Productivity JIT Stock Control Use of Technology in Production GCSE Business Studies Productivity JIT Stock Control Use of Technology in Production

Production: The amount produced Production: The amount produced. It is sometimes referred to as: “Output”.

Productivity: The amount produced in a given amount of time Productivity: The amount produced in a given amount of time. If you can increase the amount you produce in a given amount of time, you have improved your productivity.

Productivity You have 10 workers who all produce 10 boxes of chocolates in one day. How many boxes of chocolates are produced in a 5-day week? 500 boxes of chocolate 10 x 10 x 5 You train your staff so they become more skilled at producing the boxes. Their output increases to 20 boxes a day each. How many boxes are produced in a 5-day week? 1,000 boxes of chocolate 20 x 10 x 5

Productivity In our example, production (or output) has increased from 1,000 boxes a week to 2,000 boxes a week. The firm has improved its labour productivity – the amount of products produced in a given amount of time. In our example, the business has also improved its efficiency – producing more in the same amount of time. This reduces costs and therefore increases profit.

Productivity in Manufacturing How could you improve the productivity of your Top Banana boats? Train your staff to become more skilled in what they do Purchase machinery to do the work that humans would normally do Reduce Downtime: have systems in place to ensure that production never stops.

Downtime Why would production of your Top Banana boats stop (Downtime)? Machinery breaks down Factory runs out of raw materials Workforce all become ill and can’t work

Production and Productivity Rikki Blake is the production manager for an independent brewery in the West Midlands. It produces 6 different beers for 37 pubs in the region. Rikki wants to improve his productivity. 1. Using the case study, explain the difference between output and productivity. 3 marks 2. What is downtime and why might it occur in the brewery? 4 marks 3. Explain TWO ways in which Ricky can raise the productivity levels in the brewery. 6 Marks

Maximise Your Marks Explain TWO ways in which he can raise the productivity levels in the brewery. 6 Marks 6 marks, TWO ways = 3 marks each “Explain” means you must write a short paragraph State the method = one mark Explain one reason why it would improve productivity = one mark Explain your answer in the context of the case study = one mark Use terms such as “For example, …” and “This means that …”

Example Rikki could buy some new brewing equipment or he could change how he makes his beer. 2 Marks Rikki could buy better equipment so that he could produce more beer. Or he could reduce downtime by making sure he does not make any errors when measuring out his ingredients. 4 Marks

Example Rikki could purchase some new brewing equipment that produces more beer per day than the old machinery. This means he would be able to produce more barrels of beer each day and thus improve productivity. Rikki could reduce his downtime by ensuring that all his brewers measure out the ingredients properly. This means there will be less errors and he won’t have to stop production. 6 Marks

Test Your Knowledge Ginifer’s is a company which manufactures TVs. Last year, labour productivity rose by 10%. This means that: Sales rose by 10% Labour costs rose by 10% Output per worker rose by 10% Output rose by 10%

Test Your Knowledge Belk’s is a company which operates a chain of sandwich shops. It wants to increase the productivity of its workers. Which ONE of the following is most likely to achieve this? Opening a new sandwich shop in London Installing new coffee machines which make coffee faster than the old machines Hiring 20 new workers Tightening health and safety regulations in the company’s outlets

Test Your Knowledge In order to improve productivity in a factory, a manager could: a) Give all staff a pay rise b) Having too many raw materials c) Offer overtime to staff d) Make some staff redundant

Test Your Knowledge “Downtime” in a factory may be caused by: a) Replacement staff being employed when workers go on holiday b) Train their staff c) Staff working too hard d) Machinery breaking down

Improving Efficiency In a group of four, elect a leader. Leader must ensure the team produce as many boats as possible in the time given. Workers get paid two Smarties for their work. In the second activity, each worker gets paid one Smartie for each boat produced – as long as it meets the specification.

Methods of Payment Time Rate Each worker is paid an hourly rate – regardless of how much they produce. Piece Rate Each worker is paid for each item they produce. The more they make, the more they earn.

Improving Productivity and Efficiency Firms need to produce as much as possible in a given amount of time, for as little cost as possible. What benefits are there of increasing productivity and improving efficiency? The firm can make and sell more goods, reduce their running costs, and thus make more profit. This makes the business more competitive because it can sell more goods and possibly reduce prices.

Lean Production A Japanese approach to making products: Reduce waste as much as possible Use as few resources as possible Keep stock levels to a minimum Encourage workers to think of ways to improve their productivity

JIT (Just-in-Time) Production A Japanese method that aims to keep stock levels to a bare minimum – ideally zero. The idea is that stock arrives in the factory immediately before it is used. This reduces the cost of having to store stock. The problem is that it requires co-ordination between the firm and its suppliers – otherwise the firm could run out of stock.

Improving Productivity and Efficiency The washing machine factory needs to produce as many washing machines as possible in a given amount of time, for as little cost as possible. Using this business as your example, answer the following questions: What benefits are there of increasing productivity and improving efficiency at the factory? Explain the principle of lean production. Explain the principle of Just-in-time production. What is the possible disadvantages of JIT production?

Test Your Knowledge The number of products produced in one day is called … Production/output/productivity TWO ways of improving productivity could be … Purchasing better equipment/training staff The term that means the stopping of production due to a fault is called … Downtime The production method that aims to use as few resources as possible is called … Lean Production The production method that aims to keep stock levels to a bare minimum is called … JIT (Just-in-time) Production

Stock Control

Fred’s Bait Shop What are the consequences to the owner, Fred, of poor stock control? (4 marks)

Possible Consequences of Poor Stock Control in a Shop Dissatisfied customer Customer does not return for repeat sale Loss of sales revenue Loss of profit Customer goes to a competitor Customer tells their friends and family Bad image for the business

JIT (Just-in-time) Production requires accurate and efficient stock control systems. Firms must know exactly when they need new stock from a supplier. Firms therefore use stock control graphs.

“Just in Case” Stock Control Requirements: We need a minimum amount of stock so that we have enough ready if needed. (Buffer Stock) 2. We must never run out of stock. 3. We must order supplies at the right time so that supplies are replenished when stock is getting low. (Re-order Level) 4. We need to know how much stock to re-order. (Re-order Quantity) 5. We need to know how long our suppliers will take to supply our stock when we put in an order. (Lead Time)

Managing Stock Control: Fred’s Worms Maximum Stock Level 20 Stock Level 15 Re-order Level 10 Minimum Stock Level 5 Buffer stock Lead Time 2 4 6 8 Time in weeks

Managing Stock Control: Task 1 Maximum Stock Level 60 50 Re-order Level Stock Level 40 30 20 Minimum Stock Level Lead Time Buffer stock 6 3 9 Time in days

Managing Stock Control: Task 2 Maximum Stock Level 30 Stock Level 20 Re-order Level 10 Minimum Stock Level Buffer stock Lead Time 6 2 4 8 10 Time in weeks

Stock Control: Revision What are the advantages of having a “just in case” stock control system and holding buffer stock? What are the disadvantages of holding buffer stock? Test: Jollife Metals Page 45, Q 1-6

Increase Productivity Job Production Stock Control Output Flow Production JIT (Just in Time) Downtime Buffer Stock Increase Productivity Batch Production Piece Rate

Complete the Quality Control Activities Quality Circles and the Kaizen technique Quality Assurance Complete the Quality Control Activities

Quality Control Quality inspectors check that standards have been met at the end of the production process: standards are consistent Ensures that quality standards are met and the customer does not receive a sub-standard product Could be a lot of waste – fault is only identified at the end of the production process

Quality Assurance Builds quality into every stage of the production process – not left until the end. When the product is sold, the business can assure the customer it is a quality product. Every worker is responsible for making sure that the work they do meets quality standards. More time consuming for the workers. Each worker may have different standards; therefore no consistency.

Quality Circles and Kaizen Constant improvement – quality and standards are always getting better. Find a problem, solve it, then identify next improvement and solve it, etc Japanese principle – “Kaizen” meaning “constant improvement” Time consuming meetings – reduces production time

Page 46+48 Page 46 What is quality control? What is quality assurance? What is the principle of the Kaizen technique? Page 48 What do the BSI (British Standards Institute) do? What does a Kitemark show? What are ISOs?

Test Your Knowledge … Which method of production is being used if you produce personalised t shirts? Batch Production Job Production Flow Production

Test Your Knowledge … Which method of production is being used if you produce white sliced loaves in the morning and brown sliced loaves in the afternoon? Batch Production Job Production Flow Production

Types of Production: Job, Batch, Flow Which method of production did Henry Ford use to manufacture his black Model T cars? Batch Production Flow Production Job Production

Methods of Payment The method of payment where a worker is paid for the number of items produced, is called: Time rate Piece rate Item rate Production rate

Quality A car manufacturer checks the quality of their cars at the end of the production process. If there is a fault, it is corrected at the end of the production process. This is called: Quality inspection Quality assurance Quality control Quality checking

Quality The car manufacturer changes their production process so that every worker is responsible for ensuring quality standards are met. This is called: Quality inspection Quality assurance Quality control Quality checking

Stock Control A business aims to keep at least 2,000 metal sheets in stock at any one time. This stock is called: Back-up stock A stock check The maximum stock level Buffer stock The re-order level

Stock Control The managing director of a company has a policy of JIT stock control – ordering stock only when absolutely necessary. However, all too often production has to stop because they have run out of materials. This would suggest that: The maximum stock level is too high The re-order level is too high The minimum stock level should be lowered The buffer stock level should be raised