Theme 2 Flashcards
Advantages of job production
Each piece is made to the customers exact requirements
High job satisfaction for workers
Goods are high quality
Flexible designs and can be changed
Disadvantages of job production
Products are expensive
Production is time consuming
The advantages of economies of scale are lost
Staff wages high as they are skilled
Batch production?
Where groups of items are made together in a batch. Most items go through this process e.g. Clothes manufactures
All items in the batch are the same as production is speeded up. Reduces labour costs, making item less expensive for customers
Advantages of batch production
Labour costs reduced so final price is lower
Machinery can be used
Production is faster
Takes advantage of economies of scale
Disadvantages of Batch production
Work is repetitive, staff may become demotivated, slowing production
Large storage space and large stock of raw materials needed.
Machinery may be expensive
Flow production
Where identical, standardised items are produced on an assembly line
A capital intensive process.
Mass markets use it
Employees only required to perform repetitive tasks so they’re usually semi skilled
Advantages of flow production
Final product is cheap
Large quantities can be manufactured
Low labour costs as machinery can be used
Standardised quality
Disadvantages of flow production
Repetitive, low motivation
Large investment in buildings and machinery
Increased risk of accidents
Cell production
Cell production has the flow production line split into a number of self- contained units
Each term or cell is responsible for a significant part of the finished article
Highly skilled team members in a number of roles, enhancing job rotation
Advantages of cell production
Improved job satisfaction and motivation
Multi skilled workers enhances job rotation
Improved quality as a group of workers take responsibility
Factory spaced used efficiently
Disadvantages of cell production
Output may not be high
Different ‘cells’ may work at different speeds
Heavy investment in machinery and equipment may be needed
Economies of scale?
Arise when unit costs fall as output increases
Diseconomies of scale
Unit costs start to rise as output decreases
Capacity utilisation?
The proportion of a business’s capacity that is actually being used over a specific period
Capacity
The capacity of a business is a measure of how much output it can achieve in a given period.
Changes in capacity
Maintenance of equipment can reduce capacity. Working more shifts, capacity can be increased
Seasonal change
Chocolate factories need capacity to make Easter eggs in November/December before shipping them our for March
Capacity utilisation formula
Actual level of output/ maximum possible output X 100
Job production
Where items are made individually and each item is finished before the next one is started. Example would be designer dresses
Usually unique items of a small scale
Capacity utilisation benefits
Useful measure of productive efficiency since it measures whether there are idle resources in the business
Average production costs tend to fall as output rises- so higher utilisation can reduce unit costs, making a business more competitive
Businesses aim to produce as close to 100% capacity as possible in order to reduce unit costs
When is a high level of capacity utilisation required
If a business had a high break- even output due to significant fixed costs of production
Why might businesses operate below 100%?
Lower than expected market design ( e.g. Changes in consumer tastes) Loss of market share( competitors) Seasonal variations Recent increase in capacity Maintenance programmes
Dangers of operating at low capacity utilisation
High unit costs- impacts competition
Less likely to reach break-even output
Capital tied up in under-utiIised assets
Can a business operate over 100% capacity ?
Possible In short term
Increase workforce hours
Reduce time spent maintaining products
Disadvantages of operating above 100%
High unit costs
Negative effect on quality as product is rushed
Employees suffer extra workload
Loss of sales as less able to meet changes In demand
Stock ?
Stocks represent the raw materials, work-in progress and finished goods held by a firm to enable production and meet customer demand
Why is stock control used
To maintain stock levels so that the total costs of holding stock are minimised
Lead time
Time taken for stock to be renewed after it is reordered
Advantages of low stock levels
Lower costs ( rent, raw materials etc)
Lower risk of stock obsolescence
Less capital tied up in Working capital- can be used elsewhere in the business
Advantages of high stock level
Higher levels of output as production is fully supplied
Able to respond to changes in demand
JIT stock control?
Method of stock control where stocks required for production arrive just as they are needed.
Lean capital- minimal capital tied up in the stocks
Advantages of JIT
No need for buffer stocks
Stock holding costs are minimised
Lean production?
Aims to produce more using less, by eliminating all forms of waste.
Creates higher level of productivity
Requires less stock
Creates marketing advantages
Waste minimisation ?
No obsolete stock, lol
Quality ?
A product or service is of good quality if it meets the needs and expectations of the customer
Customer service ?
If quality is high then it will meet customer needs and improve customer service. If below standard them the customer will not buy it
Competitiveness ?
If competition is high, the business needs high quality products or services to compete against them
What to do about the rest of quality ?
Use the mind map sheets!!!!!!!!!
Quality control?
A process through which a business seeks to ensure that product quality is maintained or improved and manufacturing errors are reduced or eliminated
Main points I operations when inspection is used in quality control?
Raw materials received prior to entering
Whilst products are going through the production process
When products are finished-takes place before products are dispatched to customers
Advantages of quality control
It is needed to assure product quality is up to standard and meets customer needs.
Disadvantages of quality control
It can be time consuming as every product has to be checked
It can be expensive
What happens if a product is faulty?
If one product is faulty, inspectors will check others from the batch and if they are faulty they may scrap the whole batch. This would be a huge waste of production time and cost, causing products not to meet deadlines.
What might workers do in staff checks ?
They may only produce products that are ‘ good enough’ to pass the checks. Therefore the products will not be as of as high a quality
Quality assurance?
Is a system that assures customers that detailed systems are in place to govern quality at every stage in production
Quality assurances stages
Starts with a quality checking process for new raw materials, companies then out in place a documents quality assurance system, operating through the company, involving suppliers and subcontractors
Advantages of quality assurance
Makes sure the company has a quality system for every stage in the production process
Customers like the reassurance of keeping records about the quality in each stage, therefore might pay more for the higher quality products
Disadvantages of quality assurance
Does not promise a high quality product, only a high quality, reliable process which may only produce ‘OK ‘ products.
May encourage complacency, it suggests quality is sorted, whereas customers require quality to move ahead in improvement
Total quality management ?
A structures approach to organisational management that seeks to improve the quality of products and services through ongoing refinements in response to continuous feedback
It requires commitment from the whole organisation
Advantages of TQM
Should become deeply rooted into the companies culture.
Once all staff think about quality, it should show through from design to manufacture and after-sales service
Disadvantages of TQM
Especially at first, staff sceptical of management initiatives and may believe it lacks the clear structure of Quality assurance
Expensive method, would require extensive training amongst staff
Continuous improvement (kaizen)?
An approach constantly introducing small changes in a business to improve efficiency.
It assumes employees are the best people to identify room for improvement, since they see the processes in action all the time
2key elements of kaizen
- Most kaizen improvement are based around people and their ideas, rather than investment in new tech.
- Each change on its own may be of little importance. However, if hundreds of small changes are made, the cumulative effects can be substantial
Labour intensive
A process or industry that requires a large amount of labour to produce its goods or services
Typically measured in proportion to the amount of capital to produce the goods/services.
The higher the proportion of labour costs required, the more labour intensive the business
Advantages of labour intensive
Labour costs considered variable. This gives labour intensive industries an advantage in controlling expenses in market debentures by controlling the size of the employee base.
Flexible resource through multi-skilling
Disadvantages of labour intensive
Limited economies of scale( you can’t pay workers less by hiring more).
High costs of labour recruitment and investment in training.
High levels of labour turnover
Capital intensive
A business process or industry that requires large amounts of money and financial resources to produce a good or service.
Considered capital intensive based on the ratio of capital required to the amount of labour required.
Advantages of capital intensive
There may be economies of scale Cheaper in the long term Better productivity Better quality and speed Lower labour costs
Disadvantages of capital intensive
High barrier to entry
High investment
May generate resistance to change from labour force
