Wednesday 30 November 2011
Production - Kaizen
- Kaizen (or ‘continuous improvement’) is an approach of constantly introducing small incremental changes in a business in order to improve quality and/or efficiency.
- This approach assumes that employees are the best people to identify improvements in the way things are done since they see the processes in action all the time.
- A firm that uses this approach therefore has to have a culture that encourages and rewards employees for their
- Improvements are based on many, small changes rather than the radical changes that might arise from Research and Development
- As the ideas come from the workers themselves, they are less likely to be radically different, and therefore easier to implement
- Small improvements are less likely to require major capital investment than major process changes
- It helps encourage workers to take ownership for their work, and can help reinforce team working, thereby improving worker motivation
- Whilst staff suggestions can help to enrich the work for many employees, Kaizen can be seen as an unrelenting process.
- Some firms set targets for individuals or for teams to come up with a minimum number of ideas in a period of time. Employees can find this to be an unwelcome pressure, as it becomes increasingly difficult to find further scope for improvement.
- Some firms, especially Japanese-owned, conduct quality improvement sessions in the workers’ own time, which can lead to resentment unless there is appropriate recognition and reward for suggestions.
Production - Just In ime
- JIT aims to ensure that inputs into the production process only arrive when they are needed. Implemented successfully, stock levels of raw materials, components, work in progress and finished goods can be kept to a minimum.
- This requires a carefully planned scheduling and flow of resources through the production process. Modern manufacturing firms use sophisticated production scheduling software to plan production for each period of time, which includes ordering the correct stock.
- Supplies are delivered right to the production line only when they are needed. E.g. a car manufacturing plant might receive exactly the right number and type of tyres for one day’s production, and the supplier would be expected to deliver them to the correct loading bay on the production line within a very narrow time slot.
ADVANTAGES
- Lower stock holding means a reduction in storage space which saves rent and insurance costs
- As stock is only obtained when it is needed, less working capital is tied up in stock
- There is less likelihood of stock perishing, becoming obsolete or out of date
- Avoids the build-up of unsold finished product that can occur with sudden changes in demand
DISADVANTAGES
- There is little room for mistakes as minimal stock is kept for re-working faulty product
- Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed
- There is no spare finished product available to meet unexpected orders, because all product is made to meet actual orders – however, JIT is a very responsive method of production
Production - Lean
- An approach to management that focuses on cutting out waste, whilst ensuring quality.
- Lean production aims to cut costs by making the business more efficient and responsive to market needs.
- Doing the simple things well
- Doing things better
- Involving employees in the continuous process of improvement
- …and as a result, avoiding waste
- The concept of lean production is an incredibly powerful one for any business that wants to become and/or remain competitive.
- Why? Because waste = cost
- Less waste therefore means lower costs, which is an essential part of any business being competitive.
Production- Flow
- Similar to batch methods - except that the problem of rest/idle production/batch queuing is taken away.
- Flow has been defined as a "method of production organisation where the task is worked on continuously or where the processing of material is continuous and progressive,"The aims of flow methods are:- Improved work & material flow - Reduced need for labour skills - Added value / completed work faster
- Flow methods mean that as work on a task at a particular stage is complete, it must be passed directly to the next stage for processing without waiting for the remaining tasks in the "batch". When it arrives at the next stage, work must start immediately on the next process. In order for the flow to be smooth, the times that each task requires on each stage must be of equal length and there should be no movement off the flow production line. In theory, therefore, any fault or error at a particular stage
MUST:
- There must be substantially constant demand - If demand is unpredictable or irregular, then the flow production line can lead to a substantial build up of stocks and possibility storage difficulties.
- The product and/or production tasks must be standardised - Flow methods are inflexible - they cannot deal effectively with variations in the product.
- Materials used in production must be to specification and delivered on time - Since the flow production line is working continuously, it is not a good idea to use materials that vary in style, form or quality. Similarly, if the required materials are not available, then the whole production line will come to a close - with potentially serious cost consequences.
- Each operation in the production flow must be carefully defined - and recorded in detail
- The output from each stage of the flow must conform to quality standards - Since the output from each stage moves forward continuously, there is no room for sub-standard output to be "re-worked''.
- Requires considerable planning, particularly in ensuring that the correct production materials are delivered on time and that operations in the flow are of equal duration.
- E.g. the manufacture of motor cars, chocolates and televisions.
ADVANTAGES
- Flow production is capital intensive (uses a high proportion of machinery in relation to workers)
- High number of products can roll off assembly lines at very low cost
- Firms can benefit from economies of scale, which should lower the cost per unit of production.
DISADVANTAGES
- With so much machinery it is very difficult to alter the production process. This makes production inflexible and means that all products have to be very similar or standardised and cannot be tailored to individual tastes.
- The work can be pretty boring for employees involved. Keeping staff motivated is therefore an important issue for management.
Production- Batch
- Generally used for larger businesses.
- The work for any task is divided into parts /operations. Each operation is completed through the whole batch before the next operation is performed. The main aims of the batch method are, therefore, to:
- Achieve high equipment utilisation
- This technique is probably the most commonly used method for organising manufacture. E.g.the production of electronic instruments, clothing, cricket bat production, baking preparation.
ADVANTAGES
- Possible to achieve specialisation of labour.
- Capital expenditure can also be kept lower ( reduces unit costs)
- Can address specific customer needs (e.g. size, weight, style)
- Use of specialist machinery & skills can increase output and productivity.
DISADVANTAGES
- Careful planning is required to ensure that production equipment is not idle.
- There is a high probability of poor work flow, particularly if the batches are not of the optimal size or if there is a significant difference in productivity by each operation in the process.
- often result in the build up of significant "work in progress" or stocks (i.e. completed batches waiting for their turn to be worked on in the next operation).
- Potentially de-motivating for staff
- Need to keep stocks of raw materials. Cash also investment in work-in-progress
- Time lost switching between batches – machinery may need to be reset
Production- Job
- The complete task is handled by a single worker /group of workers. Jobs can be small-scale/low technology/ high technology
- Low technology jobs: The organisation of production is very simple, with the required skills and equipment easily obtainable. Enables the customer's specific requirements to be included, often as the job progresses. E.g. hairdressers, tailoring, painting, decorating, plumbing
- High technology jobs: Involve much greater complexity - and therefore present greater management challenge. Project management/ project control is essential. The essential features of good project control for a job are:
- - Clear definitions of objectives ( how should the job progress e.g dates)
- - Decision-making process (how are decisions taking about the needs of each process in the job, labour and other resources)
- E.g, film production; large construction projects (e.g. the Millennium Dome)
ADVANTAGES
- Product usually high quality
- Producer meets individual customer needs
- Greater job satisfaction – involved in all stages of production
DISADVANTAGES
- Cost of producing one unit or job is higher
- Labour is intensive
- Requires investment in skills and training
Saturday 5 November 2011
Differences between distributed and undistributed profits?
Distributed profit- profits paid to shareholders/ other owners, normally in form of dividends.
Undistributed profit- profit kept for investment in the business.
Undistributed profit- profit kept for investment in the business.
Stakeholders Vs Shareholders
Stakeholders- people that have an 'interest' in the possible success/ failure of a business.
Examples- Customers, Government, Competitors, Investors, Pressure Groups, Employees, Suppliers, Media, Banks/ Lending Organisations, Shareholder.
Shareholders- a source of investment and can contribute to decisions in the business, may change it's direction.
Public-Shares regisitered on stock exchange, anyone can purchase them.
Private-Only available to friends/ family.
More money received based on size of share owned.
Dividend-Is business has profit is paid to shareholders twice a year.
Examples- Customers, Government, Competitors, Investors, Pressure Groups, Employees, Suppliers, Media, Banks/ Lending Organisations, Shareholder.
Shareholders- a source of investment and can contribute to decisions in the business, may change it's direction.
Public-Shares regisitered on stock exchange, anyone can purchase them.
Private-Only available to friends/ family.
More money received based on size of share owned.
Dividend-Is business has profit is paid to shareholders twice a year.
Theories of leadership
McGregor an American psychologist wrote about how leaders attitude may effect behaviour.
Theories X and Y
- Y= Employees motivated solely by money
- X= Employees want more than finical gain.
- Average worker dislikes work and will avoid it.
- People must be controlled, directed and possibly punished to put in real effort.
- Typical worker wants to avoid responsibility and has little ambition.
- Employees look for a security above all else at work.
- Not inspired.
- Working is natural for most empolyees.
- Typical worker enjoys to work.
- Other means exist to motivate workers rather than control/ punishment.
- Workers want responsibility.
- Most employees have skills that can help an organization achieve their objectives
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