Production Methods & Kaizen

Production Methods & Kaizen

Production Methods & Kaizen

Production Methods

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

Title: Day Labourer Harvest Sugar CanesCopyright: Getty Images, available from Education Image Gallery

Whilst all output can be classed as production, different production methods may be more appropriate for different products or services.

Agriculture tends to be very land intensive – efficiency could be measured in terms of output per acre/hectare

Production Methods

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

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: Electronic FactoryCopyright: Getty Images, available from Education Image Gallery (http://edina.ac.uk/eig/)

Production Methods

Title: California Oil is Source of Wealth and FearCopyright: Getty Images, available from Education Image Gallery (http://edina.ac.uk/eig/)

Title: Ducati Motorcycle Compa's Profits SurgeCopyright: Getty Images, available from Education Image Gallery (http://edina.ac.uk/eig/)Title: Microsoft Line Copyright: Getty Images, available from Education Image Gallery (http://edina.ac.uk/eig/)

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

Production Decisions

Which method? Type of Product

One-Off Order?

Mass Market product?

Batch?

Market size and Segment

Factor Costs – Land, Labour and

Capital

Complexity of design

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 MethodsWhich is more efficient?

Operation 1 2 3 4 5

6

7

891011Finished Product

This?

Production Methods

Operation 1

1a 1b 1c 1d

2a 2b 2c

3a 3b 3c 3d

4 Finished product

Or this?

Production MethodsOr this?

Cell 1 Cell 2 Cell 3

Finished Product

Finished ProductFinished 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

Production Methods & Kaizen

Production Methods & Kaizen

Production Methods

Efficiency• Productivity• Technical Efficiency• Productive Efficiency

Kaizen (Continuous Improvement)

Quality Assurance• Six Sigma Methodology