Learning Curve
Candlefocus EditorThe Law of Learning Curve states that there is an inverse relationship between cost and cumulative volume—which means as the production volume increases, the cost per unit decreases. It was first studied by T.P. Wright back in 1936 in the aviation manufacturing industry and has since been studied extensively in production economics and management.
At its core, theLearning Curve is a simple graph that shows the rate of improvement in efficiency over the the number of units produced. The Learning Curve works on the premise that the more a company produces, the more quickly it can improve its output quality and cost effectiveness. Learning curves usually follow an S shape, however, the steeper the learning curve, the greater the rate of improvement. This is because when there's a steep learning curve, it means a company acquires new skills and knowledge faster.
The Learning Curve is an incredibly valuable tool in business, as it helps managers improve production processes, control costs, and increase efficiency. Additionally, dedicated and accurate monitoring of the learning curve allows companies to better measure and analyze the rate of improvement across all aspects of production, such as time, materials, and labor.
By being aware of the Learning Curve, a company can know when it reaches the utmost level of efficiency and when it will start to plateau. This sort of information allows managers to make more informed decisions, and therefore, achieve a greater level of effectiveness in their operations, boosting productivity and overall rate of returns.
In short, the Learning Curve is a fundamental tool to keep in mind when running a business, as it provides insight into how tasks are performed, how long it takes to complete a given task, and, ultimately, how to increase efficiency as a whole. When combined with an equally vigilant maintenance of costs, the concept of the Learning Curve is invaluable for bosses and managers intending to increase the rate of growth in their firms.