2.4.1 Production, productivity & efficiency

• Job Production : manufacturers produce ONE product at a time that is specific to customer requirements

  Benefits:

  • high quality product that suits customer needs
  • motivated & highly skilled employees
  • products can be customized

  Drawbacks:

  • production is slow
  • labour costs are high
• Batch Production : groups of the same product are made at the same time

  Benefits:

  • workers can specialise
  • production can take place as the previous 'batch' starts to run out

  Drawbacks:

  • require careful coordination to avoid shortages
  • money is tied up in stock
  • need to store completed product
• Flow Production : continuous manufacture of standardised products usually on a production line

  Benefits:

  • low unit costs from economies of scale
  • rapid production
  • capital intensive

  Drawbacks:

  • customisation is difficult
  • equipment can be expensive to purchase
• Cell Production : dividing the work place into cells, where each cell focuses on the production of a product family (part of production with a sequence of similar operations)

  Benefits:

  • workers tend to have good communication / working relationships
  • workers placed in cells based on specialised skills

  Drawbacks:

  • can be repetitive for workers
  • can limit skill development
• productivity - the relationship between between inputs into the production process & the resultant output

  • output per worker/hour of labour
  • output per hour/day/week
  • output per machine
• calculations:

  • labour productivity = total output / number of workers
  • capital productivity = total output / number of machines
  • average cost = total costs / number of units
  • capacity utilisation (%) = actual level of output / max level of output x 100
• improving productivity:

  • increasing the number of hours worked
  • training skills/education
  • investment in equipment/technology/capital equipment
  • changing the way work is done/organisational structure/working practises
  • motivating employees
• Factors affecting productivity:

  • quality and extent of machinery
  • skills motivation & ability of workforce
  • method of production
  • reliability of raw materials & suppliers
• efficiency - how well resources are used
• Factors influencing efficiency:

  • standardisation: making the production process the same every time
  • outsourcing: rely in another business for all/part of the production process
  • relocating: move production to a new location (E.g. nearer to supplies)
  • Downsizing: reduce the size pf the business
  • Delayering: get rid of a layer of the hierarchy
• capital intensive - production is mainly automated using machinery & there are very few employees
• labour intensive - production is mainly manual with little machinery and lots of employees