3.3 Business Operations Flashcards
Operations management
The department responsible for the transformation of inputs into outputs.
Methods of production:
Job production
Where one off tailor-made products are made from start to finish.
E.g. a piece of artwork, bridge, wedding cake etc
Each is unique
Labour intensive
Methods of production:
Flow production
A continuous movement of items through the production process. This means that when one task is finished the next task is started immediately.
Specialisation
Where work is divided into separate tasks or jobs that allow workers to become skilled at one of them.
Division of labour
Breaking a job down into small, repetitive tasks that can be done quickly by workers or machines specialised in this one task.
Job production advantages
• Charge higher price due to time spent
• Better quality product
• Staff more likely to be more motivated and skilled
Job production disadvantages
• More difficult to make large revenues due to slower production —> lack of economies of scale
• Higher costs of production
Flow production advantages
• Can make large number of products - maximise revenue and benefit from economies of scale
• More efficient production method
• Lower costs of production
Flow production disadvantages
• Product less likely to be high quality - can’t charge premium price
• Interdependent —> delays can cause interruptions
• Staff less likely to be motivated
Lean production
An approach to production developed by the Japanese to eliminate waste. It involves the management of resources in a business to reduce waste an improve efficiency. Corrects defects when they occur.
Lean production methods
Kaizen
Just in time
Cell production
Kaizen
“Kai” means “change”
“Zen” means “good (for the better)”
Continuous improvement involving everyone
Small gradual change
1 person 2 jobs
Teamwork
Just in time
Production happens with minimum stock levels.
Completed just in time for the next task.
Cell production
Way of dividing the process into series of sperate stages.
U shaped.
Teamwork.
Self checking.
Advantages of lean production
Employees are used more efficiently.
Costs are reduced.
The number of defective products is reduced.
Disadvantages of lean production
Production is reliant on suppliers.
Expensive to set up.
Efficiency
How well a business is using their resources.
It’s influenced by:
• How well employees are managed
• How good suppliers are
• Level of investment in machinery/technology
• Production method
Procurement
The finding of, purchasing of, or acquisition of goods and services.
Stock control
The systems and policies in place to order and manage stock.
What 2 choices does a business face when managing stock?
1) Just in Time
2) Just in Case
Just in case
A method of stock control that keeps a larger amount of stock just in case it is needed.
What are buffer stocks?
Excess or spare stock.
What are advantages of just in case?
• Can respond to customers order quickly and surges in demand.
• Can achieve purchasing economies of scale.
What are disadvantages of just in case?
• Costs of storing stock.
• Stock can go out of date or obsolete.
What are advantages of just in time?
• Reduced costs of storage.
• Fresher, more up to date produce.
What are disadvantages of just in time?
• Failure of stock arriving on time or meet sudden increases in demand.
• Lost purchasing economies of scale (Bulk buying).
What is quality?
A quality product is one that meets the needs and expectations of the customer.
How is quality measured?
1) Customer feedback
2) Inspection prior to leaving the factory
3) Self checking throughout the production process
4) Number of complaints or returns
5) Ratings on third party websites e.g. trip advisor
6) Retention rates or levels of repeat customers
7) Mystery shopping reports
8) Staff feedback
What are the consequences of quality issues?
1) Cost of reworking faulty goods and recalls.
2) Brand value/loyalty (customer dissatisfaction)
3) Bad publicity or word of mouth
4) Loss of market share
5) Fines
6) Poor employee motivation
2 benefits of maintaining quality?
Additional sales are made
Reputation and image are improved
2 costs of maintaining quality?
Staff training costs increase
Inspection costs are high, when using quality control
What is quality management?
Controlling activities to ensure products and services meet the specifications.
What is quality control?
Checking/inflecting quality at the end of the production process to detect faults.
What is quality assurance?
Self checking quality at each stage of the production process to prevent defects.
What is quality standards?
Setting a minimum acceptable standard. Often a legal requirement.
What is total quality management?
An approach to quality where everyone is focused on placing quality at the heart of all decisions and actions.
2 benefits of total quality management?
Ensures high quality
Reduces waste
3 costs of total quality management?
Cost of training staff
Puts pressure on staff
Time consuming
Customer service
Part of a businesses activities that is concerned with meeting as many customer needs as fully as possible.
Occurs before, during and after a good or service has been purchased.
Sales process
The steps that take place between a business e.g. a sales assistant and the customer.
Methods of customer service
Product knowledge
Customer engagement - good customer service by providing a good customer experience.
Post sales services
Benefits of good customer service
Customer loyalty
Gain new customers from recommendation
Improve business image and reputation
Increased spend
Dangers of poor customer service
Dissatisfied customers
Poor reputation via word of mouth
Problems attracting new customers
Refunds, exchanges, compensation
Information and communications technology (ICT)
Computing and communications systems that a business uses to exchange information with stakeholders.
Ways ICT have allowed customer services to develop?
• Websites
• E/M commerce
• Social media
• Data analysis
EPOS
An electronic point of sale.
Electronic POS systems link your card payment devices and till to a computer or device to allow you to create a totally integrated payment processing system.
Advantages of websites
Information about products/services
Purchase from website
Advantages of E/M-commerce?
Convenient for consumer
Quicker transactions
Advantages of social media
Reach more people
More personalised adds
Influencers bring customers
Advantages of data analysis
Make better decisions from customer feedback
Compare data to previous years
Factors affecting choice of suppliers?
• Price
• Quality
• Reliability
Logistics
Refers to the movement of goods, services, information and money throughout the production process.
How can suppliers affect efficiency?
• Delivery of supplies on time
• Quality of raw materials
• Flexibility to meet demand
• Cost of raw materials
Supply chain management
The supply chain is all the people, businesses and activities that take part in the production processes from the start until it gets to the customer.
Importance of supply chain management?
• Ensures that all processes are run efficiently & cost effectively.
• Ensures goods and services are gained for the best possible price and quality.
• Helps to cut waste and minimise cost.
• Helps to ensure streamlined process and fast production times.
• Helps to uphold business ethics.
