Production processes - AQAEfficiency in production

Efficiency measures how well a business uses its resources to make its products or provide its service. The lower the amount of inputs needed, the more efficient the business is. Efficiency can be measured using cost per unit.

A business is producing 10,000 units at a cost of £10,000; this means they have a cost per unit of £1. But if the business makes some changes and can now produce 10,000 units at a cost of £7,500, their cost per unit goes down to £0.75 and they are more efficient in their production.

The efficiency of a business will depend on:

• employee motivation
• the skills of the managers
• the quality of the suppliers
• investment in technology
• how the products are made

Lean Production

One way a business can become more efficient is through lean production. This aims to reduce waste during the production process. This waste includes:

• throwing away products that haven’t been sold
• time employees waste not working due to delays in production
• faulty products that have to be re-made
• stock that is damaged or stolen
• holding too much stock that costs money to be stored

Two key lean production techniques are kaizen and just-in-time production.

Kaizen means ‘continuous improvement’ and makes all employees responsible for suggesting ways that the business can improve the production process.

This is usually done every day, in teams and employees are encouraged to think about the day before and how things could have been done better.