2. Introduction Efficiency, Productivity and competitiveness
are linked. Better productivity means increased efficiency which
results in a higher level of competitiveness.
3. Efficiency is about making the best possible use of
resources. Efficient firms maximise outputs from given inputs, and
so minimise their costs. By improving efficiency, a business can
reduce its costs and improve its competitiveness. There is a
difference between production and productivity. Production is the
total amount made by a business in a given time period.
Productivity measures how much each employee makes over a period of
time. It is calculated by dividing total output by the number of
workers. If a factory employing 50 staff produces 1000 tables a
day, than the productivity of each worker is: 1,000 tables/50 staff
= 20 tables
4. Graph showing Staff Efficiency An increase in productivity
from 20 tables to 25 tables, without any increase in costs, means
the firm has improved efficiency. The resultant lower unit costs
increase profit margins. Staff productivity depends on their skill,
the quality of machines available and effective management.
Productivity can be improved through training, investment in
equipment and better management of staff. Training and investment
cost money in the short term, but can raise long term
productivity.
5. Other methods of Cutting Costs As well as improving
productivity, a business can cut costs by: Reducing overheads such
as administration, e.g. making some support staff redundant.
Customer service may suffer as a result of this. Relocation to
countries where staff with appropriate skills can be hired at lower
wages. Improving management so staff are motivated to work harder,
or are better used. Redesigning the product so an item is easier
and cheaper to make. Lean Production is set of measures that aim to
reduce waist during production. Waste reduction methods, such as
just in time of ordering the stock, will increase efficiency.
6. Ways to measure employee performance efficiency
7. Labour Productivity, Labour Turnover, Absenteeism and Health
and Safety At the end of todays lesson you will be able to: Measure
Employee Performance/Productivity Calculate and measure absenteeism
Calculate and describe Labour Turnover Describe Health and Safety
Measure and analyse time lost through accidents at work.
8. Managers need to assess the impact of any changes they may
make. It is no good implementing workforce planning, rewards
systems, appraisals etc if the impact of these changes cannot be
measured. There are many ways in which employee performance can be
assessed/measured. These are called Key Performance
Indicators.
9. Key Performance Indicators Labour Productivity = Output per
period No. of employees at work This measures the performance of a
group of employees. However it is important to remember that
productivity can also depend upon other factors such as talents and
motivation of the workforce and capital equipment used.
10. Key Performance Indicators Absenteeism = Number of staff
absent on 1 day Total Number of Staff X 100 Absenteeism is a term
used to describe a situation where an employee is absent from work
frequently and without good reason, and therefore is a good
indicator of the levels of morale within the workforce. High
Absenteeism means. Low absenteeism means
11. Key Performance Indicators Labour Turnover = Number of
Staff leaving during the year Average Number of Staff X 100 This
ratio measures the proportion of people leaving a business over a
period of time (usually one year). Poor morale can lead to high
labour turnover and this can be caused by low wages, inadequate
training and ineffective recruitment procedures. This can cost the
business a lot of money. Businesses require some levels of labour
turnover to bring new ideas into the business.
12. Operations Management 26th March 2010
13. Learning Objectives To identify and define the key
terminology required for the topic To describe the purpose of
operations managements within business To explain the utilisation
of capacity To differentiate between economies and diseconomies of
scale To assess the 4 methods of production To explain the purpose
of lean production and the impact on effectiveness
14. Operations Management The purpose of operations management
is to ensure that the business provides the right goods, at the
right time, at the right cost and of the right quality. Thus
improving competitiveness.
15. Capacity The maximum output which a business can produce at
any moment in time given its resources. What will this depend on?
How could it increase its capacity? Capacity utilisation measures
the amount it is producing compared to the amount it could produce.
Capacity utilisation (%) = Actual level of output x 100 maximum
possible output If firm produces 60,000 in given period and its
full capacity would allow 80,000 items to be produced, what is the
capacity utilisation? Answer = 75%
16. Capacity. why might firms have to produce less than the
maximum capacity level? How could a firm increase its capacity?
What problems could be encountered if over producing?
17. Economies of Scale EoS occur when the cost of producing a
unit falls as output increases. DoS occur when a business increases
its output and the cost per unit increases too. Why might
diseconomies of scale occur? What is the difference between
internal and external economies of scale?
18. Production When talking about production, it can be labour
intensive or capital intensive. Refer back to your match it cards
and decide whether the following would be LI or CI: Wedding dress
maker Oil refinery Hotel Factory making crisps
19. Activity - Methods of Production Job Batch Flow Ramy,
Tamara, johny Abdulwahab, Khadija Sarah, Mariyah, Khalid Activity
Each pair must create a revision sheet for a specific method,
explaining what it is and the advantages and disadvantages
associated with using the particular Method.
20. Which Production Method? What would influence the type of
production method they use?
21. Which method to use? Type of product Demand for the product
Quality level demanded by the customer Size of firm Availability of
technology
22. Activity Read through the exam pre-release case study and
answer the following: What is the current method of production at
Hoiles Crisps? What capacity is Hoiles currently operating at? What
are the advantages and disadvantages of the new production method
explained in line 61? Discuss which production method you would
recommend Hoiles to introduce (if need be)?
23. Lean Production A collection of techniques designed to
eliminate the amount of waste on the shop floor. This could be
wastage of materials, energy, time, or human effort. In turn, this
reduces costs and improves efficiency and overall competitiveness
Lean production includes: Continuous improvement / Kaizen Cell
production Just in time stock management Time-based management
benchmarking We will look at these in more depth next week
24. Lean production Advantages Increased motivation Increased
quality of output Improvement in cash flow Higher level of
participation Increased output Disadvantages Reduces EoS Requires
all staff to be committed May not be able to meet customer demand
Relies on a good supply chain
25. Activity Complete the Kodak case study on page 273 of
textbook.
26. Plenary Pictionary for keywords learnt today
http://www.tutor2u.net/business/quizzes/