Increasing Efficiency And Productivity

Question 1

What are ways of improving efficiency

Answer 1

• Increasing the capacity utilisation to spread fixed costs.
• Choosing the optimal mix of resources.
• Increasing labour productivity.
• Introducing lean production.
• Using technology.

Question 2

What can a business do if capacity utilisation is low (inefficient)

Answer 2

• try to improve its marketing to produce sales.
• reduce its capacity- this is known as rationalising or downsizing. This may take more time to do and may not be possible.

Question 3

What can a business do if capacity utilisation is too high for the existing capacity

Answer 3

• outsource to other produces- this may take time to negotiate and is likely to be more expensive than doing the task in hand.
• find a way to reduce demand in the short term.

Question 4

What might a manager do to increase labour productivity

Answer 4

• Invest in technology so employees have access to more equipment to help them complete their tasks more effectively.
• Improve training of employees so staff have more skills to do their job.
• Change the way the work is organised and the design of jobs to improve their flow of work and reduce time waiting to complete tasks.
• Change the way employees are rewarded to provide more incentives.

Question 5

Issues with trying to improve labour productivity

Answer 5

• Potential trade off with quality- higher output must still be of the right quality.
• Potential for employee resistance- depending on the methods used.
• Employees may demand higher pay for their improved productivity.

Question 6

How does being lean aim to reduce waste

Answer 6

• Improving quality and so reducing the number of items that needs to be reworked, thrown away or fixed.
• Reducing the amount of inventory held as this reduces costs of protecting and storing it. It also reduces the risk of the inventory going out of date or not being sold.
• Reducing the time items are waiting for something to happen to them.
• Reducing the time when items are moving from one stage of process to another.

Question 7

The difficulties of using lean production

Answer 7

• More vulnerable as there is no inventory if there is ever a disruption to production or unpredictable events.
• Introducing lean production can be difficult.
• Requires excellent links with suppliers so they know exactly what is needed and when.

Question 8

What will the best (optimal) combination of resources depend on

Answer 8

• The process itself- High volume repetitive tasks may be able to be undertaken by machinery, but creative work may not.
• What is affordable and achievable- funds, space, new equipment, scale of operations.

Question 9

What do technological developments enable a business to do

Answer 9

• Be more flexible to customer needs.
• Reduce costs by having more efficient processes with less errors.
• Be innovative.

Question 10

What will managers need for financial developments

Answer 10

• Have the finance to invest.
• Have the training to use it effectively.
• Understand and manage the impact on other functions.
• Be able to judge which technology will be useful in the long term rather than trying to adopt every new development that comes along.