Resource management.

HookThe week KFC ran out of chicken

ModelProduction methods, productivity and efficiency

Four methods, in rising order of scale. Job production makes one-off items to order — a Savile Row suit, a wedding cake: maximum flexibility and premium prices, but slow and labour-expensive. Batch production makes groups of identical items in turn — a bakery running a tray of sourdough, then a tray of baguettes: flexible-ish, but time is lost switching between batches. Flow production runs continuously along a line — Nissan's Sunderland plant built over 500,000 cars in 2016, its best year: very low unit costs from scale, but colossal set-up cost and little flexibility. Cell production splits the line into teams, each owning a complete chunk of the work — keeping much of flow's pace while restoring variety and responsibility to workers.

Productivity is output per unit of input — usually output per worker per period. It matters because it drives unit labour cost: pay the same wages, get more units, and each unit carries less wage cost, which funds either fatter margins or keener prices. The levers Edexcel lists: training, investment in new technology and equipment, employee motivation, and smarter working practices. Efficiency is the wider idea — producing at the lowest possible average cost, which also depends on capacity utilisation, waste, and the scale of production. A firm can raise productivity yet stay inefficient if, say, half its output is defective.

DataCapacity utilisation — sweating the assets

Capacity utilisation = current output ÷ maximum possible output × 100. It matters because most capacity costs are fixed: the factory rent, the machinery depreciation and the salaried staff cost the same whether the plant runs flat out or half empty. Under-utilisation spreads those fixed costs over few units, bloating cost per unit — which is why airlines obsess over load factors and why hotels discount midweek rooms rather than leave them dark. Over-utilisation has subtler costs: at close to 100% there is no downtime for maintenance, no slack to accept a rush order, staff burn out and quality starts to slip. Many operations managers treat roughly 85–90% as the sweet spot — high enough to be efficient, slack enough to breathe.

To fix under-utilisation: stimulate demand (price cuts, promotion), find new uses for capacity, or rationalise — close or sell the surplus. To fix over-utilisation: invest in more capacity, or subcontract the overflow. Each fix has a cost or a risk, which is exactly the trade-off language an 'assess' answer needs.

MechanismStock control — the buffer versus just-in-time

The classic stock control diagram is a saw-tooth: stock is delivered up to a maximum level, is used down over time, and is re-ordered when it hits the re-order level — set so that the new delivery arrives, after the supplier's lead time, just as stock reaches the buffer level, the safety minimum held against surprises. Reading the diagram is an exam skill in itself: a steeper usage line means faster sales; a delivery arriving below buffer level means the lead time was longer than planned.

Just-in-time (JIT) abolishes the buffer: components arrive as production needs them, finished goods leave as orders arrive. The prizes are real — no warehouse costs, no cash entombed in shelved stock, no waste from stock going stale or out of fashion, and problems surface immediately rather than being hidden behind inventory. The price is fragility: JIT works only with utterly reliable suppliers, short dependable lead times and stable demand. KFC's 2018 week of closed restaurants was a JIT failure in fast food; the pandemic and the 2021 Suez Canal blockage taught the same lesson to manufacturers worldwide, and many have since edged back towards 'just in case' buffers for critical parts. Lean production is the umbrella philosophy — eliminating every form of waste (overproduction, waiting, defects, excess motion, excess stock) — of which JIT is the most famous tool.

ModelQuality — control, assurance, TQM and kaizen

Quality control inspects output at the end of the line and rejects the defects: simple, but wasteful — the faulty mug is already made, and responsibility for quality belongs to inspectors rather than makers. Quality assurance builds checking into every stage, with each worker responsible for passing on only good work: defects are caught early or prevented entirely. Quality circles formalise worker input — small groups meeting regularly to solve quality problems from the shop floor. Total quality management (TQM) makes quality the whole organisation's culture: every department treats the next stage as its customer. And kaizen — continuous improvement — pursues quality through thousands of small, cheap, permanent improvements rather than occasional grand redesigns; it is the philosophy behind the Toyota Production System, where any worker can stop the entire line to fix a problem at source.

Why it pays: quality is a competitive advantage that supports premium pricing, cuts the real costs of scrap, rework, returns and warranty claims, and builds the reputation that keeps marketing costs down. But strong answers stay honest about the costs — training, inspection time, cultural change — and note that even the benchmark slips: Toyota itself recalled millions of vehicles in 2009–10, evidence that quality systems require maintenance, not just installation.

VocabularyKey terms the mark scheme pays for

TrapsMisconceptions that cost marks

ExamWhat examiners want