Productivity Flashcards
Productivity and how it can be improved
Productivity measures the amount of output compared to the amount of inputs that go into production — it is a measure of ef ciency. Productivity can be improved by reducing the amount of input required to obtain the same level of output or increased output. Alternatively, productivity may rise if input remains the same but output increases, therefore getting more out of the input.
Strategies that can improve productivity
Organisations can improve productivity in several ways. Improved communi- cation between management and employees can boost production. Management styles (see chapter 2, p. 70) that involve the employee in the decision-making process can increase worker productivity, as can human resources strategies such as recognition and reward programs aimed at improving worker motivation (see chapter 5). Auto- mating work processes to reduce the labour required to perform a task and increase production levels is also a strategy used in many large-scale organisations. The use of robots in car manufacturing plants is now commonplace. Improving the design and layout of facilities in a workplace can also enhance productivity levels (see p. 114).
Business competitiveness and its relationship to productivity
In this way, improving productivity will impact on operations. Organisations that can improve productivity will become more competitive, because they are able to produce more outputs at lower cost. ‘Business competitiveness’ refers to the ability of an organisation to sell products in a market. Competitive advantage occurs when an organisation is able to produce goods or services better than its competitors.
Organisations essentially compete in two ways:
1 cost — providing customers with lower priced goods or services
2 differentiation — providing customers with superior value in terms of ser-
vice ( exibility, speed, quality) or added features compared to lower priced competitors.
Competing can cost
Operation managers can compete on cost by
ensuring all resources are used to their optimum advantage: if the most benefits are gotten out of each input, productivity will rise and allow organisations to sell products at cheaper prices.
use automated production systems: if a business uses cheap and efficient automated production systems they may be able to become more productive depending on the quality of the machinery and cost less depending on the price of machinery, if this price is lower than what it had cost in wages to employees to complete that task.
competing on quality
Operations managers can compete on quality by
evaluating processes to ensure minimal defect rates: If an organisation is able to produce more products without as many defects then the overall quality reputation of the business will rise and relying on extensive use of integrated technology and computerisation: if a business uses high quality computerised technology that is capable of producing high quality products without defects then quality of products will rise, these machines might also be able to produce a product better than what a human can depending on the quality of the machinery
Competing on speed of delivery
Operations managers can compete on speed of delivery by
• establishing supply chains which work ef ciently between the supplier and the
organisation: if a business has good relationships with suppliers and never have to worry about not having resources then they will be able to constantly produce products without delay or waiting on resources which will improve productivity.
promote a sense of urgency within the organisation: this can improve productivity as it will motivate employees to work more quickly and produce products more quickly which allows a business to send their products to customers at a faster rate if they are always stocked.
What role does operations play in allowing an organisation to compete on price
Operations allows a business to compete on price as a business with a high level of productivity will be saving money by producing more outputs for less inputs or the same amount of outputs for less inputs. This allows them to be able to charge less for the outputs they are producing as it is costing the business less inputs which can encourage customers to buy from that business.
What role does operations play in allowing an organisation to compete on quality
If a businesses operations management is very productive and they are able to produce more outputs for less inputs or the same amount of outputs for less inputs they will be saving money as they wont be purchasing as many inputs. This allows them to use the extra money on producing higher quality products, they can afford higher quality resources or higher quality machinery to improve the quality of the output which can encourage customers to buy from that business.
What role does operations play in allowing an organisation to compete on speed of delivery
If operations management is highly productive and a business is able to produce more outputs for the same amount of inputs or the same amount of outputs for less inputs they will be able to produce more products. If a business is producing a higher amount of products they will not have to worry about running low on stock and be able to supply customers with more products.
Lean manufacturing
Lean manufacturing aims to eliminate waste at every stage of production. It involves analysing each stage of the production process, detecting where inef ciencies are and correcting them.
Benefits of lean manufacturing
• reducing unnecessary movement of workers, machines and products
• minimising storage required
• reducing defects in products and equipment
breakdown
• reducing waste
• reducing the time workers wait for work to come
through
• shortening the time taken to switch equipment and
people to produce new products
• shortening the time to develop new products.
What is the link between productivity and an organisation’s operations?
Operations consist of all the activities in which a business engages in to produce goods or services. The elements of an operations system are inputs, transformation processes and outputs. Productivity is a measure of ef ciency — the amount of output produced compared to the amount of input required in production.
A business with a high level of productivity will be able to offer their products at cheaper prices, produce higher quality products and produce more products at a quicker pace as they will be saving money on inputs (as they are producing more outputs for the same level of inputs/ producing the same outputs for less inputs) this allows the business to spend more money elsewhere, for example on higher quality resources.
