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
