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Business > 2.4.1 Production, productivity and efficiency > Flashcards

2.4.1 Production, productivity and efficiency Flashcards

1
Q

Production

A

turning inputs into outputs/ products and services

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2
Q

Productivity

A

Output per unit of input over a time period

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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

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4
Q

Efficiency

A

the extent to which production resources generate output without wastage, resulting in producing at the lowest per unit cost

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5
Q

Labour intensive production

A

When production mainly uses labour, rather than machines or automation

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6
Q

Capital intensive production

A

when production mainly uses machines, rather than labour

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7
Q

Capacity

A

The maximum possible output of a business

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8
Q

Capacity utilisation

A

The proportion of the maximum possible output being used by a business

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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
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10
Q

Examples of job production industries

A

Architects
Plumbers
Ship builders
Road builders

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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
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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
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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
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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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15
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
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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
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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
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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
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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
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20
Q

Process production

A

involves a series of processes which raw materials go through
-end result is a large quantity of finished products

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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
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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
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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
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24
Q

Why does cell production often lead to improved productivity?

A
  • increased motivation - team spirit and added responsibility
  • specialisation
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25
Q

Pros of cell production

A
  • 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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26
Q

Cons of cell production

A
  • 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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27
Q

Which method of production is best for a growing firm?

-depends on factors such as:

A
  • 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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28
Q

Characteristics of job

A
  • 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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29
Q

Characteristics of job

-low tech jobs

A
  • organisation of production is very simple

- required skills and equipment easily obtainable

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30
Q

Characteristics of job

-high tech jobs

A
  • much greater complexity which is a greater management challenge
  • project management is important here
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31
Q

Features of good project control

A

-clear definitions of objectives - how should the job progress
-decision making process
-

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32
Q

Aims for flow production

A
  • improved work and material flow
  • reduced needs for labour skills
  • added value - completed work faster
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33
Q

What are the requirements for flow production to work?

-demand

A
  • 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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34
Q

What are the requirements for flow production to work?

-standardised

A

the product and the production must be standardised

-flow methods are inflexible so there are no variations in product

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35
Q

What are the requirements for flow production to work?

-specification and delivery

A

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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36
Q

What are the requirements for flow production to work?

-operations

A

each operation in the production flow must be carefully defined and recorded in detail

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37
Q

What are the requirements for flow production to work?

-quality standards

A

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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38
Q

what is each cell responsible for?

A
  • 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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39
Q

What is the objective of cell production?

A

-to enable greater flexibility to produce a variety of low demand products while maintaining the higher productivity of larger scale production

40
Q

Lean production

A

A collective term for a range of techniques designed to eliminate waste, such as JIT, Kaizen, TQM and cell production

41
Q

What are the purposes of lean production?

A
  • improve quality and lower rejection rates
  • increase productivity
  • reduce the costs of production by cutting waste
42
Q

Why is labour productivity important?

A
  • 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
43
Q

Output per employee equation

A

output/ number of employees

44
Q

labour costs per unit equation

A

labour costs/ output

45
Q

What does higher output per employee lead to?

A

higher output per employee = higher labour productivity=lower labour costs per unit

46
Q

What does productivity help with?

A
  • planning
  • scheduling
  • monitoring
  • budgeting
  • running the business
47
Q

What creates efficiency?

A

if a business can increase their productivity while keeping costs to a minimum, efficiency will increase

48
Q

Ways to improve productivity

A
  • productivity bonus
  • productivity deal
  • staff training
  • investment in new machinery and equipment
49
Q

Ways to improve productivity

-productivity bonus

A

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
50
Q

Ways to improve productivity

-productivity deal

A

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
51
Q

Ways to improve productivity

-staff training

A

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
52
Q

Ways to improve productivity

-investment in new machinery and equipment

A

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

53
Q

What are the factors influencing productivity?

-quality of inputs

A
  • Quality of inputs in the production process (equipment, IT systems)
  • faulty parts in an assembly line can stop the line
54
Q

What are the factors influencing productivity?

-labour

A

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

55
Q

What are the factors influencing productivity?

-technology

A

Investment in new technology

-robots can work 24/7 without rest breaks which increases productivity

56
Q

What are the factors influencing productivity?

-workforce

A

skills and motivation of workforce - extent to which workforce is trained and supported (the working environment)

57
Q

What are the factors influencing productivity?

-external factors

A

reliability of suppliers

58
Q

How does productivity effect competitiveness?

A

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
59
Q

Labour productivity formula

A

Output in period (units)/number of employees at work =units per employee per month

60
Q

Problems when increasing labour productivity

A
  • 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
61
Q

Efficiency

A

the extent to which production resources generate output without wastage, resulting in producing at the lowest unit cost

62
Q

when is efficiency maximised?

A

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

63
Q

Average cost formula

A

total costs/ output

64
Q

When are firms considered more efficient ?

A

when firms have a higher output per employee

65
Q

Benefits of efficiency

A
  • 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
66
Q

Drawbacks of efficiency

A

-quality may suffer as a result of trying to produce items too quickly

67
Q

What determines the suitability for labour production?

A

The nature of the product

68
Q

What does the UK favour labour or capital?

A

Capital intensive production as labour costs are high which allows the business to produce goods at the minimum average price

69
Q

Negative of capital intensive production

A
  • 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
70
Q

Capital intensive production

A

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
71
Q

Labour intensive production

A

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

72
Q

Benefits of labour intensive production

A
  • 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
73
Q

Benefits of Capital intensive production

A
  • 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
74
Q

How can production be measured?

A
  • output per worker or hour of labour
  • output per period of time
  • output per machine
  • unit costs (total costs/total output)
75
Q

Why is it important to achieve high productivity?

A
  • 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
76
Q

What are the non-financial methods to improve employee performance and motivation?

A 
Delegation 
Empowerment 
Consultation 
Job rotation 
Job enrichment 
Job enlargement 
Team working 
Flexible working
77
Q

Delegation

A
  • authority is passed down to employees and staff are given the responsibility to carry out tasks
  • democratic leadership style
  • Herzberg motivation factors
78
Q

pros of delegation

A

-can lead to increased motivation as it can contribute to an employees esteem needs and self-actualisation

79
Q

Cons of delegation

A

-it is important that managers don’t over delegate, that employees are capable and willing to take on extra responsibility

80
Q

Empowerment

A

provides employees with more responsibility to work on their own behalf

81
Q

pros of empowerment

A

-gives them more control over their own work and can lead to growth and advancement

82
Q

cons of empowerment

A

employees may take advantage of the increased power

83
Q

consultation

A

when managers and leader obtain the view of employees when making decisions
-paternalistic and democratic style

84
Q

Pros of consultation

A

-can make employee feel more involved with the business

85
Q

cons of consultation

A

-depends on the extent to which workers are consulted and whether workers views are actually considered

86
Q

Job rotation

A

involves the movement of employees through a range of jobs in order to increase interest and motivation
-can facilitate multi-tasking

87
Q

pros of job rotation

A

-makes it easier to cover for absent colleagues

88
Q

cons of job rotation

A
  • requires greater training - time lost

- may initially reduce productivity due to employee being unfamiliar with new task

89
Q

Job enrichment

A

attempts to give employees greater responsibility by increasing the range and complexity of tasks

90
Q

pros of job enrichment

A
  • motivates by giving opportunity to use their abilities to the fullest
  • gives opportunity for achievement and feedback of performance
91
Q

Cons of job enrichment

A
  • important that workers have the necessary training and skills
  • other wise it could lead to reduced quality, lower productivity and dissatisfaction
92
Q

Job enlargement

A

involves the addition of extra tasks to a job

93
Q

pros of job enlargement

A
  • 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
94
Q

cons of job enlargement

A

sometimes viewed by employees as a requirement to carry out more work for the same amount of pay

95
Q

team working and pros

A

meets workers social needs and can lead to a more multi-skilled workforce and shared responsibility can improve motivation

96
Q

cons of team working

A

tension can rise between workers

97
Q

Flexible working

A

involves workers having a degree of choice relation to how and when they work allowing them to balance their work and social life

Business (64 decks)

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