4.3b Labour Productivity Flashcards
Labour productivity definition
Measure of the output per worker in a given time period
Labour productivity formula
Labour productivity = output per period ÷ number of employees at work
Ways to improve labour productivity
- Training
- New technology
- Improve worker motivation
Advantages of high labour productivity and efficiency
- Maximise production
- Reduces unit costs
- Improved quality through using cost savings
Efficiency can be improved by
- Training of the workforce
- Investment in capital equipment
- Renewable or recyclable resources
Economies of scale definition
Advantages that an organisation gains due to an increase in size
Examples of economies
- Purchasing economies
- Technical economies
- Marketing economies
Lean production definition
An approach to management that focuses on cutting out waste, whilst ensuring quality
What is the aim of just-in-time production?
To ensure that inputs into the production process only arrive when they are needed
Advantages of JIT production
- Lower stock holding = reduction in storage space = saves rent
- Less working capital is tied up in stock
- Less likelihood of stock perishing
Disadvantages of JIT production
- Little room for mistakes
- Production is highly reliant on suppliers
- Fewer opportunities for bulk buying
Disadvantages of increasing productivity:
- Quality could suffer
- New technology is expensive
What is Kanban and how does it work?
It is the JIT system of triggering orders - when staff reach coloured kanban cards towards the end of a batch or components they order more straight away
What does lean production methods include?
- JIT
- Time-based management
- Kaizen
What does time-based management aim to do?
Reduce wasted time in the production process
