Production, Productivity, and Efficency: EFFICENCY Flashcards
What is efficiency?
Making best possible use of all business resources
Business will want to use its materials, labour capital as effectively as possible
What makes production efficient? Average costs are minimized
What are factors influencing efficiency?
Introducing standardization
Outsourcing
Relocating
Downsizing
Investing in new tech
Delayering
Lean production
Kaizen
JIT
How does introducing standardization influence efficiency?
Involves using uniform resources and activities or producing uniform (standard) product —> bulk purchases can be made
DISADVANTAGE: inflexible, makes customization more difficult
How does outsourcing influence efficiency?
Improves it
By outsourcing specific business activities work currently done by business is given to specialists outside —> that can do same work at lower costs and higher flexibility
How does relocating influence efficiency?
Moving whole business to new site = drastic measure
Can result in much lower costs
How does downsizing influence efficiency?
Involves reducing capacity eg. Laying off workers and closing unprofitable divisions
What are the advantages of downsizing
Cost saving and increase profit
More focused and competitive operation
Removal of unprofitable / insufficient parts of business
What are the disadvantages of downsizing?
Laying off workers means business will lose skills , experience and knowledge
Might be forced to hire back more redundant (retired) staff
Negative effect on morale of existing workers
How does investing in new technology influence efficiency?
Can improve it
New machinery may be quicker and more accurate
therefore capable of more tasks
and may be controlled by computers to reduce errors
How does delayering influence efficiency?
Involves reducing staff.
Also removing some of the layers to give a flatter structure
Therefore no need for salaries and improves communication
What are the advantages of delayering?
Savings made from laying off expensive managers
Leads to better communication and better motivated staff
How does lean production influence efficiency?
Using less of everything, includes factory space, machinery, stocks, supply’s , labour, capital and time
What are the advantages of lean production?
Raises productivity which will reduce costs and cut lead times
Reduces number of faulty products to improve reliability and speed up product design
How does kaizen influence efficiency?
Means continuous improvement
A belief in Japan
Means workers are always coming up with ideas to improve quality, reduce waste, increase efficiency
How does JIT influence efficiency?
involves minimizing or eliminating the amount of stock held by a business
It reduces all cost associated with stock holding
