2. Resource Management
Resource management is all about the making of the product or service and delivering it to the client
Marketing creates demand for the product or service, resource management supplies it
It involves the following 5 steps
Designing the product or service to meet customer needs
Producing the product
Working with suppliers
Managing quality
Achieving high levels of efficiency

3. Specification We will follow in specification order
4 lessons production
2 capacity utilisation
3 stock control
2 quality management

4. Production; different approaches:
Job production. Producing a one-off item for a customer. Finish one before starting the next. Example? Hand made shoes, suits (can be £000s)
Batch production. Set number of identical items are produced. Often uses machinery (eg not hand stitching, but using a machine), and labour specialises. Produce batch of one product before moving on. Examples? Boots for the army, bread
Flow production. A production line. Often very automated with little labour, and the most efficient way to produce a good with predictable high-volume sales. Examples? Cars
Cell production. Small production line or group which can produce flexibly and to order, but also with greater efficiency than job production. Examples? Custom bicycles

5. Productivity – what is it?
Output
Inputs per time period
Formula:
The inputs can be land or capital (machinery), but it is generally applied to labour
Labour productivity is therefore a measure of how much each worker can produce. It may typically be measured per hour or per day
Be careful: productivity is not the same as total production
Firm 3 produces the most but is least productive (efficient). Firm 2 has the highest productivity
Bicycles
Firm 1
Firm 2
Firm 3
Workers 12 9 15
Output per day 42 36 45
Productivity (bicycles per day)
3.5
4.0 ?

6. Importance of productivity
Output per employee is a key measure for a firm (or any organisation)
The more productive a firm’s employees are, the cheaper its costs to produce each unit. Calculate wage cost per bicycle below
In this case, the labour cost of producing a bicycle is only £ in Firm 2, but £30 in Firm 3
This means Firm 2 can either earn higher profits, or it can lower its price and so be more competitive and thus sell more bicycles
Bicycles, £
Firm 1
Firm 2
Firm 3
Workers 12 9 15
Output per day 42 36 45
Productivity (bicycles per day)
3.5
4.0
3.0
Daily wage rate (£) 90
Wage cost per bicycle (£)
25.71
22.50 30

7. Influences on productivity
Quality of machinery/equipment
The more a firm invests in modern equipment, the better it will be and the higher productivity will be
Investment is generally lower in the UK than in other countries eg China (but this is also because our economy is more based on services than manufacturing, and services use less equipment)

8. Influences on productivity
Quality of labour
Do workers have the right skills and training to complete the job?
Better educated and better trained workers can produce more and with fewer errors
More jobs in the UK require IT literacy as well as other transferable skills (eg literacy and numeracy)
UK firms do not always invest in training, worrying that workers leave for other firms once they have been trained
But UK government is focused on training – look up Autumn Statement (Investing in Britain’s Future); 1 paragraph to be written
Are they motivated?
Can be a big factor in productivity. Will cover with Miss Cheetham
(Were Chelsea players motivated this year? Man U?)

9. Measuring productivity
Are there any problems with measuring productivity , ie can we measure it for everyone in a firm? Try for each of these (4 groups, 2 mins each)
CEOs and other managers?
Doctors?
Lawyers?
Receptionists?

10. UK productivity
Before the financial crisis, UK productivity was above the EU average, and not far below Germany
Following the financial crisis and recession in 2008, however, UK productivity fell, and has still not risen above 2008 levels
In 2013, output per worker was 27% higher in France, 28% higher in Germany and a surprising 31% higher in the US
This is called the UK productivity puzzle and has had an impact on the competitiveness of UK firms
Fortunately, the UK specialises in high-end manufactures (eg Jaguar Land Rover) or services for which price is not the only factor determining competitiveness
What are the other factors?

11. Efficiency and productivity
Productivity is very closely linked with efficiency
Though productivity may not include wastage or pollution
Production is at its most efficient when costs per unit are at their lowest
Larger factories tend to be more efficient than smaller ones
Larger firms can buy in bulk, so costs per unit fall as output increases
So as a firm produces more, costs per unit tend to fall
However, if firms become too big, they become cumbersome and costs may increase
There is an optimum output at which average costs are at their lowest
AverageCost
Cost (£)
Output
Minimum level of unit costs

12. Factors influencing efficiency
As well as the scale of the business, other factors affecting efficiency include:
How much wastage there is – are many products thrown away because their quality is inadequate?
Are the machines being used the most up-to-date and so efficient (think of a 10 year old PC…)?
Does the firm have the right number and type of workers as well as the right machinery?

13. Capital and labour intensity
Labour-intensive means labour costs are a high percentage of total costs
A firm uses labour rather than machinery
Capital-intensive means the fixed costs of purchasing and running machinery are high
A firm uses a lot of machinery
Which industries or types of firms tend to be labour-intensive?
Savile Row tailors (hand made) or makes of custom wedding dresses), hairdressers
Smaller firms – in general cannot afford expensive machinery
Service industry – what about schools?
Job rather than flow production
Which types of firms tend to be capital-intensive?
High output of similar products eg cars – flow production
Linked to industries with economies of scale

14. Labour-intensive production

15. Characteristics and +/-
Labour-intensive
Capital intensive