2.4.1 Production, productivity and efficiency Flashcards
(97 cards)
1
Q
Production
A
turning inputs into outputs/ products and services
2
Q
Productivity
A
Output per unit of input over a time period
3
Q
Labour productivity
A
Output per unit of labour over a time period or output per worker hour - it is a measure of efficiency
4
Q
Efficiency
A
the extent to which production resources generate output without wastage, resulting in producing at the lowest per unit cost
5
Q
Labour intensive production
A
When production mainly uses labour, rather than machines or automation
6
Q
Capital intensive production
A
when production mainly uses machines, rather than labour
7
Q
Capacity
A
The maximum possible output of a business
8
Q
Capacity utilisation
A
The proportion of the maximum possible output being used by a business
9
Q
Job production
A
- one off, small number of items produced
- Normally made to customers specifications
- often undertaken by small specialist businesses
- often associated with high quality
- labour intensive
10
Q
Examples of job production industries
A
Architects
Plumbers
Ship builders
Road builders
11
Q
Pros of job production
A
- customer requirements and changes can be handled which enables greater specialisation
- Associated with higher quality meaning they can charge higher prices
- employees may be better motivated and have more job satisfaction due to labour intensive work
- flexible production methods
12
Q
Cons of job production
A
- individual cost of one unit may be high
- often labour intensive = high labour costs
- Requires close consultation with the client
- Usually reliant on high skills
13
Q
Batch production
A
Makes a group of products to one specification at a time
- similar items are produced together
- each batch goes through one stage of production process before moving onto the next stage
14
Q
What is the aim of batch production?
A
- concentrate skills
- achieve better use of equipment so produce better quality products more economically than manufacturing them individually
- often offers standard products with some options
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Q
pros of batch production
A
- cost savings can be achieved by bulk buying
- allows customers some choice
- products can be worked on by specialists staff or equipment at each stage
- allows a firm to handle unexpected orders
16
Q
Cons of batch production
A
- takes time to switch production of one batch to another
- requires the business to maintain higher stocks of raw materials and work-in-progress
- tasks may become repetitive and boring reducing motivation of employees
- size of batch dependant on capacity allowed
17
Q
Flow production
A
continuous production of a single standardised product
- product moves continuously through production processes
- when one task is finished next task must start immediately
- time taken on each must be the same
- associated with making high volumes of the same product
18
Q
pros of flow production
A
- costs per unit of production reduced through improved work and material flow
- suitable for manufacturers of large quantities
- capital intensive which means it can work constantly
- less need for training and skills
19
Q
Cons of flow production
A
- very long set up time and reliant on high quality machinery - significant cost if production is delayed
- high raw materials and finished stocks unless lean production used
- goods are mass produced therefore less differentiation for the customer
- production is shut down if flow is stopped - if production is stopped at any stage, all stages stop which is opposite to batch
20
Q
Process production
A
involves a series of processes which raw materials go through
-end result is a large quantity of finished products
21
Q
Pros of process production
A
- can normally be automated which reduces unit costs
- large quantities can be produced
- ideal fro products which have to be of a consistent quality
22
Q
Cons of process production
A
- heavy investment required in process design and production equipment and facilities
- difficult and disruptive if the production process has to be stopped
- little opportunity to make different versions of the product
23
Q
Cell production
A
- organising workers into small groups or cell, that can produce a range of different products more quickly than job production allows
- assembly lines are broken down into group related activities
- teams are given responsibility of doing a part of production process as product moves through assembly line
- every member of the team is skilled at a number of roles - providing an opportunity for job rotation
24
Q
Why does cell production often lead to improved productivity?
A
- increased motivation - team spirit and added responsibility
- specialisation
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Pros of cell production
- stability of the team improves communication between cell members
- processes, defects, scheduling and maintenance can be managed more efficiently and cost effectively
- workers become multi-skilled and are consequently more adaptable and flexible to the changes in the business
- improves customer response time
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Cons of cell production
- may not allow firms to use their machinery as intensively as in flow and output will be lower than mass pro
- greater investment is required in new management and control processes, such as stock ordering
- may be tensions between cells and conflicts may arise if one cells is left to wait for output from another
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Which method of production is best for a growing firm?
| -depends on factors such as:
- target market - does the customer demand product options?
- technology - can production be automated
- resources - does the firm have finance and people to be able to use flow?
- standards - what quality is required?
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Characteristics of job
- the complete task is handled by a single worker or group of them
- jobs can be low and high technology and small and complex scale
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Characteristics of job
| -low tech jobs
- organisation of production is very simple
| - required skills and equipment easily obtainable
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Characteristics of job
| -high tech jobs
- much greater complexity which is a greater management challenge
- project management is important here
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Features of good project control
-clear definitions of objectives - how should the job progress
-decision making process
-
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Aims for flow production
- improved work and material flow
- reduced needs for labour skills
- added value - completed work faster
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What are the requirements for flow production to work?
| -demand
- there must be a substantial constant demand
| - if demand is unpredictable, it can lead to a build up of stock and storage difficulties
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What are the requirements for flow production to work?
| -standardised
the product and the production must be standardised
| -flow methods are inflexible so there are no variations in product
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What are the requirements for flow production to work?
| -specification and delivery
materials must be to specification and delivered on time
- continuous work - using materials that vary in style, form or quality is not a good idea
- if materials are not available the whole production line will have to stop
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What are the requirements for flow production to work?
| -operations
each operation in the production flow must be carefully defined and recorded in detail
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What are the requirements for flow production to work?
| -quality standards
the output from each stage of the flow must conform to quality standards
- product moves to each stage continuously so there's no time for sub-standard output to be re-worked
- opposite for job and batch
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what is each cell responsible for?
- responsible for the quality of the product they pass on
- responsible for a complete unit of work which Herzberg defined as job enrichment
- improves motivation and morale which means they are less likely to become bored of repetitive work
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What is the objective of cell production?
-to enable greater flexibility to produce a variety of low demand products while maintaining the higher productivity of larger scale production
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Lean production
A collective term for a range of techniques designed to eliminate waste, such as JIT, Kaizen, TQM and cell production
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What are the purposes of lean production?
- improve quality and lower rejection rates
- increase productivity
- reduce the costs of production by cutting waste
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Why is labour productivity important?
- labour costs are usually as significant part of total costs
- business efficiency and profitability link to productive use of labour
- in order to remain competitive, a business needs to keep its unit costs down
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Output per employee equation
output/ number of employees
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labour costs per unit equation
labour costs/ output
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What does higher output per employee lead to?
higher output per employee = higher labour productivity=lower labour costs per unit
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What does productivity help with?
- planning
- scheduling
- monitoring
- budgeting
- running the business
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What creates efficiency?
if a business can increase their productivity while keeping costs to a minimum, efficiency will increase
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Ways to improve productivity
- productivity bonus
- productivity deal
- staff training
- investment in new machinery and equipment
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Ways to improve productivity
| -productivity bonus
A business may offer their employees this to boost productivity
- this will increase costs to the business so may not maximise efficiency
- measure performance add set targets
- streamline production processes
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Ways to improve productivity
| -productivity deal
the union in a business may negotiate a productivity deal for all staff
- should motivate to work harder and efficiently
- this is a financial method = high costs
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Ways to improve productivity
| -staff training
Better trained staff will be more productive - fully trained = hard working
- training can be expensive-means that at least 2 people are away from their job whilst someone is being trained
- lost productivity
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Ways to improve productivity
| -investment in new machinery and equipment
may invest to make more efficient and produce more goods per hour - boost productivity
-machinery is expensive and may take years to recoup the costs - long term strategy to improve productivity
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What are the factors influencing productivity?
| -quality of inputs
- Quality of inputs in the production process (equipment, IT systems)
- faulty parts in an assembly line can stop the line
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What are the factors influencing productivity?
| -labour
labour shift organisation workers
-having the right number of staff at peak times will increase productivity overall, as stretched staff are demotivated by being overloaded
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What are the factors influencing productivity?
| -technology
Investment in new technology
| -robots can work 24/7 without rest breaks which increases productivity
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What are the factors influencing productivity?
| -workforce
skills and motivation of workforce - extent to which workforce is trained and supported (the working environment)
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What are the factors influencing productivity?
| -external factors
reliability of suppliers
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How does productivity effect competitiveness?
more productive - can produce more goods economically efficiently
- therefore business is in a position to charge more competitive prices
- will enjoy economies of scale and can charge a competitive price
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Labour productivity formula
Output in period (units)/number of employees at work =units per employee per month
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Problems when increasing labour productivity
- potential trade off with quality
- potential for employee resistance - depending on methods used e.g. new technology
- employees may demand higher pay for their improved productivity - negates impact on labour costs per unit
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Efficiency
the extent to which production resources generate output without wastage, resulting in producing at the lowest unit cost
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when is efficiency maximised?
when goods are produced at the minimum unit or average production cost - production will aim to do this to take advantage of economies of scale
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Average cost formula
total costs/ output
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When are firms considered more efficient ?
when firms have a higher output per employee
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Benefits of efficiency
- leads to a competitive advantage as prices per item made are lower than competition
- can become market leader through low prices
- enjoy high profits due to lower production costs
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Drawbacks of efficiency
-quality may suffer as a result of trying to produce items too quickly
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What determines the suitability for labour production?
The nature of the product
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What does the UK favour labour or capital?
Capital intensive production as labour costs are high which allows the business to produce goods at the minimum average price
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Negative of capital intensive production
- machines often break and need to be maintained
- are expensive to buy
- machinery can become obsolete
- may generate resistance from workforce
- may be greater loss if there is a fault
- business may lose competitiveness if they are stuck in the same production technique
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Capital intensive production
aims to create a product using as little people as possible, the process could be entirely or partially automated.
- aims to be cheaper than labour in the long run
- aims to make the job simple and quick
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Labour intensive production
aims to use a large workforce to complete work by hand, this usually employs a lot of people to create a product.
-some products are seen to have more value if they were made by hand
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Benefits of labour intensive production
- business can benefit from premium pricing for hand crafted goods
- generally better quality
- can use flexible workforce to make sure locations are staffed efficiently
- lower break even output
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Benefits of Capital intensive production
- machines do not require pay so lower labour costs
- labour is more specialised so individuals are good at their job
- firms can benefit from access to long term financing
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How can production be measured?
- output per worker or hour of labour
- output per period of time
- output per machine
- unit costs (total costs/total output)
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Why is it important to achieve high productivity?
- a more efficient business will produce lower cost goods than competitors
- they can either make a higher profit per unit sold or offer a lower price than competitors and still make good profit
- investing in production assets is expensive - business needs to maximise the return it makes on these assets - equipment, factory, building
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What are the non-financial methods to improve employee performance and motivation?
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Delegation
Empowerment
Consultation
Job rotation
Job enrichment
Job enlargement
Team working
Flexible working
```
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Delegation
- authority is passed down to employees and staff are given the responsibility to carry out tasks
- democratic leadership style
- Herzberg motivation factors
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pros of delegation
-can lead to increased motivation as it can contribute to an employees esteem needs and self-actualisation
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Cons of delegation
-it is important that managers don't over delegate, that employees are capable and willing to take on extra responsibility
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Empowerment
provides employees with more responsibility to work on their own behalf
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pros of empowerment
-gives them more control over their own work and can lead to growth and advancement
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cons of empowerment
employees may take advantage of the increased power
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consultation
when managers and leader obtain the view of employees when making decisions
-paternalistic and democratic style
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Pros of consultation
-can make employee feel more involved with the business
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cons of consultation
-depends on the extent to which workers are consulted and whether workers views are actually considered
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Job rotation
involves the movement of employees through a range of jobs in order to increase interest and motivation
-can facilitate multi-tasking
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pros of job rotation
-makes it easier to cover for absent colleagues
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cons of job rotation
- requires greater training - time lost
| - may initially reduce productivity due to employee being unfamiliar with new task
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Job enrichment
attempts to give employees greater responsibility by increasing the range and complexity of tasks
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pros of job enrichment
- motivates by giving opportunity to use their abilities to the fullest
- gives opportunity for achievement and feedback of performance
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Cons of job enrichment
- important that workers have the necessary training and skills
- other wise it could lead to reduced quality, lower productivity and dissatisfaction
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Job enlargement
involves the addition of extra tasks to a job
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pros of job enlargement
- by widening the range of jobs that need to be performed, hopefully the employee will experience less repetition and monotony
- rarely need to acquire new skills to carry put additional tasks
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cons of job enlargement
sometimes viewed by employees as a requirement to carry out more work for the same amount of pay
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team working and pros
meets workers social needs and can lead to a more multi-skilled workforce and shared responsibility can improve motivation
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cons of team working
tension can rise between workers
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Flexible working
involves workers having a degree of choice relation to how and when they work allowing them to balance their work and social life
