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http://www.bized.co.uk
Copyright 2007 – Biz/ed
Production Methods & Kaizen
http://www.bized.co.uk
Copyright 2007 – Biz/ed
Production Methods & Kaizen
http://www.bized.co.uk
Copyright 2007 – Biz/ed
Production Methods
http://www.bized.co.uk
Copyright 2007 – Biz/ed
Efficiency• Any production method relies on efficiency –
this can be viewed in different ways:• Productivity – a measurement of output per
unit of the factor used (labour, capital or land) Total Output
Productivity = ------------------- Units of Factor
• Technical Efficiency – output produced using the fewest possible inputs
• Productive Efficiency – output produced at the lowest possible cost
http://www.bized.co.uk
Copyright 2007 – Biz/ed
Efficiency
• Production decisions involve deciding methods for new production runs and analysis of existing methods.
• Decisions may include:– Substitute machinery for labour? – Use of new technology? – Organisation of the production layout? – Change of production method?
http://www.bized.co.uk
Copyright 2007 – Biz/ed
Production Methods
Copyright: Photolibrary Group
Whilst all output can be classed as production, different production methods may be more appropriate for different products or services.
Agriculture tends to be very land intensive – efficiency could be measured in terms of output per acre/hectare
http://www.bized.co.uk
Copyright 2007 – Biz/ed
Production Methods
Copyright: iStock.com
As technology and analysis of production methodology has improved, methods have changed dramatically – what used to be labour intensive production methods are now capital intensive
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Copyright 2007 – Biz/ed
Production Methods
California Oil is Source of Wealth and FearCopyright: iStock.com
Textile factoryCopyright: Stock.XchngBottle production lineCopyright: Photolibrary Group
The choice of production method and the factor inputs depends on such things as:
• the nature of the product
• factor costs
• the scale of production
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Copyright 2007 – Biz/ed
Production Decisions
Which method? Type of Product
One-Off Order?
Mass Market product?
Batch?
Market size and Segment
Factor Costs – Land, Labour and
Capital
Complexity of design
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Copyright 2007 – Biz/ed
Production Methods• Job Production – One-off production -
each item might have particular specifications
• Flow Production – suitable for mass market products that are identical
• Batch Production – each stage of the production process has an operation completed on it before moving on to the next stage – allows modifications to be made to products that otherwise are the same
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Copyright 2007 – Biz/ed
Production MethodsWhich is more efficient?
Operation 1 2 3 4 5
6
7
891011Finished Product
This?
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Copyright 2007 – Biz/ed
Production Methods
Operation 1
1a 1b 1c 1d
2a 2b 2c
3a 3b 3c 3d
4 Finished product
Or this?
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Copyright 2007 – Biz/ed
Production MethodsOr this?
Cell 1 Cell 2 Cell 3
Finished Product
Finished ProductFinished Product
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Copyright 2007 – Biz/ed
Production Methods
• Answer – it could be any of them!• The design of the production space
can influence:– Output levels– Factor use– Efficiency– Cost levels– Quality assurance procedures
http://www.bized.co.uk
Copyright 2007 – Biz/ed
Kaizen (Continuous Improvement)
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Copyright 2007 – Biz/ed
Kaizen (Continuous Improvement)
• Japanese concept – not made redundant by the decline of the Japanese economy which may be due to other institutional factors!
• Focus on gradual and continuous improvement
• A whole business philosophy• Importance of EVERYONE buying into
the concept and the vision
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Kaizen• Great attention paid to
customer requirements and needs
•Efficient stock control methods help reduce costs and improve cash-flow
•Flexible working practices and empowerment – help increase efficiency, reduce costs and improve motivation
•Leadership seen as vital. Ability to communicate a clear vision, take people along with the vision and to think about where the company needs to be in 5, 10, 15 and 20 years time
•Fundamental principles – often characterised as ‘lean production’ – reducing waste, zero defects, high quality control measures at all stages•Punctuality in all aspects – delivery, supply, manufacture, etc.
http://www.bized.co.uk
Copyright 2007 – Biz/ed
Quality Assurance• Six Sigma Methodology
– Coined by Motorola Engineer Bill Smith– Now a major influence on production
methods and quality assurance – Data and statistical driven approach to
eliminate defects in production– Aims to improve processes and reduce
variations in quality– Necessitates organisational change, training
and planning