Question

What are some reasons that business outputs vary? For example, why does production output vary? Explain the difference between common causes of variation and special causes of variation.

Answer 1

No two things are ever exactly alike. There is "common" variation in everything. All processes have variation. There are normal differences in the process caused by heat changes, the rotation of a wheel, the squirt of a material, and many other things. These variables are hard to detect but they are always there in the process. ................................ Another "special" variation might suddenly be introduced into the process by the sudden loss of power, by running out of material or by having a piece of equipment break. These "special" causes of variation are usually easily identified and corrected. This type of variation isn't an expected part of the process which is what makes it different to "common" variation................................... I hope this helps..................... Any business can be looked at as a process with inputs and outputs. Inputs and outputs can be identified as having a positive, negative or neutral impact on society. For example electricity is a typical input for virtually all businesses. It is generally accepted that generating electricity has a negative impact on air quality or on fish habitat etc. Electricity can therefore be considered a negative input which should be minimized however it is a necessary input for virtually all businesses. Without it few businesses would be able to generate positive outputs.................. Minimizing many of these "negative" inputs and outputs also makes very good business sense from the conventional business perspective. In fact most companies find that these activities improve their bottom line performance........................ One of the difficulties for a business trying to operate sustainably is knowing how to judge whether their overall net impact on society is positive or negative. Any evaluation must take into account indirect as well as direct impacts. Most of these indirect impacts do not show up in normal business accounting................... The Natural step makes it much easier to evaluate if a business is moving toward sustainable operation. All activities, strategies etc are evaluated for conformance with the Four Conditions. Obviously it is not practical for all activities etc to fully conform with the four conditions immediately. The important thing is that there is movement toward conforming............................ Identifying Inputs................................ The first step is to list all inputs, these should include:- Purchased items - everything the company pays for such as:-Materials used in production, supplies, freight, utilities, local taxes, labor, contributions etc, etc. Non-purchased Inputs - Natural lighting, heating, cooling, water,clean air, natural resources, waste from other sources etc........................................ Identifying Outputs............................. Everything that is generated as a result of the company being in business such as:- Products,waste,contaminated air or water,heat,economic wealth to the employees, community, shareholders etc, etc..................... Classifying Inputs and Outputs............................. One of the main objectives of classifying inputs and outputs is to identify those inputs and outputs that, if modified, can make significant improvements toward operating more sustainably and improving economic performance............................. Each input or output is rated on a scale from 1-5 for it