4.3b - Labour Productivity Flashcards
Labour productivity definition
The output per worker in a given time period
Labour productivity formula
Output / number of employees at work
How can a business improve labour productivity?
- Set targets
- Streamline production processes
- Training
- New technology
- Improve worker motivation
Efficiency definition
Getting more output from a given amount of input
Advantages of high labour productivity and efficiency:
- Satisfy the needs of more customers
- Lower unit costs
- Cost savings used to improve other areas
- Competitive advantage
How can a business improve efficiency?
- Training
- Invest in capital equipment
- Use recyclable resources
Disadvantages of increasing productivity:
- Quality could suffer
- New technology can be expensive
Economies of scale definition
The advantages that an organisation gains due to an increase in size
Lean production definition
An approach to management that focuses on cutting out waste, whilst ensuring quality
Just-in-time production definition
A production approach that ensures inputs into the production process only arrive when they are needed
Kanban definition
The JIT system of triggering repeat orders
How does Kanban work?
When staff reach coloured Kanban cards towards the end of a batch of components they order more straight away
Advantages of JIT production:
- Lower stock holding so save money on rent
- Less working capital is tied up in stock
- Less likelihood of stock perishing
- Motivated workforce (increased participation)
Disadvantages of JIT production:
- Little room for mistakes
- Production is highly reliant on suppliers
- No spare finished product available to meet unexpected orders
- Fewer opportunities for bulk buying
What are the different lean production methods?
- JIT
- Time-based management
- Kaizen
