3.4.3 Making operational decisions to improve performance: increasing efficiency and productivity

Operational efficiency

Ability to deliver products/services in a cost-effective manner without compromising quality.

Productivity

Measures the output produced per unit of input, such as labor hours or materials used.

Benefits of increasing efficiency

Lower costs, improved profit margins, enhanced customer satisfaction, better resource management.

Method to improve operational efficiency

Implementing technology, such as automation or software solutions, to streamline processes.

Lean production

Approach focused on minimizing waste while maximizing productivity in manufacturing.

Just-in-Time (JIT) inventory management

Reduces inventory costs by receiving goods only as needed, minimizing stock levels.

Total quality management (TQM)

Management approach aimed at long-term success through customer satisfaction and continuous improvement.

Capacity utilization

Measures how much of a business's potential output is achieved, expressed as a percentage.

Role of staff training in productivity

Enhances skills, improves efficiency, and increases employee motivation, leading to higher productivity.

Economies of scale

Cost advantages obtained due to the scale of operation, with cost per unit decreasing with increased output.

Process mapping

A visual representation of the steps involved in a process, used to identify areas for improvement.

Feedback loops

Allow businesses to assess operational effectiveness and make adjustments based on performance data.