high labour productivity reduces the costs of the business as each individual worker produces more goods lowering unit costs and the business may lay off workers to reduce costs even further

Factors that affect labour productivity:

• extent and quality of fixed assets
• skills ability and motivation of the workforce
• methods of production organisation
• extent to which the workforce is trained and supported
• external factors such as reliability of suppliers

Issues with improving productivity:

• potential trade off with a drop in quality for increased speed
• worker resistance depending on the methods used such as new technology
• employees demanding more pay for increased work

external factors affecting objectives:

• new tech is developed which lowers unit costs
• a new law forces companies to reduce factory emissions
• a european recession forces a firm to reduce output as demand is decreased
• a rival firm boosts productivity to lower unit costs

Benefits:

• lower stock holding means a reduction in storage space which saves rent and insurance costs
• less working capital is tied up in stock
• less likelihood of stock perishing, becoming obsolete or running out of date
• less time spent on checking or reworking

Drawbacks:

• there is little room for mistakes as minimal stock is kept for reworking faulty products
• production is heavily focused on reliable suppliers as products need to be delivered on time or production will be delayed
• there is no spare finished product available to meet unexpected orders because all product is made to meet the actual orders

Kaizen:
continuous improvement, an approach of constantly introducing small incremental changes in a business in order to improve efficiency or quality. ideas come from employees, small improvements are less likely to require major capital investment than major process changes, culture; all employees should constantly look for ways to improve their own performance, kaizen encourages employees to take ownership for their work = can help reinforce team working and improve motivation

Firms should have high capacity utilisation but not 100% the reasons for this include:

• may have to turn away customers if already full
• now downtime making it easier for machines to break
• cannot increase demand during seasonal variations in demand
• no margin for error as every order has to be perfect first time as no time to re do it

Quality control: manual inspection of each product done by humans
Advantages:

• can be used to guarantee that no faulty product leaves the factory
• requires little staff training
  Disadvantages:
• if one faulty product is found, the whole batch has to be checked
• as they are checked at the end poor quality could have been built in at the first step meaning that the steps after would have been useless
• poor quality is built into the product as workers know it will just be checked at the end

Quality assurance: detailed systems that are in place to govern quality at every step of the production process
Advantages:

• company has a quality inspection for every section of production
• some customers get reassurance from quality records
  Disadvantages:
• quality process not quality product
• encourage complacency
• time and money consuming employing workers to inspect each product after every stage of production
  

Total quality management: Philosophical way of looking at quality. Every employee considers quality for every product at every stage of production
Advantages:

• should become rooted into the companies culture
• quality is instinctive
  Disadvantages:
• employees may treat it as 'hot air' and require a specified program
• requires extensive training which costs a lot of money