4.3 Increasing efficiency + productivity

Question 1

What is efficiency?

Answer 1

Getting more output for a given level of inputs

Using less resources to achieve a given level of output and quality

Question 2

Why is efficiency so important?

Answer 2

Businesses can drive down unit costs, leading to lower prices or higher profits with the same price
Important to be able to match what competitors are doing

Question 3

ways to improve efficiency:

Answer 3

1. Using capacity more effectively
2. Choosing the optimal mix of resources
3. Increasing labour productivity
4. Introducing lean production
5. Using technology

Question 4

labour productivity formula?

Answer 4

Output per employee

Equation: Total output
No. employees

Question 5

higher labour productivity is = to?

Answer 5

lower labour unit costs`

Question 6

unit labour costs formula?

Answer 6

Output per period (units) = unit labour costs

Number of employees at work

Question 7

how can labour productivity be improved?

Answer 7

1. training
2. new technology
3. new ways of working
4. better management
5. new reward schemes

Question 8

Difficulties with increasing labour productivity:

Answer 8

1. Rushing could lead to quality issues
2. Employees might expect higher pay rates
3. Waste through excessive stock

Question 9

what is lean production?

Answer 9

Managers reducing waste in order to improve efficiency

Question 10

How does lean production reduce waste?

Answer 10

• Improving quality - reducing the number of items needed to be reworked, fixed or thrown away
• Reducing the amount of inventory held
• Reducing the time items are waiting for something to happen to them
• Reducing the time items are moving from one stage to another

Question 11

4 methods of lean production:

Answer 11

1. Kaizen
2. Andon
3. Changing the layout of the store or factory
4. Changing the process

Question 12

what is Kaizen?

Answer 12

emphasis on continuous improvement. Major changes overtime will occur as a result of small changes made regularly. Employees are encouraged to focus on their area and come up with ways to improve their processes.

Question 13

what is Andon?

Answer 13

Andon cord is present to pull and stop production if a problem arises. Flashing lights highlight where the problem has occured and everyone goes to this point to understand what has happened. Idea behind it is that everyone learns from a problem occuring.