Theme 2 (Resource Management)

• Job production


  Producing items that meet specific requirements
• Job production


  • Customer requests and changes can be made easily
  • More motivated workers
• Job production


  • Costs are high per unit
  • Very labour intensive
• Batch production


  Many similar items are produced at the same time
• Batch production


  • Cost savings from bulk buying
  • Element of choice and flexibility
• Batch production


  • Takes time to switch production between batches
  • Need to hold on to higher stock levels
• Flow production


  Continuous movement of items through the production process
• Flow production


  • Lower cost per unit through improved work flow
  • Capital intensive – can work constantly to increase output
• Flow production


  • Time-consuming and costly to set up
  • Goods mass produced – less differentiation possible
• Cell production


  Production process is split into self-contained units
• Cell production


  • Increased motivation through team work
  • Specialisation as teams work on specific areas of production
• Cell production


  • Output lower than flow as machinery not used as intensely
  • May be rivalry between cells
• Productivity


  Measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs
• Factors influencing productivity


  • Labour – skills, knowledge, training
  • Capital – access to automated equipment
• Productivity


  Competitiveness - The more productive an organisation is, the lower its costs are. As a business lowers its costs, it can be more competitive in the market as it can lower its prices or make more profit, which can be reinvested to improve performance.
• Factors influencing efficiency


  • Use of machinery
  • Ability of workforce
• Labour intensive


  Labour is primarily used to produce of a good or service
• Capital intensive


  Machines are primarily used to produce the good or service
• Capacity utilisation


  Actual output / Maximum output x 100
• Implications of under-utilisation of capacity


  • Higher unit costs
  • Lower morale as staff under-used
  • Less competitive
• Implications of over-utilisation of capacity


  • Increased likelihood of disruptions as machines breaking down
  • Less able to respond to changes in demand e.g. new orders
  • Impact on customer service as work might be delayed or misses deadline
• Ways of improving capacity utilisation


  • Improved marketing
  • Reduce total capacity
• Stock control diagram
• Buffer stock


  Stock held as a contingency in case of unexpected orders so that such orders can be met and in any case of a delay from suppliers
• Buffer stock


  • Potential for lower unit costs from buying in bulk
  • Improved customer service
• Buffer stock


  • Added cost of holding stock (warehousing etc.)
  • Cash flow problems
• Just-in-time


  Where inputs into the production process arrive only when they are needed
• Just-in-time


  • Lower stock holding costs
  • Less working capital held up in stock
• Just-in-time


  • Little margin for error – may be delays
  • No spare finished product to meet unexpected orders
• Implications of poor stock control


  • More waste leading to higher costs leading to lower profitability
  • Lower levels of customer satisfaction leading to lower sales
• Benefits of waste minimisation


  • Lower costs
  • Improved efficiency
• Lean production


  An approach to management that focuses on cutting out waste, whilst ensuring quality. It aims to cut costs by making the business more efficient and responsive to market needs.
• Ways lean production might lead to a competitive advantage


  • Cutting waste reduces unnecessary costs which means more competitive in pricing
  • Cutting waste means less time and being more responsive to market changes or to customer requirements, leading to faster delivery times and more satisfied customers
• Ways quality management can give a business a competitive advantage


  • Strong brand reputation as a result of delivery quality products
  • Differentiate by improved customer satisfaction and brand loyalty
• Quality control


  The process of inspecting products to ensure that they meet the required quality standard, usually checking at the end of production for faults before being delivered to customers
• Quality assurance


  About the processes to ensure production quality meets the requirements of customers, ensuring every process is designed in order to get the product right first time and preventing mistakes from ever happening
• Quality circles


  Groups specifically brought together to identify potential improvements
• Total quality management (TQM)


  An attitude to quality where the aims are zero defects and total customer satisfaction
• Kaizen


  Translated as 'continuous improvement' is an approach of constantly introducing small incremental changes in a business in order to improve quality and/or efficiency