2.3 making operational decisions Flashcards
What are the two purposes of business operations?
- To produce goods
- To produce services
What are the three types of production processes?
- Job production
- Flow production
- Batch production
What is job production?
making one thing at a time
when is job production used?
When a firm manufactures individual unique products
Each product has a unique design based upon the customers specification
Give examples of job production
building ships,bridges and made -to -measure clothes
What is the disadvantage of job production?
it can take a long time to make as each product is unique
Fewer products are made in a set period of time compared to other production methods
This means the firms productivity will be low
What is the advantage of job production?
As the products are unique and usually high-quality customers may still buy the products even if the company sets its price is very high which can lead to higher profits for a firm
what is flow production?
Making lots of things continuously
All product are identical and the aim is to produce as many as possible along an assembly line and make productivity as high as possible
How is flow production done to be efficient?
production is continuous with no stoppages- many flow production factories operate 24 hours a day with workers rotating in shifts
give examples of flow production
Used for mass market products for example, chocolate bars, mobile phones, televisions
What is the disadvantage of flow production?
flow production is highly capital intensive, it needs a lot of money to buy machinery and may require a lot of space for product storage
What is batch production?
it is a mixture of job and flow production
Firms use flow production techniques to make a batch of one thing then stop we organise and make a batch of something else
what type of products is batch production for?
It is suited to products that are identical to each other, but which are only produced in limited quantities or for a limited amount of time
give an example of batch production
Furniture where producers make a limited number of many different designs
is batch production or job production faster?
Batch production is faster than job production since each product in a batch is identical so firms that use batch production have higher productivity than firms using job production
What is the disadvantage of batch production?
Time is needed to change between batches so productivity is lower than for flow production
Batch production is also more expensive than flow production because different machinery and tools might be needed to make different products. This means prices might not be as competitive as products made using flow production.
how have advances in technology created new ways to produce goods?
Robots are not often used instead of human staff for tasks such as assembling products or packing products into boxes
It is usually cheaper and faster for robots to do this job instead of humans
how can technology be used to help design products?
Computers can be made to design products digitally and this information can then be fed straight into the production machine
This can make the design process more efficient
What are the advantages of using technology in production?
- Technology can carry out processes more quickly accurately than humans- so using technology can increase the productivity of the business and the goods that are produced should be of a more consistent quality
-Technology means that machines can work 24/7 so production can be completely continuous
- In the long-term it’s cheaper to run machines then to pay humans to do the same thing
what are the disadvantages of using technology in production?
- can be very expensive as it can cost a lot to buy and install new machines and they may need regular maintenance and updates. Staff will also need to be trained to use the technology which can be expensive and time-consuming.
-Some technologies might replace manual work so staff might be worried that they’ll lose their jobs. This could demotivate them causing their productivity to go down.
-Machine machines are often only seated to one task which can make them inflexible. This makes it difficult if the business wants to change its production method or the product its making.
what is just in time stock control?
it keeps stock levels as low as possible
All raw materials come, are made into products, and go straight out- all just in time for delivery to customers
What is the main goal of managing stock for a business?
To balance the costs of storage with the risk of running out of stock.
What does Just-in-Time (JIT) aim to achieve in stock management?
To keep stock levels to the bare minimum — preferably zero.
Describe the ideal process of Just-in-Time (JIT) stock management.
Raw materials come in one door, are made into products, and go straight out another door — all ‘just in time’ for delivery to customers.
What technology is commonly used in Just-in-Time (JIT) stock management?
Computer systems to calculate stock levels and automatically order more supplies when needed.
What is a major benefit of Just-in-Time (JIT) stock management?
Reduces the cost of keeping stock.
How does Just-in-Time (JIT) affect warehouse needs?
Requires less warehouse space and fewer warehouse workers.
How does Just-in-Time (JIT) help with stock freshness?
Stock is less likely to go out of date as it shouldn’t be stored for very long.
What impact does Just-in-Time (JIT) have on cash flow?
Helps cash flow by minimizing the delay between buying supplies and selling the product.
What is a significant challenge of implementing Just-in-Time (JIT)?
Requires a lot of coordination between the firm and its suppliers.
What risk does a firm face if deliveries in a Just-in-Time (JIT) system do not arrive on time?
The firm could run out of stock.
What is a drawback of buying stock in small quantities under Just-in-Time (JIT)?
Loses out on economies of scale.
What is procurement?
Finding and buying things that a firm needs from suppliers outside of the firm
what is logistics?
Getting goods and services from one part of the supply chain to another
how does having effective procurement and logistic systems improve the efficiency of a business?
The business will help the supplies it needs at the right time
This means there will be no brakes in production because materials aren’t available all that materials don’t have to be wasted because they didn’t arrive at the right time
how can effective procurement and logistics reduce the overall costs of a business?
If a business gets supplies at the best price and it doesn’t waste money by being inefficient, it will have lower overall costs. This will reduce the amount of costs to make each item to the firm can make more profit on each item or pass the savings on to the consumer by reducing prices.
what does well managed procurement and logistics ensure and improve?
it helps to ensure a firms products are high-quality a reasonable price and delivered on time
This improves both customer satisfaction and the firms reputation
How can quality impact businesses choosing suppliers?
The quality of supplies needs to be consistent
Customers can be very selective about quality
Customers will associate poor quality with the business they buy from not their suppliers
How can trust impact a business choosing its suppliers?
if a supplier lets a firm down the firm may not be able to supply its own customers so firms need supplies they can trust
Suppliers need to deliver high-quality product on time or give plenty of warning if they can’t
how can availability impact a business choosing its suppliers?
If a supplier is often out of stock of items, it can affect the firms production process so they need to make sure their supplier can provide stock in sufficient quantities
How can delivery impact a firm choosing its suppliers?
firms need to consider how much it will cost to get supplies delivered and how quickly they want supplies to arrive
Delivery from a supplier that’s near the firm is likely to be cheaper and faster than a supplier that’s far away
Delivery should be reliable because if a supplier doesn’t deliver stock on time or it gets damaged along the way the businesses production could be disrupted
How can price impact a firm choosing its suppliers?
firms have to decide how much they want to pay for supplies and whether cost is their top priority
supplies that offer faster delivery may rate higher than those that compete on price alone
Cheaper suppliers will often supply lower quality products
Firm needs to balance reduce costs with the quality of the product or service it wants to provide
Why is quality important for businesses?
Even the most productive business won’t succeed if its products aren’t up to scratch.
What do customers expect from products?
Customers expect products to be of good quality, work properly, and not fall apart quickly.
What quality expectations exist for service-based businesses?
Service quality is crucial; for example, a bus company must ensure its buses are clean, well-maintained, and punctual.
How does monitoring quality help a firm?
It helps control costs by reducing waste from unsellable products and minimizing customer complaints.
What is the impact of a good quality reputation on a firm?
A firm known for good quality can enhance its brand image, gain competitive advantage, and potentially charge higher prices.
What systems can firms use to ensure product quality?
Firms can implement quality control and quality assurance systems.
What is quality control?
Quality control involves checking for faults in products during production at various stages.
What are the stages of quality control?
Quality control checks include raw materials, work in progress, and finished products.
What is a potential downside of quality control?
It can be expensive, as whole batches may need to be scrapped if defects are found.
Can quality control apply to service businesses?
Yes, service businesses can use methods like ‘secret shoppers’ to assess service quality.
What is quality assurance?
Quality assurance focuses on maintaining quality throughout the production process to prevent errors.
How can a firm ensure quality at each production stage?
Employees should check that their work is of good quality before passing it on to the next stage.
How can a firm demonstrate its quality standards?
A firm can be assessed by an external body and awarded a rating or certificate to assure customers of its quality.
What six steps might the sales process involve?
-finding potential new customers
-Approaching potential customers
-Assessing the customers needs
-Presenting
-Closing(getting the customer to formally agree to buy)
-Follow-up(post sales service)
why is it important for a firm to have good product knowledge?
-any questions customers have can be answered quickly and accurately
-Staff may be able to sell them additional products to go with their initial purchase
-Customer feels more confident buying from the firm and let me know
how can firms engage well with customers?
staff should be polite and friendly with customers and make them feel important and valued
They often think of extra ways to make the experience for the customer better such as offering free refreshments or next day delivery
how can the firm have quick and efficient service?
Company should quickly answer any questions the customer has
Sales process should be efficient -can be achieved by cutting down the number of steps it takes for a customer to get in touch with the company or to buy a product
Sales process should be quick and easy for a customer
how can the firm of a post sales service?
Firm may offer user training
Some businesses have a specific after sales helpline where they can resolve issues the product
How can businesses respond to customer feedback?
they should make customers feel valued and respond specifically to the comments
they may even offer a gift in thanks for the feedback
Businesses can use customer feedback to make changes to the business in order to improve the sales process for future customers
what are the benefits of good customer service?
-Leads to high levels of customer satisfaction
-Satisfied customers are more likely to remain loyal to the company and make repeat purchases from them in the future
-Customers may be persuaded to spend more with the company that provides them with good customer service
what are the dangers of poor customer service?
-Likely to have dissatisfied customers
-Customers may tell others about the poor customer service they received
-Business ends up with the poor brand image to customers will be less loyal and buy from other companies
-This leads to lower market share and lower sales
