2.3 - Making Operational Decisions Flashcards
What is job production?
Unique design
Labour costs higher
Cannot take advantage of economies of scale
What is flow production?
All products identical
Efficient
Economies of scale
Uses machinery
What is batch production?
Limited amount of products for a limited amount of time
What is Just In Time?
an inventory management method in which goods are received from suppliers only as they are needed
What do suppliers need to be chosen according to?
Consistent quality
Trust
Availability
Delivery
Price
What is quality assurance?
Takes steps at every process to ensure no faults. It aims to stop errors from being made in the first place
What is quality control?
Checks after every process is complete - can be costly if there are faults
What is job production?
When a firm manufactures individual, unique products
Each product has a unique desifn based upon the customers specification
What are the features of job production?
Longer to make - Fewer made in a set period of time
More skilled labour, labour intensive?
High costs - higher prices
What is flow production?
All products are identical and the aim is to produce as many possible along an assembly line and make productivity as high as possible
To be efficient, it has to be continuous with no stopping
Many flow production factories operate 24 hours a day, with workers rotating in shifts
What are the features of flow production?
Used for mass market products
Economies of sale
Low average unit costs
What is batch production?
Batch production is faster than job production since each product in a batch is identical
Firms that use batch production have high productivity than job production
Flow production techniques
Disadvantages of batch production
Time is needed to change between batches - productivity is lower than flow production
Expensive
What are advantages to using technology in production?
Can carry out processes more quickly and accurately than humans
Increase productivity of the business and the goods that are produced should be of a more consistent quality
Technology means machines can work 24/7, so production is completely continuous
Cheaper to run machines in long term
What are disadvantages to using technology in production?
Expensive for maintenance and buying and installing
Replaces manual work so some staff might be worried of losing their jobs - demotivates them causing productivity to go down
Machines are inflexible - only suited to one task
Why is managing stock important for a business?
It balances costs of storage against risks of running out of stock.
What does Just-in-Time (JIT) aim to achieve?
Keeps stock levels to the bare minimum - preferably zero.
What is the ideal process in a JIT system?
Raw materials come in, are made into products, and go straight out for delivery.
What technology is typically used in JIT systems?
Computer systems to calculate stock levels and automate orders.
What is a major benefit of JIT?
Reduces the cost of keeping stock.
How does JIT impact cash flow?
Minimizes delay between buying supplies and selling products.
What is a key challenge of implementing JIT?
Requires coordination between the firm and its suppliers.
What is the consequence of delivery delays in a JIT system?
The firm could run out of stock.
What is a downside of buying small quantities in JIT?
Loss of economies of scale.
What is buffer stock?
Extra stocks at every stage to handle supply shortages or unexpected demand.
What is a problem associated with maintaining buffer stocks?
Can lead to costly stockpiles of items.
What do bar gate stock graphs monitor?
Stock levels and when to order more stock.
What is the reorder level in stock management?
The level at which new stock should be ordered.
How do you determine delivery time using a bar gate stock graph?
Difference between reorder level time and arrival time.
What happens when stock arrives on a bar gate stock graph?
The graph shows a vertical line indicating the quantity ordered.
True or False: JIT is always the best approach for stock management.
False.
Define procurement
Finding and buying things that a firm needs from suppliers outside the firm
For example a clothes manufacturer, procurement would involve buying materials that it needs
Define logistics
Getting goods or services from one part of the supply chain to another
For example a clothes manufacturer would need to havr the material it needs transported to its factory
How can effective procurement and logistics improve the efficiency of a business?
The business will have the supplies it needs at the right time
For example: no breaks in production because materials aren’t available, or that materials don’t have to be wasted because they didnt arrive at the right time
How can effective logistics and procurement decrease the overall costs for a business?
reduce the unit cost - the amount it costs to make each item. The firm can make more profit on each item as it gets supplies at the best price and doesn’t waste money by being inefficient
Why might good procurement and logistics be useful for a business?
High quality
Reasonable price
Delivered on time
Improves:
Customer satisfaction
Firms reputation
What factors should a company consider when choosing a supplier and building a relationship with them?
Quality
Trust
Delivery
Availability
Price
Why should a company consider quality when choosing a supplier and building a relationship with them?
Quality needs to be consistent
Customers can be very selective about quality - if it is not of their liking they may switch their shopping to elsewhere
Customers associate poor quality with the business, not the suppliers, firms image gets ruined
Why should a company consider trust when choosing a supplier and building a relationship with them?
If a supplier lets a firm down, the firm might not be able to supply its own customers
Firms need suppliers they can trust
Suppliers need to deliver high quality products on time or warning if they cant
Why should a company consider delivery when choosing a supplier and building a relationship with them?
Firms need to consider how much it will cost to get supplies delivered and how quickly they want suppliers to arrive
Delivery from suppliers near the firm are more likely to be cheaper and faster from a supplier further away
Delivery should be reliable - business production could get disrupted
Why should a company consider availability when choosing a supplier and building a relationship with them?
If a supplier is often out of stock, it could affect the firms production process
They need to make sure their supplier can provide stock in sufficient quantities
Why should a company consider price when choosing a supplier and building a relationship with them?
Firms have to decide how much they want to pay for suppllies and whether cost is their top priority
If they want to cut down the time it takes to serve customers, suppliers that offer faster delivery may rate higher than those on price alone
Cheaper may offer lower quality products
What are the two systems that a firm can use to check the quality of their products?
Quality control
Quality assurance
Whatr is quality control?
Checking products as they’r e being made helps to find faults before the product reaches the customer
Defects may be spotted before finishing making the product - reducing waste
Expensive - but cost will be greater if customer is dissatisfied
What is quality assurance?
Checking that quality is being maintained throughout each process involved in making the product. Stops errors being made in the first place rather than needing to get rid of faulty goods once they’ve been made
Why could a firm consider getting quality assured by an external body?
It may be awarded a rating or certificate that it can display to assure customers that the business produces high quality products
What might sales processes involve?
Finding potential new customers
Approaching potential customers
Assessing the customers needs
Presenting
Closing
Follow up
Why is it important that anyone from the firm involved in the sales process has excellent knowledge of the firm?
Any questions can be answered quickly and accurately
Customer feels more confident buying from the firm
Why is it important that anyone from the firm involved in the sales process has excellent engagement with the customer?
Any experience with customers should be positive
Polite and friendly
Making customers feel important and valued
Customers shouldn’t feel as if they’re being pushed into making a purchase
Why is it important that anyone from the firm involved in the sales process has quick and efficient service?
Quick and easy
Cutting down the number of steps it takes for a customer to buy a product
Discounts?
Why is it important that anyone from the firm involved in the sales process has post sales service offering?
Firm may offer user training - teaching customers how to use the product once bought
Specific after sales helplines
Some cars may need to be serviced throughout their lifespan - maintain a good rep with customer throughout
Why is it important that anyone from the firm involved in the sales process responds to customer feedback?
To make customers feel valued, companies should reply, be polite, even if the company disagrees with what the company has to say
Specific responses rather than generic
Offer a gift for the feedback, such as discounts?
Customers might be influenced with how a business responds
Business can use customer feedback to make changes to the business, improve for future customers
Why is it important that anyone from the firm involved in the sales process provides good customer service?
Higher customer satisfaction
Repeat purchases - loyal
Persuaded to spend more
Bad customer service may:
Dissatisfy customers
Poor brand image
Less loyal
Reduced market share and lower sales
