Production: is the provision of a product or a service to satisfy consumer wants and needs
To be competitive:
Should combine the inputs of resources efficiently
To make the best use of resources
Keep costs low to increase profits
In developing country :
wages are low --> labour intensive : use many worker and fewer machines
In developed country :
wages ( labour cost ) are high --> capital intensive : use machines/ robots and employ few workers
Operation department :
Factory manager : responsible for the quantity and quality of products --> include maintaining production line and repair
Purchasing manager : responsible for providing the materials, component and equipments
Researching and development manager : responsible for designing and testing new products
Productivity: is the output measured against the inputs ( usually labour) used to create it
productivity is how a business measure efficiency
Productivity = quantity of output / quantity of input
As productivity increases cost of production falls
Businesses measure productivity with one factor ( usually labour)
Labour Productivity = Output / number of employees
Employee more efficient --> output per employee increase --> cost of each product production will fall --> more competitive
Way to increase productivity :
Improve quality control/ assurance reduces waste
Improve employee motivation
Introduce new technology
Improve inventory control
Train staff to be more efficient
Use machines instead of people to do jobs
Benefits of increasing efficiency/ productivity :
Increased output
Lower cost per unit
Fewer worker - low wage cost
Increase motivation
Stock : raw materials, components, partly finished goods, finished products
Stock control:
Should stock level be high or low?
Too little stock : cannot meet demand
holding inventories allows a business to maintain production and satisfy costumer demand quickly
Too high stock : highest of storage and holding inventory - money could be put to better use
When the stock level reaches the re-order level, it triggers a new order. The difference between the time of re-order and delivery is the "lead time".
minimum stock level = buffer inventory level
buffer inventory level : is the inventory hold to deal with uncertainty in consumer demand and deliveries of supply
Lean production
Variety of techniques to cut down on waste and therefore increase efficiency
It tries to reduce the time it takes for a product to be developed and become available in the shops for sale
Lean production looks at reducing all forms of waste throughout the production process
Type of waste :
over production : high storage cost and possible damage to goods while store
waiting : waste is occurring is product is not move
transportation : moving goods around unnecessary increase cost and might cause damage while moving
unnecessary inventory : increase cost
motion ( action of employee e.g stretching, bending ) : can waste time , might be a health and safety risk for employee
over processing : using complex machines to perform simple tasks
defects : faults during production
Benefits of lean production:
Save cost through:
Less storage of stock - less money tied up in inventories
Quicker production
No repairs/ replacement needed
Better use of equipment
Cutting down unwanted processes
Improved health and safety
Method of lean production:
Kaizen
JIT
Cell production
Kaizen ( continuous improvement ) :
Focus is on elimination of waste
Kaizen is a system that involves every employee from upper management to cleaning crew
Everyone is encouraged to come up with small improvement suggestions on a regular basis
Example:
Kaizen - factory floor is reorganised by repositioning machines tightly together in cells in order to improve the flow of production.
JIT
Just in time - supplies arrive just at the time they are needed.
Eliminating the need to hold inventories
Cell production method
Production line is divided into self contained units, each making an identifiable part of the finished production
Cell 1 = finished product
Cell 2 = finished product
Cell 3 = finished product
Cell production
Team work - improves morale - efficiency
Methods of production:
Job production
Batch production
Flow production
Job production
Single product at one time
B2B
bridges, ships, cinema films, individual computer programs
Workers have more varied jobs - greater job satisfaction and customer satisfaction
Labour intensive and costs are higher
Batch production
Similar products are made in blocks or batches
Production can easily be changed from one product to another
Gives some variety to worker's jobs
Expensive as semi-fin iced products will need moving about
Warehouse space will be needed for stocks of raw materials and components
Flow production
Large quantity of a standardised product
Costs are kept low, prices are lower
Goods produced cheaply and quickly
Capital intensive method - high start up costs
Little job satisfaction
One machine breaks down, line affected
Improvements in technology
Robotics :
Computerised arms used to manufacture cars and electrical goods
Can be carried out with 100% accuracy
Although expensive to buy, robotics are cheaper to run than to pay employees
Can work long hours and so increase productivity
Automation: eg. car assembly line
Mechanisation: eg. printing press
Computer integrated manufacturing ( CIM ) : integration of CAD and CAM
Computer Aided Design ( CAD ) : used to design new products or details techinical drawings
Computer Aided Manufacture ( CAM ) : computers and control robots on factory floor
EPOS ( electronic point of sales ) : stock record is changed when item had been sold
EFTPOS ( electronic funds transfer at POS ): eg. NETS
Better customer service results, quicker communication, better quality products, more skilled workers are needed, productivity is greater
Benefits of using technology
Technology does not require additional cost such as wages
Technology can work for longer hours
fewer people are needed which reduces business costs
Drawbacks of technology
Large initial costs
A more automated approach takes responsibility away from employees, which reduces motivation
Technology can be outdated very soon so may need to be updated frequently to meet changing needs of customers
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