Operations Flashcards
The Operating System:
Input
* the raw materials and other necessary resources (such as labour or machinery)
Process
* the process that changes inputs into outputs: the actual production or manufacturing
Output
* the actual goods or services for sale
CHOOSING A SUPPLIER
Purchasing Mix:
Price
* the price charged by a supplier to purchase raw materials
* are discounts available for repeat purchases?
* is it value for money – quality vs price?
Quality
* how good the raw materials are
Quantity
* the amount of raw materials required
Reliability/Reputation
* reliability - will the supplier deliver when they say they will?
* reputation - what do other people think of the supplier.
Storage Space
* how much space the business has in a warehouse to hold the raw materials until they are needed.
CHOOSING A SUPPLIER
Why is the Purchasing Mix important?
Price
* costs need to be kept as low as possible to make a profit
* low costs will improve the cash flow of a business
Quality
* without high quality raw materials, the finished product will not be of a high quality
* low quality raw materials could result in higher wastage
Quantity
* there needs to be enough raw materials available to allow production to continue but not too much otherwise this can be expensive for storage
* correct quantities of raw materials are required to satisfy customer demand
Reliability/Reputation
* late delivery can mean customers might not get their order on time and result in order cancellation
* suppliers with a good reputation are likely to get more business compared to one that has a poor reputation
Storage Space
* raw materials might be wasted if they cannot be stored in the correct place
* storage cost, e.g. insurance can be expensive
METHODS OF PRODUCTION
What are the Types of Production?
Labour Intensive
* mainly people used in production
Capital Intensive
* mainly machines used in production
Automation
* where machines are controlled by a computer
METHODS OF PRODUCTION
What are Factors to Consider before choosing a MoP?
- the actual product being made, e.g. is it something unique that has to be made by someone highly skilled or is it a standardised item
- the quantity of product to be made, e.g. mass produced items would be made using batch or flow
- the amount of finance available, e.g. does expensive machinery need to be purchased
- the skills and ability of your staff, e.g. do they need to be flexible or highly skilled or will they be using machinery and need to be trained
- market size, e.g. if you will be selling a large amount of the product then it would be best to use batch or flow
METHODS OF PRODUCTION
Labour Intensive vs Capital Intensive:
Advantages
* increased output as machinery can operate 24/7
* increased quality, greater consistency and standardisation
* lower labour costs as fewer employees
* robots can easily do repetitive work
Disadvantages
* cost of installing the equipment
* cost of training staff on specialist equipment
* breakdowns and technical difficulties will stop workflow
METHODS OF PRODUCTION
What is Job Production?
When a company produces a single or small number of products to suit specific [customer] requirements, e.g. wedding cake, bridge.
METHODS OF PRODUCTION
Advantages and Disadvantages of Job Production:
Advantages
* customers exact demands can be
met, causing increased satisfaction
* high prices can be charged
* designs can be changed during
production
Disadvantages
* specialist tools or equipment may
be needed
* products can take a long time to
make
* bulk purchases of stock are not
always possible – no economies of
scale
METHODS OF PRODUCTION
What is Batch Production?
When a group of similar products are made at once. Each product in the batch is the same but can vary from one batch to another.
The products are similar but different ingredients may be used for different products, e.g. Cadbury - Dairy Milk, Dairy Milk Oreo; Heinz - Tomato soup, Chicken soup.
METHODS OF PRODUCTION
Advantages and Disadvantages of Batch Production:
Advantages
* batches can be altered to suit customer requirements
* cost savings can be made compared to job production
Disadvantages
* resources, such as equipment and employees, may have nothing to do between each batch
* a fault in one item can lead to the whole batch being wasted
METHODS OF PRODUCTION
What is Flow Production?
A continuous process with production flowing from one operation to the next, each stage adding to the production. This MoP often uses a production line for mass production of goods to the same specification, e.g. cars, paper.
METHODS OF PRODUCTION
Advantages and Disadvantages of Flow Production:
Advantages
* large quantities of identical products can be made
* economies of scale, e.g. the business can buy in bulk and obtain discounts so that cost of production per unit falls as output increases.
* machinery can be used 24/7
Disadvantages
* products cannot be made tocustomer’s requirements
* a fault or breakdown in one part of production line could stop production process
* the repetitive work can be demotivating for employees
QUALITY
Why is Quality important?
- poor quality goods can result in customers returning their purchases, causing loss in sales and increased complaints.
- the highest quality goods can be sold for premium prices, increasing profits
- customers more likely to make repeat purchases, becoming loyal customers
- a good reputation is gained, which will encourage new customers, increasing growth
- wastage is reduced
QUALITY
What are the Methods to Ensure Quality?
Quality Assurance
* the production process is checked at every stage to improve quality by designing every process to get the product ‘right first time, every time’
Quality Circles
* a group of employees and managers that meet regularly to discuss issues in the production process, here problems are identified and suggestions are made to resolve them
Mystery Shopper
* employed, either by the business itself or through an agency, to purchase products, ask questions, register complaints or behave in a certain way, then provide feedback to the business which is used to improve their operations.
Benchmarking
* a process of that uses the best performers in a particular industry to set standards for others to meet - businesses in the same sector can compare their performance to the market leader then aim for these quality standards (‘‘best practice’’) with its own products, aiming to achieve an equal standard or exceed it
Quality
Advantages and Disadvantages of Methods Ensuring of Quality:
Quality Assurance (Prevention)
Advantages
* prevents defects from occurring in the product as early as possible
* easier to identify where there are faults in the production process
Disadvantages
* additional checks are more time consuming which slows down production
* can increase the cost of production, e.g. paying Quality Assurance manager wages
Quality Circles
Advantages
* employees will be motivated and productive as they contribute to decision making
* opportunity for development motivates staff
* communication between managers and staff improves
Disadvantages
* employees meet during paid company time, meaning production time is lost
* employees are often trained to join a quality circle, costing the business more time and money
Mystery Shopper
Advantages
* valuable feedback is recieved if a product is below standard or unsatisfactory + the mystery shopper can suggest improvements to the customer experience
* training needs for staff can be identified
Disadvantages
* staff may resent a mystery shopper evaluating them and take the feedback personally
* feedback may not be fully representative of the business as a whole, e.g. only one branch is the problem
Benchmarking
Advantages
* studying competitors can identify opportunities for other functions, such as marketing or operations, to be improved
Disadvantages
* methods used by one organisation may not be suitable for another, e.g. due to internal constraints
