Chapter 3 - Business Operations Flashcards
Production (or operations) management
Refers to all the activities in managing the transformation process
Production
Is the process of changing inputs such as labour services into goods and services that can be sold
What is job production
Is a method of production in which a product is supplied to meet the exact requirements of a customer
4 examples of Job Production
- Garden Design
- Tailors
- Personal trainers
- Restaurants
Advantages of job production (2)
- Can gain an advantage of larger rivals
* Not much technology needed so saves on costs
Disadvantages of job production (3)
. Expensive method of production
. Unless a business is sure it can charge higher prices it may struggle to make a profit
. Often requires skilled employees therefore lots of money has to be spent on training
What is flow production
Is when an item moves continuously from stage of the process to another
Advantages of flow production (3)
. Allows firms to produce huge volumes of output and therefore enables them to sell in large numbers
. Allows for specialisation therefore individuals can become more efficient and they repeat the same tasks and will keep getting better
. It is relatively cheap per unit as the costs are spread over millions of units of production so the cost of each one is actually low
Disadvantages of flow production (2)
. Initial costs are high therefore a business may not be able yo afford this
. Risky as businesses need to invest a lot of money
What is effiency
Is how well a business uses its resources to produce
Factors of efficiency (4)
. How well employees are managed - are they managed well and motivated
. How good suppliers are - are they reliable, provide good-quality supplies
. Investment in machinery and technology - good quality and up-to-date tech
. The way in which the products are produced - mass scale?, expensive? Etc
What is lean production
Is an approach to production that aims to minimise waste
What is just-in-time production
Hold as little stock as possible. Items are ordered just in time before use
What is kaizen
Means continuous improvement . It is an approach to production that aims to achieve change from a series of small steps
Advantages of lean production (2)
. Aims to reduce waste so is fairly eco-friendly method of production
. Increase of efficiency due to reduction on waste
Just-in-case (JIC) production
Holds stock just incase there is a delay from supplies or a sudden increase in demand
4 Components of a typical supply chain
- Suppliers of raw materials
- Manufacturer - turn raw materials into a product
- Distributor - takes the product and delivers it to stores
- Retailer - sells product to the customer
How can a supply chain avoid breaking down?
• Logistics and procurement
Impact of a supply chain breaking down
Customer wants to buy a product but may be unable this can lead to that business gaining a reputation of being unreliable
Impact of a business having efficient logistics and procurement systems (3)
- minimise waste in production process
- lead to finding materials at best price possible - saving on costs
- Lower a businesses average unit costs likely to increase profits if they make the same number of sales
Example of a business that has efficient logistics and procurement
Jaguar Land rover use DHL to transport the stock of its car parts to and from its factories
Logistics
The organising of the processes involved in the supply chain
Impact of building a long term relationship with suppliers + example (2)
- can help lower costs in the future
- BMW mini uses continental tyres when building new cars - tyres are transported by using logistics companies like Plant Wackersdorf
Impact of having a well organised supply chain (2)
- determines the price and quality of the final product
* reduce waste can help reduce costs and increase profits
Factors of consideration when choosing suppliers (4)
- Quality -
- Cost
- Ethical and environmental considerations
- Reliability
Main benefit of Just-in-time (JIT)
Reduces cost of having to keep stock
Main drawback of Just-In-Time production (3)
- Requires lots of coordination between firms and its suppliers
- Frequent deliveries can be costly for the firm
- If any delivery issues the firm could run out if stock
Main benefit of Just-In-Case (JIC)
If there are any problems with deliveries the buffer stocks will allow enough stock to satisfy demand so production can continue
Main drawback of Just-In-Case
The firms can be left with big stock piles of items which can be costly to store
Quality
A quality product is one that meets the customers requirements
How can a business measure quality
May ask different groups of people who are internal and external to the business e,g customers, mystery visitors and staff
How can customers help with measuring quality (2)
- Customers can fill out surveys
- Customer telephone lines so customers can ring and let the business know if they have done well or not e.g Pret a Manger and Starbucks
How can mystery visitors help with measuring quality
Use the product in secret to test the quality - can make employees feel as if they are being spied on
How can staff help with measuring quality (2)
- May have a quality control system to check quality throughout the production process
- Quality assurance
Total quality Management (TQM)
Is an approach to quality in which every one is focused on preventing errors occurring and ensuring quality at each stage of the production process
Customer service
Is the part of a business’s activities that is concerned with meeting customers’ needs as fully as possible
Methods of good service (6)
- The product
- Reliability
- Safety
- Customer engagement
- Good product info
- Premises
Benefits of good customer service - Customer satisfaction (5)
- Attract new customers
- Increase customer spend
- increase market share
- increase customer loyalty
- Increase Profitability
Effects of poor customer service (4)
- Dissatisfied customers
- problems with attracting new customers
- loss of revenue and profits
- increase in costs - reimbursing customers
Procurement
Involves selecting suppliers, establishing the terms of payment and negotiating the contract
The supply chain
Refers to all the businesses, people and activities that take part in a production process
