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production of goods and services (how technology has changed production…
production of goods and services
operations department
factory manager
responsible for the quantity and quality of products coming off a production line. (maintenance and other repairs)
purchasing manager
responsible for providing the materials, components and equipments required for the production
research and development manager
responsible for the design and testing of new production processes and products
productivity
formula
productivity = quantity of output : quantity of inputs
labour productivity = output : number of employees
ways to improve productivty
improved quality control / assurance reduces waste
improve employee motivation
introduce new technology
use machines instead of people (automation)
train staff to be more efficient
improve inventory control
benefits of productivity
increased output relative to the inputs required
lower costs per unit (average cost)
fewer workers may be needed, possibly leading to lower wage costs
higher wages for workers increases motivation
lean production
7 types of waste
overproduction
waiting
transportation
unnecessary inventory
motion
over-processing
defects
benefits
less storage of raw materials or components
quicker production of goods or services
no need to repair defects or provide a replacement service for a dissatisfied customer
better use of equipment
cutting out some processes which speeds up production
less money tied up in inventories
improved health and safety leading to less time off work due to an injury
types of lean production
kaizen
increased productivity
reduced amount of space needed for the production process
work-in-progress is reduced
improved layout of the factory floor may allow some jobs to be combined, thereby freeing up employees to carry out some other job
just-in-time inventory control
all this reduces the cost of holding inventory, as no raw materials and components are ordered to keep in the warehouse just in case it is needed
warehouse space is not needed, again reducing costs
the finished product is sold quickly and so money will come back to the business more quickly, helping its cash flow
cell production
production line is divided into separate, self-contained units (cells)
each unit makes an identifiable part of the finished product
improves morale
of the employees and makes them
work harder
so they become
more efficient
employees will
feel more valued
and are
less likely to strike
or cause disruption
methods of production
job production
advantages
it is most suitable for
personal service
or "one-off" products
the product meets the
exact requirements
of the customer
the workers often have
more varied jobs
(not just one task)
more varies work
increases employee motivation
(greater job satisfaction)
it is flexible and often used to high-quality goods and services meaning that a
higher price can be charged
disadvantages
skilled labour
is often used
the costs are higher because it is often
labour intensive
production often
takes a long time
products are specifically made to order and so any
errors can be expensive to correct
materials may have to be specially purchased
leading to higher costs
batch production
advantages
it is
flexible
way of working and production can easily be changed from one product to another
it still
gives some variety
to workers' jobs
it allows
more variety to products
which would otherwise be identical, which gives consumer choice (different flavours)
production may not be affected to any great extent if machinery breaks down
disadvantages
it can be expensive as semi-finished or finished
products will need moving about
machines have to be reset between production
batches which means there is a delay in production, output is lost
warehouse space will be needed
for stocks of raw materials and components which is costly
flow production
advantages
there is a high output for standardised product
costs are kept low and therefore prices are also lower
it is easy for capital-intensive production methods to be used - reducing labour costs and increasing efficiency
capital-intensive methods allow workers to specialise in specific, repeated tasks and therefore the business may only need relatively unskilled workers - little training
it may benefit from economies of scale in purchasing
low average costs and therefore low prices usually mean high sales
automated production lines can operate 24 hours a day
goods are produced quickly and cheaply
no need to move goods from one part of the factory to another (time is saved)
disadvantages
very boring system for the workers, little job satisfaction, lack of motivation for the employees
significant storage requirements - costs of inventories of raw materials / components and finished products can be very high
the capital costs of setting up the production line can be very high
if one machine breaks down the whole production line will have to be halted
factors that affect which method of production to use
the nature of the product
the size of the market
the nature of the demand
the size of the business
how technology has changed production methods?
automation
mechanisation
CAD (computer aided design)
CAM (computer aided manufacture)
CIM (computer integrated manufacturing)
EPOS (electronic point of sale)
EFTPOS (electronic funds transfer at point of sale)
advantages
productivity is greater as new production methods are used
greater job satisfaction stimulates workers, as routine and boring jobs are now done by machines
the types of jobs have changed as more skilled workers are needed to use the new technology (training exercises -> more motivated -> increased quality)
better quality products are produced owing to better production methods and better quality control
more accurate consumer demand results from computers being used to monitor inventory levels
quicker communication and reduced paperwork, owing to computers, lead to increased profitability
the information that is available to managers is much greater and this results in better and quicker decision making
new products are introduced as new methods of production are introduced. the market and tastes of consumer have changed
disadvantages
unemployment rises as machines/computers replace people on the factory floor and in offices
expensive to invest in, also increases the risks as large quantities of products need to be sold to cover the cost of purchasing the equipment
employees are unhappy with the changes in their work practices when new technology is introduced
new technology is changing all the time and will often become outdated quite quickly and need to be replaced is the business is to remain competitive