Module 2 OPERATIONS MANAGEMENT

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Module 2OPERATIONS MANAGEMENT

• PRODUCTIVITY

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DEFINITIONSProductivity a measure of
efficiency it measures a firms output in
relation to its input
Yeah but, no but, whats efficiency?

• Efficiency making the best use of the
  resources available to the business

It can be measured in many ways e.g. output
per worker or cost per unit produced
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Labour Productivity

• This is the most commonly used measure
• of productivity..
• Labour Productivity
• Output (per period)
• No. of employees (per period)

LEARN THIS FORMULA!!!!!!
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Exercise European Car Manufacturers

• Calculate the Labour Productivity for each firm
• Which firms are the most productive?
• What makes one firm more efficient than others?

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Calculate labour productivity
Output (per period) No. of employees (per period)
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Productivity answers
Which firms are the most productive? What makes
one firm more efficient than others?
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Why is it important to be efficient?
?
COSTS? OUTPUT? Company OBJECTIVES?

• What happens to inefficient firms?

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How can firms improve their labour productivity?
But how?

• Either
• Reduce labour force but keep production levels
  the same,
• or.
• Increase production levels with the same labour
  force

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Firms can achieve this improved efficiency by

• Increasing working hours
• Achieving more in a given work period (but how?)
• Introducing flexible working patterns or more
  efficient organisation of workers
• Investing in faster/more efficient machinery
• Improving production methods
• Closing down inefficient parts of the business

Computer says no.
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Why do some firms struggle to increase their
productivity?

• Managers dont use resources effectively
• Poor equipment..investment needed
• Quality of the workforce..training needed
• Resistance fr0m workers

Why?

• Fear of redundancies
• Resistance to change

What a kerfuffle
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Points to consider
Benefits of improved productivity

• Increased competitiveness increased orders
• risk of redundancies is reduced
• (may even increase long term opportunities)
• Increased productivity may lower the unit cost of
  production higher profit margin
• (therefore, pay and
• productivity are often
• linked in pay
• negotiations)

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Well, thats productivity in a nutshell.Got it?
Yeeeeeeeees!
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The End
P215 in textbook B2 case studyGoing Potty. Do
Q 1a, 2a,b,d 3 (28 marks)