AS Operations Management

1. AS Operations Management Labour V’s capital intensive Production methods

2. Capital V’s Labour Intensive • Labour intensive is when a high proportion of workers are involved in the production process compared to machinery or other capital equipment. • Capital Intensive is involving a high proportion of capital equipment in the production process compared with the use of labour. Is CLN Capital or Labour intensive?

3. Production Methods • There are four main methods of production that are used by businesses: • Job production • Batch production • Flow production • Cell production • The method of production a business opts for depends on may factors. These include: • The type of product • Demand for the product • Quality level expected by the customer • Size of the business • Availability of technology

4. Job Production • This method of production involves an item being manufactured entirely by one worker or by a group of workers. These items are often made to customer requirements, rather than being mass produced. • Examples include wedding dresses and ‘one-off’ products such as The Spinnaker Tower Job production: The benefits: • This method of production is allow the business to add lots of value to the product. • The one off project can increase the motivation of staff and can increase customer satisfaction. Job production: The drawbacks: • The project is often time consuming • The project also has high production costs because it is capital intensive • Customers also have to wait, this could encourage customers to look else where.

5. Batch Production • This method of production involves the manufacture of an item being divided into a number of small tasks. A collection (or ‘batch’) of items each have one of these tasks completed, and then the batch moves onto the next manufacturing task. • In other words, several items have the same task performed on each of them and then they move onto the next task together in a group. Batch Production: The benefits: • It is faster than Job Production • It has lower unit costs than job production • More flexible to meet customer demand Batch Production: The drawbacks • Lower Motivation level of staff • Down Time • This production method can result in the build-up of large amounts of stock and work-in-progress. • This may be a problem if the business is in a fashion industry, where customers’ tastes can change quickly and unpredictably, leaving the business with much stock that it is unable to sell.

6. Flow Production • This method of production involves continuous production for each unit, often with the use of a moving conveyor belt (e.g. a car assembly line). This type of production is usually undertaken by large businesses. Flow Production: The benefits: • Low Unit costs, there the business can benefit from economies of scale • Increased level of output • High levels of standardisation Flow Production: The drawbacks: • Inflexible production • Problem of breakdowns • Initial high costs • It is often argued that flow production leads to high rates of alienation, demotivation and absenteeism amongst the employees • It is for these reasons that much machinery is today used on these production lines to perform simple, repetitive tasks which humans may easily become bored in performing.

7. Cell Production • This method of manufacturing an item organises workers into ‘cells’ within the factory, with each cell comprising several workers who each possess different skills. • Each cell is independent of the other cells and will usually produce a complete item, and each cell will usually have an output target to achieve for a given period of time. Cell Production: The benefits: • Greater teamwork which can improve communication and therefore levels of motivation and job satisfaction will be greatly enhanced. • Improved quality • Workers become multi-skilled • Reduction in stock requirements • It is often argued that if the group of workers in each cell can see the completion of the finished product, then their work will have more meaning Cell Production: The drawbacks: • Requires teamwork • Output can be less than flow production • More complex factory layout; cells are often laid out in a U shape, this requires a large amount of space and not all business have this!

8. Which Production Method? • What methods of production would be most suitable for the following: • Paracetamol tablets • A piece of pottery • A BMW Mini • A tower such as the spinnaker tower • A collector’s bottle of wine • An Aston Martin • A light bulb • Why do you think Aston martin use job production when most car manufacturers such as BMW Mini use mass production?

9. Case Study:Contours Landscaping & Nurseries Ltd (CLN) Read the Contours Landscaping & Nurseries Ltd (CLN) case study highlighting the key terms • Explain the difference between labour and capital intensive. (4 marks) • Identify the method of production CLN use. (2 marks) • Using evidence from the case study analyse the benefits of CLN using this method of production. (8 marks) • Being an employee with CLN must be a rewarding job. To what extent do you agree with this statement? (12 marks)