3.1 Production Processes Flashcards
What is production (or operations) management?
All the activities in managing the transformation process of the product
What is production?
The process of changing inputs into goods and services that can be sold
Give some examples of inputs into the
transformation process
- Raw materials
- Labour services
- Energy
What are the three stages of the production process?
Inputs, transformation, outputs
What is job production?
A method of production whereby a product is produced that meets specific customer needs
Give some examples of job production
- Garden design
- Tailors
- Personal trainers
- Restaurants
What are the benefits of job production?
- High quality products
- Products made to specific requirements of the customer
- Higher prices can be charged
- Greater job satisfaction for workers, as they are involved in all stages of production process
- Easily differentiate from competitors
What are the drawbacks of job production?
- Higher unit costs
- Labour intensive process, so machinery is not suited to this method
- Requires skilled employees who may demand higher wages or training
What is flow production
When an item moves continuously from one stage of the process to another
What are the advantages of flow production
- Produce on large scales
- Less labour than job production
- Workers can specialise and become more efficient
- Production lines can operate 24/7 if necessary
- Consistent, standard quality
- Lower unit costs
What are the disadvantages of flow production
- Production can be inflexible, due to use of machinery
- Jobs are repetitive for staff and can lower motivation
- Initial purchase and set up costs can be high
- Breakdowns can result in downtime/inefficiencies
- Lower skilled workers required may result in higher labour turnover
- Products may be too similar to rivals
What is specialisation
When individuals focus on a limited number of tasks
What is technical economies of scale
When cost per unit falls as a result of businesses using machinery in production
What is unit cost and how do you work it out
The average cost of each unit, that is the total costs of producing products divided by the number of products produced
What is the efficiency of a business
How well a business uses its resources to produce goods and services
How can you measure the efficiency of a business
By looking at the cost per unit; if a business produces output using relatively few inputs, it is regarded as efficient and will have low cost per unit
What does the efficiency of a business depend on
- How well employees are managed
- How good suppliers are
- Investment in machinery and technology
- The way in which products are produced
What is lean production
An approach to production that aims to minimise wasted resources
What is waste
Unwanted materials from production or faulty and unsalable products which are of little value
What are the different forms of waste in a business
- If there is too much supply and not enough demand
- Wasted time and inefficiency
- Faulty products which have to me re made
- Holding stocks
What problems does holding stock cause for a business
- Expensive due to warehouse costs for storage
- Products could get damaged or stolen
- Opportunity cost of money which could have been spent on other things instead of storing stock
What is Kaizen
Continuous improvement, or an approach to production that aims to achieve from a series of small steps
How does lean production require employees to be more involved in helping a business to improve
- Managers must work closely with employees to make sure relationships between them are good to prevent stoppages, as with JIT, disruption can be damaging
- Kaizen requires employees to find better ways of doing things, so they need to be motivated
- To avoid waste, employees need to check quality of every stage of the process, so they need the right training
What is procurement
The whole process of managing the ordering and receipt of the goods or services in the business
What does procurement involve
- Deciding what is needed
- Selecting suppliers
- Terms of payment
- Negotiating contracts between the business and its suppliers
- Managing how goods are ordered and received
- Managing logistics
What does stock management include
- Stocks of raw materials required to produce the finished goods
- Stocks of finished goods needed to meet demand
- Staffing in service industries e.g. checkout operators in a supermarket
What is purchasing
The process of buying the goods and services needed for the production to take place
