Introduction for learning curve theory
Learning curve is a concept that measuring the experience of a skill gained by an organization, and how fast it can be master. As the experience gained, the workers performance will be improve, time taken will be decrease, and therefore the productivity will grow up. Also, according to Steven (2010), learning curve is a significant technique for management to predict the time needed for the future task (p.1). It can also be useful for the several areas, for instance, making a pricing or budgeting decision, estimate the wages cost and planning schedule of work. In addition, learning curve is based on the task doing by human and must be in repetition. And Steven (2010) point out that the learning curve doesn’t help to reduce cost, it only occurs when the management take action.
Introduction for the organization
In the following section, the learning curve theory will be apply to L+H Fashion Limited (L+H), they are manufacturing of knitwear which is 100% hand made and also made in Hong Kong, from design, product development, knitting, linking, stitching, labeling to packaging.
First of all, the learning curve can be applied in L+H since there are many procedures is doing by human and those procedures will unchanged because of L+H is only produce the knitwear, also those procedure are in repetition. Such as stitching, the workers have to stitch up those parts of the knitwear by hand. In this situation, the learning curve can be apply, because if the worker stitching the first knitwear, it will spend more time to find out the way. Move to the second one, the worker will more confidence and faster to stitch it, in repetition the task, the worker can be more efficiency.
Furthermore, since they would like to be a high fashion brand in Hong Kong, and providing high quality knitwear to the other high fashion brand, so they are now considering should they accept the new contract, build up their own brand or both.
The learning curve can be use to helping them to consider the budgeting, pricing, detecting the design bugs, future operation decisions and determine the human resourse.
In this case, if the learning affects taken into L+H, it is easily for them to evaluate the rate of learning and the time reduction. It can provide a reliable standard to measuring the actual performance of the product line. Therefore, the management can obtain the most near information, giving them a forecast of revenues and expenditures. Thus, they can evaluate their performance, and control the waste from error, setting the budgeted goal. Beside the goals set by the learning effect is more motivation for the workers.
Such as production budgeting, they can estimate the production unit to meet the budgeted goal. Since they would like to provide the knitwear to the new contract, they can forecast the cost, human resources and material need for the new contract. They should use learning curve, because the simple analysis will ignored the learning effect, so that the performance may underestimate.
It can also help to set a standard for guiding the workers, use to make sure the quality of knitwear, control the cost and to establish the bonus plan. So that the management can confirm the knitwear having a high quality to fulfill their goal that being a high fashion brand. They can also estimate the product cost, since the cost is foremost element for pricing decision
To conclude, it can help L + H for budgeting, since it can give them a accuracy forecasting, to let them set up a budgeted goal to...