2.3 - Making operational Decisions Flashcards
What does business operations mean
The part of the business that provides customers with the goods or services that they ordered
What is operations responsible for
Taking resources such as raw materials, finance and workforce and using them to create finished goods or services
They then ensure that these arrive on time and at the right quality standard
How are operations defined in relation to goods
When products are produced in a factory, everything that happens within the factory, from making goods to delivering goods, is classed as operations.
How are operations defined in relation to services
When a business provides a service, the processes it uses are known as operations.
What are the 3 different production processes
- Job production
- Batch production
- Flow production
What is job production
when individual products are made one at a time to meet specific customer preferences
What is batch production
making a set quantity of identical products. This quantity is known as a ‘batch’. The batch size could be ten, 10,000 or a million identical products
What is Flow production
Flow production involves continuously making identical products. This allows the production process to be heavily automated
What are the advantages of Job production (3)
- High profit margin for bespoke products
- Employees gain satisfaction from using their skills
- Customers get exactly what they want
What are the disadvantages of Job production (2)
- Highly skilled staff required leading to increased costs
- Training can be costly if highly skilled staff not available
What are the advantages of Batch production (3)
- Can make a variety of different sizes flavours ect
- Can be partially automated
- Can produce more products than job production
What are the disadvantages of Batch production (2)
- Not as flexible as Job production in regards to customers wants
- Not fully automated so costs can be higher than flow production
What are the advantages of flow production (3)
- can make far more products
- Consistency in production due to automation
- can be fully automated
What are the disadvantages of flow production (3)
- In a competitive market with similar mass produced products profit margins may be low
- Non tailored products
- Expensive to buy automation machinery
What 4 ways can a business increase productivity
Investing in up to date machinery
Providing incentives to workers
Providing training to staff
Encouraging staff to come up with time saving ideas
Define procurement
Getting the right supplies from the right supplier. Effective stock control is important to both customers and businesses.
What happens if businesses have bad stock control
They can run out of stock which can lose them sales and customers
What happens if a business has too much stock (3)
- High storage costs
- Increased waste if products are Perishable
- Reduced income/ profit
What is the maximum stock level on a bar gate stock diagram
the largest amount of stock a business can store on site
What is the minimum stock level on a bar gate stock diagram
This is also known as buffer stock
It is the lowest amount of stock a business can store on site whilst still being able to operate effectively
What is the lead time on a bar gate stock diagram
How long it takes from ordering stock for it to arrive
What is the reorder level on a bar gate stock diagram
the point at which a business needs to order new stock in order for it to arrive before its stock falls below the minimum level
Due to new technology such as barcode scanners this can be done automatically
What is Just - in - time stock control
a stock control method where the business doesn’t store any raw materials.
Instead, it has regular deliveries that bring only what is needed before its existing raw materials run out, so buffer stock is not needed
What are 4 advantages of JIT
- Removing buffer stock space so you have more space for sales
- Smaller but more frequent deliveries mean that the products will be fresher
- Businesses will no longer have large amount of capital tied up in stock that could go out of date/fashion
- Reduces production cost allowing you to have a higher profit margin
What are 4 disadvantages of JIT
- It can be hard for businesses to react to unexpected changes in demand
- You cannot utilize bulk - buy discounts
- Customers could receive a poor service due to a misjudgement in stock needed
What 5 factors should a business worry about when choosing a supplier
cost quality Delivery time Availability and capacity trust
Define logistics
Making sure the correct products are procured and will arrive when needed
What is quality control
the process of inspecting products and services to ensure that what customers receive is of a high standard
What are 3 methods of quality control
Feedback
Factory inspections usually at the end of production
A 100% inspection system - All items are checked before being sold
What is a disadvantage of quality control
it only identifies faults at the end of production so it will be more expensive to fix
What is quality assurance
a process of carrying out quality checks at specific stages during the production process.
This ensures that faults and sub-standard products are found sooner rather than at the end of the production process.
Quality control VS Quality Assurance
Quality Control:
Focuses on identifying faulty goods
Identifies and fixes problems and faults
Quality is the responsibility of one individual or a specific team of individuals
The product is at the heart of quality control
Quality Assurance:
Focuses on improving the production process
Establishes a good system for quality management
Quality is the responsibility of everyone involved in the manufacturing process
The production process is at the heart of quality assurance
Why is quality management important in relation to costs
It helps reduce waste costs
It helps reduce employee costs as if a car light was broken the employer would have to pay additional wages to get it fixed
What is the sales process
The process of purchasing a product of service
What are the 5 key stages of the sales process
Customer interest Speed and efficiency of service customer engagement Post sales service customer loyalty
this is a cyclical process
What are the 2 sales approaches
Hard approach - Employees seek customers and advise them about products and services eg cold calling
Soft approach - Employees simply advise customers tat are there (like in the shop)
What are the 6 main factors which contribute to a good customer service
- knowledgeable, helpful and friendly staff
- meeting all legal requirements
- quick delivery
- efficient service
- excellent post-sales service and support
- good product availability
