2.4.1 - Production, productivity and efficiency

• Define productivity:

  • is the businesses way to measure how hard a person or a machine rate of output per unit of input.
• Methods of production:

  • job production
  • batch production
  • flow production
  • cell production
• Job production:

  • where one single product is made at a time to meet customer needs.
  • made for specific clients.
  • Made high quality, higher prices can be charged.
• Job production adv:

  • bespoke, unique to customer satisfaction can charger higher prices.
  • motivated workers are normally more productive, have lower rates of absenteeism.
• Job production dis:

  • skilled labour and craftsmen are expensive.
  • can’t buy in bulk, slows down production process.
• Batch production:

  • used when a business wants to make more than one item at a time.
  • goods are made in batches, and can be switched over to make something different on same production line.
  • furniture makers may produce a run of one design of chairs before switching to something else.
• Batch production adv:

  • production can be changed to meet customer needs or fluctuations in demand.
  • employees specialise so they become good at their job.
• Batch production dis:

  • small batches carry higher average unit costs (no economies of scale).
  • workers may be less motivated with repetitive work.
• Flow production:

  • uses production line with continuous movements of items through the process.
  • many mass produced products are made this way, like - Coca Cola, cars , toothpaste.
  • laid out in assembly lines.
• Flow production adv:

  • can make larger quantities which means they can buy bulk raw materials and save money (economies of scale).
  • production is continuous stocks of parts and raw materials, means can use JIT system.
• flow production dis:

  • higher costs of machinery.
  • low motivation of staff due to repetitive tasks.
• Cell production:

  • dividing up production into separate self contained areas that are each responsible for a section of works.
  • each cell will have a team leader and a team of multi-skilled workers.
• Cell production adv:

  • wastage through movement of materials is reduced.
  • time waiting for stock to arrive is reduced.
• Cell production dis:

  • any breakdown of machinery will stop production.
  • need more staff to supervise production lines.
• Methods to improve productivity:

  • productivity bonus
  • productivity deal
  • training
  • machinery
• Productivity bonus:

  • for example, the employees if they increase production by 5% may be entitled with a lump sum bonus of £500 or a percentage on their wages.
• Productivity deal:

  • the union in a business may negotiate a productivity deal for all staff, this should motivate everyone in the organisation to workers and more efficiently.
• Training:

  • if staff are better trained, they can be more productive and complete tasks effectively and quicker.
• Machinery:

  • the business may decide to invest in new machinery to make it more goods per hour - which will boost productivity.
• Link between productivity and competitiveness:

  • if business is more productive then it can reproduce goods more economically efficiently and therefore in a position to charge more competitive prices.
  • will enjoy economies of scale and therefore charge competitive prices.
• Productivity and efficiency:

  • higher output per employee are more efficient.
  • can lead to competitive advantage as prices per item made are lower than competition.
  • can become market leaders through low prices.
  • enjoy high profits with low productive costs.
• Labour intensive production:

  • make products using mostly human effort (labour).
  • the nature of the product will determine if it’s suitable for labour intensive production, e.g. can make cars by hand but to produce in volume requires machines.
• Capital intensive production:

  • goods are produced using mainly machines and equipment.
  • allows business to produce goods at a minimum average price.
  • machines often break, need to be maintained and are expensive to buy.