Production Methods & Kaizen

Production Methods & Kaizen

Production Methods

Productivity = ------------------- 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

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?

Production Methods Agriculture tends to be very land intensive – efficiency could be measured in terms of output per acre/hectare Whilst all output can be classed as production, different production methods may be more appropriate for different products or services. Title: Day Labourer Harvest Sugar Canes Copyright: Getty Images, available from Education Image Gallery

Production Methods 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 Title: TV Factory 1954 Copyright: Getty Images, available from Education Image Gallery (http://edina.ac.uk/eig/) Title: Electronic Factory Copyright: Getty Images, available from Education Image Gallery (http://edina.ac.uk/eig/)

Production Methods 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 Title: Microsoft Line Copyright: Getty Images, available from Education Image Gallery (http://edina.ac.uk/eig/) Title: Ducati Motorcycle Compa's Profits Surge Copyright: Getty Images, available from Education Image Gallery (http://edina.ac.uk/eig/) Title: California Oil is Source of Wealth and Fear Copyright: Getty Images, available from Education Image Gallery (http://edina.ac.uk/eig/)

Production Decisions Batch? Market size and Segment One-Off Order? Which method? Complexity of design Type of Product Mass Market product? Factor Costs – Land, Labour and Capital Batch?

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

Production Methods Which is more efficient? This? 2 3 4 5 6 7 Operation 1 2 3 4 5 6 7 Finished Product 11 10 9 8

Production Methods Or this? 1a 1b 1c 1d 4 2a 2b 2c 3a 3b 3c 3d Operation 1 2a 2b 2c Finished product 3a 3b 3c 3d

Production Methods Or this? Cell 1 Cell 2 Cell 3 Finished Product

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

Kaizen (Continuous Improvement)

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

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.

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