Increasing Efficiency and Productivity (2)

Increasing Efficiency and Productivity (2)

1. There are 2 main types of Technology

   • Robotic Engineering - Using robots in manufacturing
   • Computer Technology - Product development, business communications and finance departments heavily depend on IT systems

2. Using Robots can Reduce Staffing Costs

   • Robots can replace human labour for tasks which are dangerous, repetitive or boring
   • Factories often use automated pickers to take goods on the production line and pack them into boxes. It's usually cheaper and faster for robots to do this rather than humans
   • Companies that are planning to replace human workers with robots need to weigh up the advantages of using robots against the demotivating effects it is likely to have on staff

3. Development in IT can make Companies more Efficient

   • Computer aided design (CAD) uses computers to design new products or make alterations to existing products - useful for architecture (3D mock-up)
   • Computer aided manufacturing (CAM) - Products are digitally designed (CAD) and fed straight into the production machine to produce the product (CAD/CAM).
   • Database stock control makes it easier to monitor when you need to order new stock. Having a good stock control system means a company could use JIT
   • Spreadsheets useful in marketing and finance departments - e.g in marketing they can calculate the impact of potential changes in expenditure/sales which make decision making easier
   • Email is a fast and efficient method of communicating internally and externally - cheaper advertising to target market
   • Internet allows businesses to reach a huge customer base - customers can order products through a businesses website rather than phoning in

4. Firms need to consider the Advantages and Disadvantages of Technology

   • Advantages - increased productivity & quality, reduced waste, effective & efficient delivery, effective marketing campaigns, reduced administrative and financial costs and better communications both internally and externally
   • Disadvantages - high initial costs, requires maintenance and constant updating (expenses), increased needs of staff training, higher staff redundancies

5. A capital intensive firms has lots of machinery and few workers

   • Larger firms tend to be more capital intensive than smaller firms e.g Rolls Royce makes a small number of handmade luxury cars using lots of labour, whereas vauxhall corsas use more robots
     • A rise in costs of labour can cause a company to switch to capital intensive methods of production
       • Advantages
         • Cheaper than manual labour in the long term
         • Machinery is often more precise than human workers, which might lead to more consistent quality levels
           • Machinery is able to work 24/7
             • easier to manage than people
       • Disadvantages
         • High set up costs
         • Machines are usually only suited to one task, which makes them inflexible
         • If machinery breaks down it can lead to long delays
         • The fear of being replaced by a machine can cause motivation to decrease

6. A labour intensive firm is very people-heavy

   • A labour-intensive firm uses more workers and less machinery e.g the NHS is very labour-intensive
     • Cheap Labour e.g China means labour intensive methods of production are more common
       • Advantages of Labour Intensive Production
         • People are more flexible and can be retrained
         • Cheaper for small scale production
         • Labour intensive methods are also cheaper in low cost labour countries e.g China
         • Workers can solve problems that arise during production and suggest ways to improve quality
       • Disadvantages of Labour Intensive Production
         • Its harder to manage people than machines
           • People can be unreliable - they can get sick
             • People can't work without breaks or holidays
               • Wage increases could increase cost of labour over time
                 • Labour costs as a % turnover are high

7. Factors affecting capital and labour

   • Most companies will have the latest capital if they could afford it
     • Shortage of suitably skilled labour means they may have to use capital instead
       • How complicated a product is to make e.g orange juice has one component whereas a car has hundreds