Unit 4.3- Increasing efficiency and productivity

Question 1

What does efficiency mean?

Answer 1

Getting more output from a given level of inputs and/or using less resources to achieve a given level of output and quality.

Question 2

Why is efficiency so important?

Answer 2

Lowers unit costs, so they can lower prices or increase profit margins.

Question 3

How can efficiency be improved?

Answer 3

• Using capacity more effectively
• Choosing the optimal mix of resources
• Increasing labour productivity
• Introducing lean production
• Using technology

Question 4

What would a business do if capacity utilisation is too low?

Answer 4

Try and improve their marketing to boost sales

Reduce its capacity - rationalising or down sizing

Question 5

What would a business do if capacity utilisation is too high?

Answer 5

• Outsource to other producers

- Find a way to reduce demand in the short term

Question 6

How can labour productivity be improved?

Answer 6

• Training
• New technology
• New ways of working
• Better management
• New reward systems

Question 7

What are the Problems with improved labour productivity?

Answer 7

Rushing leads to quality issues
Employees wanting higher pay
Waste through excess stock

Question 8

What will impact on the best (optimal) combination of resources?

Answer 8

The production process

What is affordable and achievable

Question 9

What is lean production?

Answer 9

When managers reduce waste and therefore operations become more efficient.

Question 10

How can lean production reduce waste?

Answer 10

• Improving quality - reducing the number of items needed to be reworked, fixed or thrown away
• Reducing the amount of inventory held
• Reducing the time items are waiting for something to happen to them.
• Reducing the time items are moving from one stage to another.

Question 11

What are the issues with lean production?

Answer 11

• More vulnerable as holds little/no stock
• Issues in the production process will halt operations - deliveries, absences
• Risk from external factors e.g. weather
• Employees are checking their own work - engaged, skills and training
• Need excellent links to suppliers
• Need excellent communications and technology

Question 12

How can technology improve operational efficiency?

Answer 12

Flexible to customer needs
Reduce costs by being more efficient with less errors
innovative.