AS Operations Management Labour V’s capital intensive Production methods

Capital V’s Labour Intensive Labour intensive is when a high proportion of workers are involved in the production process compared to machinery or other capital equipment. Capital Intensive is involving a high proportion of capital equipment in the production process compared with the use of labour. Is CLN Capital or Labour intensive?

Production Methods There are four main methods of production that are used by businesses: Job production Batch production Flow production Cell production The method of production a business opts for depends on may factors. These include: The type of product Demand for the product Quality level expected by the customer Size of the business Availability of technology

Job Production This method of production involves an item being manufactured entirely by one worker or by a group of workers. These items are often made to customer requirements, rather than being mass produced. Examples include wedding dresses and ‘one-off’ products such as The Spinnaker Tower Job production: The benefits: This method of production is allow the business to add lots of value to the product. The one off project can increase the motivation of staff and can increase customer satisfaction. Job production: The drawbacks: The project is often time consuming The project also has high production costs because it is capital intensive Customers also have to wait, this could encourage customers to look else where.

Batch Production This method of production involves the manufacture of an item being divided into a number of small tasks. A collection (or ‘batch’) of items each have one of these tasks completed, and then the batch moves onto the next manufacturing task. In other words, several items have the same task performed on each of them and then they move onto the next task together in a group. Batch Production: The benefits: It is faster than Job Production It has lower unit costs than job production More flexible to meet customer demand Batch Production: The drawbacks Lower Motivation level of staff Down Time This production method can result in the build-up of large amounts of stock and work-in-progress. This may be a problem if the business is in a fashion industry, where customers’ tastes can change quickly and unpredictably, leaving the business with much stock that it is unable to sell.

Flow Production This method of production involves continuous production for each unit, often with the use of a moving conveyor belt (e.g. a car assembly line). This type of production is usually undertaken by large businesses. Flow Production: The benefits: Low Unit costs, there the business can benefit from economies of scale Increased level of output High levels of standardisation Flow Production: The drawbacks: Inflexible production Problem of breakdowns Initial high costs It is often argued that flow production leads to high rates of alienation, demotivation and absenteeism amongst the employees It is for these reasons that much machinery is today used on these production lines to perform simple, repetitive tasks which humans may easily become bored in performing.

Cell Production This method of manufacturing an item organises workers into ‘cells’ within the factory, with each cell comprising several workers who each possess different skills. Each cell is independent of the other cells and will usually produce a complete item, and each cell will usually have an output target to achieve for a given period of time. Cell Production: The benefits: Greater teamwork which can improve communication and therefore levels of motivation and job satisfaction will be greatly enhanced. Improved quality Workers become multi-skilled Reduction in stock requirements It is often argued that if the group of workers in each cell can see the completion of the finished product, then their work will have more meaning Cell Production: The drawbacks: Requires teamwork Output can be less than flow production More complex factory layout; cells are often laid out in a U shape, this requires a large amount of space and not all business have this!

Which Production Method? What methods of production would be most suitable for the following: Paracetamol tablets A piece of pottery A BMW Mini A tower such as the spinnaker tower A collector’s bottle of wine An Aston Martin A light bulb Why do you think Aston martin use job production when most car manufacturers such as BMW Mini use mass production?

Case Study: Contours Landscaping & Nurseries Ltd (CLN) Read the Contours Landscaping & Nurseries Ltd (CLN) case study highlighting the key terms 1. Explain the difference between labour and capital intensive. (4 marks) 2. Identify the method of production CLN use. (2 marks) 3. Using evidence from the case study analyse the benefits of CLN using this method of production. (8 marks) 4. Being an employee with CLN must be a rewarding job. To what extent do you agree with this statement? (12 marks)