What are 3 ways a business can increase its capacity?
- Sub-contract our production to another business
- Offer overtime pay to the workforce
- Employ workers on temporary contracts
What are 2 ways a business can decrease its capacity?
- Rationalisation( redundancies or sale of assets)
2. Subcontract in work from another business
What is a labour intensive production process? 4
High level of human input into the production process
- Highly specialised
- personal
- service industry
- high level of skill required
What is a capital intensive production process? 3
High level of capital investment into the production process
- Mass production
- Standardisation
- Efficient production
What happened to labour cost per unit when they labour efficiency is increased?
The labour cost per unit decreases
What are 7 benefits of improved efficiency?
- Labour productivity increased
- Unit costs fall
- Resources such as labour, expertise and time can be reallocated
- Profit margins increase
- Improved flexibility across the business
- Opportunity to explore new ventures
- Ability to charge low prices therefore improve competitiveness
What are the 5 different ways to increase efficiency and labour productivity?
- Introduce new reward systems (incentive to work harder)
- New ways of working (more effective designer job)
- Training (improve skills and motivation)
- New technology (speed up processes & reduce human error)
- Better management (improve supervision, direction and leadership)
What 3 things may decrease as labour productivity increases?
- Quality
- creativity
- customer service
Define lean production
Because when managers reduce waste and therefore operations become more efficient
What are the 7 types of waste a business can reduce?
- Motion – unnecessary movement of people
- Transport - unnecessary movement of products
- Inventory – too much stock
- Defects – faulty products
- Waiting – for processes to finish before others begin
- Extra processing – adds unnecessary valueless features
- Overproduction – hard to sell products
What are six ways of reducing waste?
- Close proximity to each other and resources
- Designing facilities to minimise movement
- Using effective stock control systems
- Adopting quality assurance techniques
- Meeting the exact needs of customers
- Using a range of forecasting techniques to match production accordingly
What are the 3 lean production methods?
- Just – in – time
- Kaizen
- Lean organisations
What is the just – in – time method?
Supply of products and raw materials triggered by demand from customers
Minimises stock levels, frees up resources and capital
Relies on effective communication and systems the process and deliver
What is the Kaizen method?
This is a Japanese concept of continuous improvement, for example by making marginal improvement in efficiency, rather than revolutionary improvement
What is the lean productions method?
Only use processes that add value and are effective
Remove anything that is not necessary
What are the five main difficulties of adopting lean production?
- What disruptions in production may leave business vulnerable if inventory is empty
- Creates over – reliance on suppliers to deliver on time
- Danger of removing processes and features that employees and customers value
- Pressurises workforce to self check in the motor for work, skills?
- Kaizen can bring about change that may be resisted by the workforce
