Please enable JavaScript.
Coggle requires JavaScript to display documents.
Chapter 18 - Coggle Diagram
Chapter 18
Productivity - the output measured against the inputs used to create it (Output / Quantity of input)
Businesses often want to measure the productivity of one of the factors of production or inputs, usually labour. This is measured by dividing the output over a given period of time by the number of employees : Output (over a given time period) / Number of employees
There are a number of ways to increase productivity and efficiency :
- Improve quality of the product and inventory control to reduce waste
- Replace employees with machinese
- Improve training to increase employee efficiency
- Motivate employees more effectively
- Introduce new technology
- Use more automation
Benefits of increasing efficiency/productivity :
- Reduced inputs needed for the same output level
- Lower costs per unit (average cost)
- Fewer workers may be needed, possibly leading to lower wage costs
- Higher wages might not be paid to workers, which increases motivation
Lean production - a term for those techniques used by businesses to cut down on waste and therefore increase efficiency, for example, by reducing the time it takes for a product to be developed and become available for sale
Tried to prevent seven types of waste :
- Overproduction - Producting goods before they have been ordered by customers
- Waiting - When goods are not moving or being processed in any way
- Transportation - Moving goods around unnecessarily causes waste and is not adding value to the product
- Unnecessary inventory - if there is too much inventory then this takes up space and may get in the way of production, costing money
- Motion - Any actions, including bending or stretching movements of the body of the employee wastes time
- Over-processing - If complex machinery is being used to perform simple tasks then this is wasteful
- Defects - Any faults require the good being fixed and time can be wasted inspecting the products
Pros :
- Less storage of raw materials or components
- Quicker production of goods and 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 injury
Lean production methods :
- Cell production
- Kaizen
- JIT (Just in time)
Methods of production
-
Batch production is where a quantity of one product is made, then a quantity of another item will be produced
Pros :
- Is a flexible way of working and production can easily be changed from one product to another
- It still gives some variety to workers' jobs
- Production may not be affected to any great extent if machinery breaks down
Cons :
- It can be expensive as semi-finished products will need to be moved about
- Machines have to be reset between production batches
- Warehouse space will be needed
Flow production is where large quantities of a product are produced in a continuous process. It is sometimes referred to as mass production
Pros :
- High output of a standardised product
- Costs of making each item are kept low
- May benefit from economies of scale in purchasing
Cons :
- Very boring system for workers therefore there is little job satisfaction
- There are significant storage requirements
- Capital costs of setting up production line can be very high
Just-in-time (JIT) is a production method that involves reducing or virtually eliminating the need to hold inventories of raw materials or unsold inventorys of the finished product
Pros :
- All this reduces the costs of holding inventory, as no raw materials and components are ordered to keep in the warehouse
- Warehouse space is not needed
- The finished product is sold quickly and so money will come back to the business more quickly, helping cash flow
Cons : 1. If goods come late then production might have to stop, missing out on potential sales
-
Kaizen - A Japanese tern meaning 'continuous improvement' through elimination of waste. They do this by getting rid of large amounds of inventory or reducing the amount of time taken for workers to walk between jobs to eliminate wasted movement. Small groups of workers meet regularly to discuss problems and possible solutions all the time.
Pros :
- 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 in the factory
Cell production is where the production line is divided into seperate, self-contained units, each making an identifiable part of the finished product instead of having a flow or mass production line