Production, Productivity & Efficiency (Edexcel A Level Business)

Job Production

• Manufacturers produce one product at a time as ordered by the customer

• High quality product
• Motivated and highly skilled workers
• Customised products can be produced

• Production is slow
• Labour costs are high

Flow Production

• Continuous manufacturing of standardised products, usually on a production line

• Low unit costs due to economies of scale
• Rapid production
• Usually highly automated (capital intensive)

• Customisation is difficult
• Capital equipment can be expensive to purchase

Batch Production

• Groups of the same product are produced as a batch e.g. 1000 Blueberry muffins

• Workers can specialise
• Production can take place as the previous 'batch' starts running out

• Requires careful coordination to avoid shortages
• Money is tied up in stock as completed products need to be stored

Cell Production

• This involves workers being organised into multi-skilled teams, with each team responsible for a particular part of the production process

• Cell production is often more efficient than other methods as workers share their skills and expertise
• Motivation is usually high as employees work as a team

• Requires extensive reorganisation of production processes
• Teams efficiency may be reduced by weaker workers

• Employee motivation

• Motivated workers tend to be more productive
  
  • Financial incentives linked to output may increase worker productivity
    
  • Non-financial incentives may include workers in decision-making, increase their commitment and productivity

• Skills, education & training staff

• Well-trained and educated workers are likely to be able to make useful contributions to decisions that improve productivity
  
  • Workers are more autonomous so the need for supervision is reduced
    
  • Contributions from knowledgeable staff are likely to lead to improvements in productivity

• Business organisation & working practices

• Flexible and adaptable workplaces can improve the commitment of workers and allow a business to respond to changes in demand
  
• • Hours and location of work can be adapted to better meet the needs of workers and demand
    
  • Workstations may be used for various purposes with careful planning and training

• Investment in capital equipment

• Increased automation can improve levels of output and quality
  
  • Well chosen machinery is less likely to make mistakes than humans
    
  • Machinery and technology can operate for long periods without a break as long as it is properly maintained

Standardisation of the production process

• Occurs when all staff use the same components and techniques in the production process
  • Training of workers is minimised
  • Bulk-buying of components reduces variable costs
  • Production lead time is reduced
  • BUT customisation of products is not usually possible

Relocation or downsizing

• Moving production to a cheaper or smaller location can reduce fixed costs
  • Labour-intensive businesses may look for lower wage locations
  • Capital-intensive locations may look for lower rents or land costs
  • However, relocation is very disruptive and will incur significant short-term costs

Investment in capital equipment

• Purchasing or upgrading machinery and technology can increase the rate of output, lower costs and improve quality

Organisational restructuring

• Reducing the level of staff or reorganising staff can better match labour to output needs
  
  • Delayering reduces labour costs as levels of management are removed
    
  • Redeployment can motivate workers by providing opportunities for staff to take on a new role which will develop their skills and experience

Outsourcing

• Tasks may be given to other specialist businesses that can complete it at a lower cost
  • Outsourcing allows a business to focus on improving the efficiency of its core competences

Adoption of lean production techniques

• An approach to production that involves the reduction of all types of wastage (time, resources and space)
  • Kaizen means that improvements are made continuously
  • Just in Time involves the holding little or no stock which minimises storage costs

Capital Intensive

• Low-cost production where output is high
  
• Machines are usually consistent and precise
  
• Machines can run without breaks

• Significant set-up and maintenance costs
  
• Breakdowns can severely delay production
  
• May not provide flexibility in production

Labour Intensive

• Low-cost production where labour costs are low
  
• Provides opportunities for workers to be creative
  
• Workers are flexible (e.g. they can be retrained)

• Workers may be unreliable and need regular breaks
  
• Incentives may be needed to motivate staff
  
• Training costs can be significant