What is the experience curve?

Experience curve is a form of learning curve that uses more information to properly assess the situation of the situation. For the first time described in 1960, Bruce Henderson uses a curve of experience to explore the relationship between production costs and the amount of production. The general idea of ​​the curve is that as the action necessary in the production process over time, the cost of performing these actions will be reduced.

Unlike the basic learning curve, which focuses more on working aspect, the experience curve focuses on a wider range of elements that affect the production process. This includes elements such as marketing strategies and costs, administration, distribution costs and production costs such as raw material costs. This detailed approach can facilitate the determination of whether the cumulative cost of the production of each unit actually decreases. If this is not the case, the shape of the curve can help identify areas where improvements can be made and cause this trend of declining costs.

For example, rendering an experience curve can help identify ways to minimize slow places in the production process and thus increase production and reduce the total cost per unit. For example, if the production process requires the machines to be stopped for twenty minutes, because a new lot of raw materials are loaded into the machine, the solution can be purchased larger land. This change allows you to load the machine to full capacity and allow it to run longer than more materials are required. If this process change leads to a reduction in downtime by 25%, then the same type of tasks eventually produces more goods for sale in the same amount of time, which in turn helps reduce the costs invested in each unit.

The effectiveness of using the experience NCE requires companies to carefully look at any element that can affect the process and cumulative amount of production. Changes in technology can enable the same tasks to make the same tasksAnd to maintain the same level of production, but to use fewer resources such as work. Looking at each step in the production process can result in a regrouping of the sequence of tasks, resulting in higher productivity. In some cases, it may be found that the tasks are recurring and are not necessary for the production process and can be completely eliminated.