Operations Flashcards
Supply chain
All groups involved in manufacturing the finished product
Factors affecting choice of suppliers
Price
Reliability
Quality
Procurement
Finding and buying things that a business needs from suppliers outside of the business
Logistics
Means getting goods or services from one part of the supply chain to another
Benefits of managing a supply chain
Good relationship with suppliers
Finding best price and value
Reducing waste and unescery cost
Methods of production
Flow production
Job production
Lean production
Just in time
Just in case
Job production
When an individual within a business manufactures products exactly to the customers needs
Drawbacks of job production
Expensive
Long time to make
High skilled labour
Flow production
All products are identical and the aim is to produce as many as possible across the assembly line
Lean production
Uses a few resources as possible and to have little waste
Just in time
Keeps stock levels to a minimum and products are made in just in time
Just in case
Business holds buffer stocks to attend to sudden increases in demand
Quality benefits
Better reputation and brand image
Can charge higher price
Increased sales
Quality drawbacks
Staff training cost
Inspection cost
Measuring quality
Customer surveys
Amount of products returned
Complaiments
TQM
Focuses on quality and making sure there is no issues with the product
QA(quality assurance)
Checking quality throughout production process
Kaizen
Continuous improvement
Customer service need to know
Having excellent product knowledge
Engaging with customer
Offering post sales service
Benefits of good customer service
Better customer satisfaction
Better customer loyalty
Drawbacks of bad customer service
Dissatisfied customers
Bad reputation/word of mouth
What is production
The process of changing inputs, such as labour services and natural man-made resources, into goods and services that can be sold
What inputs does production use
Labour services
Man made resources for example, buildings, vehicles and machinery
Natural resources, including land and minerals such as coal and oil
What are two types of production
Job production
Flow production
What is job production
A method of production in which a product is supplied to meet the exact requirements of a customer
Job production benefits
Can be attractive to customers as it is likely to meet their needs ore fully than standard products, resulting in higher sales
Businesses can charger higher prices as customers will value goods and services that are produced specifically for them
Smaller businesses can compete more with larger businesses as they produce specific goods compared to bigger businesses who produce loads of products for a cheaper price and can advertise there products as specific to individual wants.
Job production drawbacks
It’s expensive as each job is different and may need more resources to complete it. In particular, more employee time may be required to understand and respond to precise customer needs
Employees may need more training to design and produce different goods and services increasing the costs of production
What is flow production
Occurs when an item moves continuously from one stage of the production process to another
Flow production advantages
Businesses produce a lower unit cost due to economies of scale. Fewer resources are used in production as larger numbers of standardised products are made. This helps the business sell at lower prices.
Employees can become specialised in certain aspects of production. This can result in them becoming very efficient, which means they can produce each good relatively cheap.
Businesses can produce goods and services in huge quantities, which can assist them in entering new markets and increasing market share
Flow production disadvantages
It can be very costly, and only large businesses may be able to afford the necessary equipment and staff training.
It may be left efficient than expected. If a business sells fewer products than expected, the expensive production line may not be fully used, but it’s costs will still have to be paid
Many consumers expect to have a choice when buying products and this can be difficult to supply with a flow production system. Sales may be lower than expected
How can a business increase the efficiency of their production
Training and managing employees effectively . Employees with the right skills and high levels of motivation will help the whole business to be efficient
Using technology to support production. Amazon, the online retailer, uses robots in it’s warehouses to select and transport products quickly and efficiently
Reduce the number of faulty products produced. Faulty goods or services may incur costs without generating revenue.
What is lean production
An approach to production that aims to minimise waste
What is just in time production
Involves s business as little stock as possible. Items are ordered just in time to be used
What are two lean production techniques
Just in time
Kaizen
Advantages of just in time production
Holds minimal stocks of raw materials and components. This avoids storage costs
Business has less money tied up in stock - money can be used for other purposes
The business does not risk stock becoming out of date or being stolen
Explain kaizen
Means continuous improvement
Lots of small changes made at each stage in production
What is stock
Refers to raw materials, components and finished products held by a business. Stock is sometimes called inventory
What does just in time stock control require
Excellent communications with suppliers as stocks must be delivered frequently to ensure production is not interrupted.
Businesses to trust their suppliers to deliver the correct materials, at the correct time
What is just in case stock control
Involves holding stocks just in case there is a delay from suppliers or a sudden unexpected increase in demand
What are drawbacks to just in case stock production
Storage costs
Risk of theft
What is a benefit to just in case stock control
Businesses may receive fewer deliveries of stock, thereby reducing costs
They may also receive purchasing economies of scale
What is buffer stock
The minimum amount of stick held by a business to ensure production can continue normally
What are the factors affecting choice of suppliers
The prices charged by suppliers. A supplier that offers low prices may compromise on quality. However if supplies can be bought cheaply, unit costs can be reduced and profits may be higher. This can prove vital for businesses selling in a highly price competitive market Such as air travel.
The quality of the suppliers products. A business may not be able to meet its customers needs if the quality of the inputs are inadequate. Quality can be particularly important factor for businesses selling luxury products.
Reliability. Using suppliers that deliver the right inputs, in the right quantities at the right time is important for all businesses. Reliable suppliers are essential for businesses using just in time methods of production.
What is procurement
Also called purchasing, this involves selecting a supplier establishing terms of payment and negotiating a contract
What is supply chain
Refers to all the businesses, people and activities that take part in production process from the start until the product gets to the consumer
What is logistics
The movement of goods, services and information throughout the production process
What is a benefit to managing your supply chain effectively
Costs kept to a minimum. Finding the most efficient supplier can likely result in supplies being delivered at the lowest possible cost to a business. A business may also work with an existing supplier to improve the suppliers efficiency and so help reduce costs for both businesses
Unnecessary waster can be eliminated. The disposal of waste can increase the time and money it takes to produce a product and may also result in bad publicity. Streamlining a supply chain by reducing the amount of time or material that is wasted will result in faster production times and a lower unit cost per product
What is disposal of waste
The removal or dumping of unwanted raw materials, the by-products of manufacturing or finished goods
What is total quality management (TQM)
An approach to quality in which everyone is focused on preventing errors occurring and on ensuring quality at each stage of the production process
What are the benefits of maintaining quality
Additional sales/customers. A business is much more likely to keep its existing customers, and to attract new ones, if it maintains high quality standards.
Good brand image/reputation. A business is likely to benefit from an enhanced reputation if it maintains quality. This should increase sales
What are the drawbacks to maintaining quality
Inspection costs. When employees are inspecting the work of others, they are not engaged in producing goods or services.
Staff training. Employees may need training to engage in quality inspections. Training can be expensive and takes employees away from producing goods and services
What is customer service
The part of a business’s activities that is concerned with meeting customers needs as fully as possible
What is customer engagement
Occurs when the business puts the customers requirements at the heart of its operations ; can result in customers having good experiences with the business.
What is a post sales service
Meeting customers needs after they have purchased a product, for example by repairing or servicing the product
What is customer loyalty
When a business’s customers make repeat purchases because they prefer the business’s products to those of it’s rivals
What are methods of good customer service
Ensuring product meets customer needs
Excellent product knowledge
Improved customer engagement
Good service during sale e.g. varied payment methods
Excellent after sales service
What are benefits of good customer service
Greater profits
Increased spending by customers
Greater customer loyalty
Increased customer satisfaction
What are the dangers of poor customer service
A bad reputation for poor customers via word of mouth or social media. So it will make it difficult for business to attract new customers
Customers may be dissatisfied and so buy from competitors in the future
How can websites increase customer service
Businesses can provide larger amounts of information about themselves and their products to help meet customers needs. Websites often post customers review of products.
A website can provide a means of contacting a business to ask questions or make complaints. Businesses can respond quickly and easily, and can post responses or videos explaining how to deal with common problems
What benefits do m-commerce and e-commerce provide customers
Allows customers to buy products online at any time and from many locations. This increases customer satisfaction and sales
Products sold online are often cheaper as businesses do not have to pay costs relayed to buying and maintaining shops
