Production, productivity & Efficiency (2.4.1) Flashcards
What is production?
The transformation of resources (e.g. raw materials) into finished goods or services
What is the difference between goods and services?
Goods are physical products, such as bicycles and T-shirts whereas Services are non-physical items such as hairdressing, tourism and manicures
What are the four types of Production?
Job Production
Batch Production
Flow Production
Cell Production
What is Job Production?
-One-off bespoke Products
-High quality products made by experienced staff
What are the advantages of Job Production?
-Premium Price can be charged
-Easy to differentiate from competition
What are the disadvantages of Job Production?
-Staff require higher wages and process is slow
-Unit costs tend to be higher
What is Batch Production?
-Batches of similar products
-More flexible production than flow
What are the advantages of Batch Production?
-Standardized process make it cheaper than job
-Use of Technology make it cheaper than job
What are the disadvantages of Batch Production?
-Batch less varied than job so staff morale may be lower
-Downtime between batches make it less efficient than flow
What is Flow Production?
-Large-scale,24/7 production of standardized product
-Specialist machinery designed for production line
What are the advantages of Flow Production?
-Lots of Technology/low staff leads to low Unit Cost
-Consistent, standard quality
What are the disadvantages of Flow Production?
-Production Process inflexible to change
-Very high initial set-up cost
What is Cell Production?
-Production line split into self-contained teams
-Team carries out a process and checks the quality
What are the advantages of Cell Production?
-Teamwork improves motivation and quality
-Multiskilling within teams takes place
What are the disadvantages of Cell Production?
-Not as automated as batch or flow
-Cell workload has to be managed closely
What does Standardization mean?
The more standardized production is, the more you can bulk buy and you can cut costs
What does Automation mean?
The amount of technology you use in your production process
What does Downtime mean?
The amount of time workers or technology are NOT producing goods or services
What are Economies of Scale?
The more you buy, the cheaper you get each unit so the lower your Unit Costs
What are Business Operations?
The method a business will use to produce and deliver a product or a service to the customer
What is Productivity?
The amount of units produced by a given number of employees. Output per person or machine per hour
What does labour productivity mean?
It’s a measure of the output per worker during a specific period of time
What is the equation for Labour Productivity?
Total Units of Output/ Number of Employees
What does Capital Productivity mean?
It’s a measure of the output of capital employed (machinery) during a specific period of time
What is the equation for Capital Productivity?
Total Units of Output/ Number of Machines
What are the ways in which you can improve productivity?
-Specialization and the Division of Labour
-Motivate staff
-Education and Training
-Working Practices
-Labour Flexibility
-Technology
What does Efficiency mean?
Maximizing your output from your inputs to minimize cost per unit. Being as cost-effective as possible
What is efficiency often measured in terms of?
Average cost per unit
How is Average Cost per unit worked out?
Total costs/Number of Units
When is maximum efficiency achieved?
When the cost per unit is at its lowest
How can you improve efficiency?
-Lean Production
-Standardization
-Outsourcing/Offshoring
-Downsizing/Delayering
-Technology
-Just-In-Time Production
What is Lean Production?
It focuses on eliminating waste, improving efficiency, and maintaining quality.
What is Kaizen?
Kaizen is a Japanese term meaning change for the better or continuous improvement. It is a Japanese business philosophy that concerns the processes that continuously improve operations and involve all employees. Kaizen sees improvement in productivity as a gradual and methodical process.
What are the Benefits of using Kaizen?
-Increased Productivity
-Reduced Waste
-Better management of resources
-Improved quality
-Better safety
-Lower costs
-Higher Customer Satisfaction
-Improved cooperation and communication
-Higher employee satisfaction and morale
What are the Drawbacks of using Kaizen?
-Difficult to implement in existing businesses
-Resistance to change
-Time and effort required to see results
-Costly
-Management involvement is a must
-Slow process of improving workers skills and so can demand higher wages
What is Capital Intensive and Labor Intensive Production?
-Labor Intensive Production predominately uses physical labor in the production of goods/services
-Capital-Intensive Production predominately uses machinery and technology in the production of goods and services
What are the advantages and disadvantages of Labor Intensive Production?
Advantages:
-Low-cost production where labor costs are low
-Provides opportunities for workers to be creative
-Workers are flexible
Disadvantages:
-Workers may be unreliable and need regular breaks
-Incentives may be needed to motivate staff
-Training costs can be significant
What are the advantages and disadvantages of Capital Intensive Production?
Advantages:
-Low-cost production where output is high
-Machines are usually consistent and precise
-Machines can run without breaks
Disadvantages:
-Significant set-up and maintenance costs
-Breakdowns can severely delay production
-May not provide flexibility in production
