being made
Speedier than job production as making a batch of identical products speeds up production
-ves:
More costly to set up than job production as domestic specialist machinery will be needed
Cost per unit still higher than flow as machinery needs to be adjusted between batches
Flow production
Continuous manufacturing of single standardised product usually on a production line. Huge volumes
+ves:
Unit labour costs are extremely low
Huge volumes allow huge demand in mass markets to be met
-ves:
High initial costs of installing production machinery
Products need to be identical, no tailoring to suit different tastes
Cell production
Organising workers into small groups or cells that can produce a range of different products more quickly than job production allows
+ves:
Group work allows ideas to be generated within the cell for improvements to processes
The small, highly skilled cell can adjust products to suit customers needs
-ves:
Costs relatively high as heavily reliant on people rather than production
Production vol. not as high as in flow production
Productivity
Efficiency of production process. Measures out per worker per time period. Productivity≠Production or output.
Productivity=Tot. Output/no. Of workers
Increasing productivity of workers spreads hourly wage costs over more units of output, meaning lower costs per unit and increases profit margins
Factors influencing productivity
1.Quality and age of machinery- Newer machinery may work faster, and break down less
2.Skills and experience of workers- Highly skilled staff can produce things faster whilst experience brings knowledge of how to compete tasks with high efficiency and quality
3.Level of employer motivation-Motivated staff likely to focus on tasks without distraction and work as quickly as they can
Link between productivity and competitiveness
Higher levels of productivity=Lower unit costs
This is because the labour costs involved in making each unit falls as workers work faster
Lower unit costs allow businesses to cut prices while maintains same profit margin
Efficiency
Measures extent to which resources used in a process generates output without wastage.
Ability to use its production resources as cost effectively as possible
Factors affecting efficiency
Same as those affecting productivity
1.Quality and age of machinery- Fewer breakdowns mean fewer faults and newer machinery may produce with less variation(more accuracy )
2.Skills and experience of workers- Skilled staff are likely to make fewer mistakes, while experience can mean staff spot the problems that lead to faults before they occur
- Level of employee motivation- Motivation brings pride in work, so motivated staff will be careful not to make errors, and will lose concentration less often
Labour intensive production
Labour intensive production means that a production process relies heavily on human input with little automation
Key issues with labour intensive production:
-Labour costs will form high proportion of tot. costs.
-Managing labour costs become critical. Might cause firm to move to lower wage places etc
-Offers greater scope for tailoring products to suit customers needed adding value and allowing higher selling price
Capital intensive production
High levels of automation, reducing role of humans
Key issues:
-Initial costs will be very high, with the need to invest specialist machinery
-Running costs will be relatively low
-May offer little flexibility in terms of product variations
