UNIT 4 OPERATIONS - INCREASING EFFICIENCY AND PRODUCTIVITY Flashcards
INCREASINg opperational efficiency is all about
getting mroe ouptu from a given level of resources
if operatioal efficiency can be achieved what happens to unit costs
they fall
and you know the drill
uni costs declines as a capacity utilisation icnreases
t/f
true
as unit costs decrease when capacity utilisation increases its important a bs dont have too much
excess capapcity
what is excess capacity
when actual production falls below max production
if we have excess capcity resources arent being used
efficiently
operating at amx apapcity creates it sown problems why
3 points
reduces flexibility int erms of new orders
puts undue pressure o workers
put undue presure on machinery if proper maintainenace cant be undertaken
what is an optimal level of capacity
close to 100% as posssible while leaving sufficient spare capacity to cope with new orders
optimal elvel of acpapcity in agrowing market needs to be planned
carefully
when making a judgement/eval a bs capapcity utilisation what is importnat
compare with capcit utilisation in previous years
industry avergae
increasing capacity utilisaiotn is better but not
always
sum up beneffits of high capacity utilisation
3 points
more efificney
important for high fixe costs
reduces inot costs
explain +ve of capcity utilisatio in terms of more efficieny
more efificnet
as more resources used
therefore less waste
this is beenficial for saving osts
make consumers happy as less being wasted
and lowers unit costs
why is high capcity utilisation important for a busines with high fixed csots
they need to increase ouptut to keep unit costs lower q
why is hihg capacity utilisation important in terms of beenfits of lo unit costs
as a result of being more efificent we get lower unit costs
we can decrease prices
and increase demand for goods in a comp mkt - if price elastic
as lower price - more rev
sum up negatoves of hihg cpacity utilisation
4
undue stress on workers and machines - lead to demotivated/ less well run machines
people may be doing things way to quick
miantiannng machines/equipmtn is hard
increase sproblems if deamnd spikes high
in terms of -ve og high capacity utilisiation why is pepole/mahcines doing thigns to quick bad
can reduce quality
in long term can create -ve rep , decreae brand loyalty and increase elastiicty
why from hihg cap utilisation do we get problems if deamnd spieks
since already nealry at max - may not be able to fulfill
result in missed opportunity and bs seen as unrealiable (Fail to meet op obj
-ve of low cap utilisation
less resources used
affects other departments
run risk of not being ablr to meet deamdn wehn high
whats the problem of less resources being used int erms of capacity utilisation
if less are used this reduces our efficiency
and increases our overall avg unit costs
which can lead to us increasing prices and being less comp as a result
eval depends on elasticity
how can low cap u affect mkting for a hotel
low cap dont lok good for marketing and rep
cuz when customers come think why no one else here
how can low cap u affect hr for a dpt
they can be demotivated as theres not lots to do
little drive to over achieve
why does low cap u run the risk of not being able to meet demand when high
wf may not be used to this high level
they may not be able to perform under pressure
so bs cant meet demadn
missed opportunity
run risk of being unrelaiabl
what are +Ve of capacity utilisatoin
time available to do necessarty aminatianeance of machines
spare capapcity
possibly improve quality
how can in terms of low cap u time avaiable to do necessary maintaineeance of machines be a positive
means can use them for longer and dont have to replace machines constantly
reducing LR costs for the business
why is spare cappcity a postiive of lower cap u
can cope with unexpected demadn
can adjst quick 2 trends if got more space
how can low ca utilisation imporve quality
not rushed so have more time during production
can implement quality assurance and quality control
labour have more space and time to train on job ??
if ew have stable demadn throught the year and dont need excess demand we can get rid of it this will lead to
increased capacity utilisairon
how can we sell of excess capcity
RATIONALISATION
Whats rationalisation
increasing efficiency by reducing scae
how can we reduce scale
redundancies
selling assets
selling spare capacity reduce our ovrall x but leads to hgiher
capacity
higher efificneyc
why is labour productivity importnat
increeaing it leads to reduction in unict costs of production
biggest cost of abs - 70%
so increasing it can lead to more comp prices
what factors ingluencing labourproductivity
hours employee works
making change 2 key bs processes
purchasing new tech or equipment
increasing training
how does number of hour worked infleunce labour productivity
employees rareky choose to do more so theres a limt of what they cn create
how does making key changes to bs process impact labour prodcutivity
maybe reluctant to learn whihc decreasig their motivaiton and therefore productivity
/may not like it and show resitance
hwo does purchasing new tech . equipment influence LP
may decrease it as may be a threat to their jobs q
how does incresaing training influecne LP
increases prodcutivity as got more skills or better able to improve their skills
why woudl increasing triangnbe counter productive to oeprations
if wanna keep costs low
what is efficieny
production maximised based on a given set o FOP
how is labour productivity related to efificney
looks at efficiency of labour
why is efffiicnecy important
if able to max production from a given level of FOP
you can reduce AUC
in terms of reducing auc from efficiency why is it important - selling price
can reduce selling price
this can icnrease demand and therfore sales
this increases rev if price elatic
makes bs more price competitive
in terms of reducing auc from efificeny why is it important - maintain SP
sdduming demand is the same increase prodit maargin which increases profit
what can we do with our efficinecy gai of lower UC
invest into higher quality , creates hgiher rep of bs and bran this means increases added value
knock on eeffects of custoemr retention /brand loyalrt
or we can increase wages which increases motivation and therfore increase labour productivity which reduce sUC al over again
what methods can we use to increase labour productivity
4
investmetn in technology
improvements in training and motivatio
job redesign
reduction in labour force
how does investment in tech increase efficieny and labour productivity
improves wualitya nd reliabilty of a product
result in greater output from fewer eemployees
imprtovements in trianng and motivation - what is the aim of trainig
improve skills of workforce
imprtovements in trianng and motivation - the aim of trinaig is to iprove skils of workdirce how does this increase efficiency and labour productiivyt
leads to greater output
improvements in training and motivation - how does trianign impact motivatino
if triang involves employees feeling more involvd in process cna lead to greater motivarion
motivated as pefrom taks better
being more trinaed cna cause you to have a winning mindset
and firther imporvememtn in both quality and output
hwo does labour trinaing increease quality of a product
more skilled therfore less liekly to have defects and waste lead to less costs tha ususal from waste
+
higher quality products
we can also imporve laobour productivity thoguh
having a differnt maangment styles e,.g laissez faire
explain how job redesign may increase labour productivity
invovles changing content of job in terms of duties and repsosbilbities
may be done in a way that impotves overall pefomance of employee
how does reduction in labour force ipmorve productivity
automatically improves labour productivity
if same level of ouptu can be maintained
may be achieved through investment in tech or better trianig
its important to recognise imporvemnts in productivity shoudl come without
redcutino in quality or dependability of a service
what are the drawbacks of increasing labour prodiuctiivyt through trianig
costly may offset lower unit cost gains form increased labour productivity
i
icnreased LP may result in worker sasking for hgiher wages - whic furthe rincreases costs
taining can cause resitance and tension in workplace as likely to be used to old ways
even though labour productivity can result in highe rcosts and higher wages - waht is the long rn impact
imporvemtn in productivity may lead to greater competitiveness and greater sales
which may in the long run cover the costs
when can lbour productivity be achieved at expense of quality
workers encourage dto produce more through financial incentivies e.g peice rate system
why may some employees resit change when tryan increase LP
job losses and job security is threatedned
e.g intro of tech
so bs need to consider carefully how its introduced
efforts to imporve productivity can impact motivation positivley or engatovley this depens on
communication
managment style
busienss culture
shold we take a long term or short temr approach to imporing productiivyt
it depedns
what ar teh short term way to imporve effiicneyc and prodcutivity
job redesign
reducing labour force
what are eh long term ways to imporve productivit and efficinecy
investmetn in tech
imporvemetns in triang and workforce
