increased efficency and productivity

improved efficiency

• means getting more output from given level of output,

• another way to consider is using minimum level of resources to get desired product at right quality, as efficiency is directly linked to unit costs it is key route to maximising profits.

• productivity and efficiency directly connected, greater productivity means the workforce is more efficient and effiency across business allows more resources to be devoted to production.

• increased productivity = decreased labour costs per unit

benefits of of improved efficiency

• labour productivity increased

• unit costs fall

• resources such as labour, expertise and time can be reallocated

• profit margins increase

• improved flexibility across the business

• opportunity to explore new ventures- such as a new product lines

• ability to charge lower prices and therefore improves competitiveness

ways to increase efficiency and labour productivity

• introduce new reward systems - in order to create an incentive to work harder

• better management - improve supervision, direction and leadership of the workforce

• new ways of working- design the job of the workforce to be more effective

• training- invest in training to improve workers skills and motivation

• new technology- speed up processes and reduce human error

difficulties in increasing efficiency and labour productivity

• sometimes trade-off when increasing labour productivity- between quality, creativity and customer service vs labour productivity.

• increasing output of a worker may increase productivity and unit costs in short term but high level of output can cause stress and burnout.

• focus on output also means mistakes and faults are also likely to occur leading to product returns and complaints.