Operations Flashcards
What is a supply chain
A group of firms involved in the process of manufacturing and designing a product or service
Who is involved in the supply chain
Suppliers
Manufacturers
Distributors
Retailers
What do businesses need to consider when choosing a supplier
Price of raw material
Quality
Reliability
Sustainability
Procurement
Is the process of finding and buying things a firm needs from a supplier
Logistics
The process of getting goods and services from one part of the supply chain to another
Benefits if managing supply chain effectively
Good relationship with suppliers
Finding the best price and value
Reducing unnecessary waste
Job Production
The process of making a product to meet the customers demands and each product is unique ie a wedding cake,wedding dress
Benefits of job production
Firms can charge higher prices because of skilled labour
This leads to an increase in profit.
High Quality so customers will be pleased.This improves business image
Drawbacks of job production
Skilled labour is expensive
Time consuming
Flow production
A continuous production of products where they are all items are identical and aim to make as many as possible
Benefits of flow production
Businesses can achieve economies of scale and as a result have low unit cost.
Capital intensive so machinery is quick and accurate
Drawbacks of flow production
If a machine breaks down it will stop the entire production process
High initial cost
High cost for storage units
Lean production
A strategy businesses can use to make production more efficient
Aims of lean production
Businesses aim to use few resources as possible and have as little waste as possible
Just in time (JIT)
JIT is a form of lean production. It aims to keep stock levels to the bare minimum. JIT products arrive from manufacturer and is immediately delivered to the customer
Benefits of JIT
Little to no cost on storage
Reduced waste
Drawbacks of JIT
There needs to be a lot of coordination between supplier and firm. The firm also needs to make frequent deliveries. This is costly
If deliveries of don’t arrive on time or there are mistakes with the order the company just runs out of stock
JIT businesses miss out on economies of scale (bulk buying)
Just in case (JIC)
JIC is the method of operating a production and distribution system with buffer stock (extra stock) in case there is an increase in demand or supply shortage
Benefits of JIC
If there is problem with deliveries of raw materials there is extra stock to satisfy customer and demand
Drawbacks of JIC
Business can be left with a big stockpile of items which may lead to a purchase of a larger storage
Quality
The minimus standard a customer demands from a product
Factors that affect quality
Materials used
Production method
Benefits of maintaining quality
Higher Price-Customers are prepared to pay more for higher quality products
Increased Sales-When customers make purchase and are pleased with it they’re likely to return. This increases sales
Improved image and reputation- firms that have good quality products usually have better reputation. This means new customer are likely to choose you instead of your competitors. Existing customers may also be encouraged to return
Drawbacks of maintaining good quality
Staff training- giving staff the proper training may be time consuming and costly
Inspection-products need to be inspected to check quality. This process takes time
What happens if quality isn’t maintained
Disrupted provision of services-if quality standards are not maintained it may disrupt services a business has to offer and ultimately losing potential sales
Product recalls-if a product isn’t safe or poor quality the firm may need to give the customer a refund or give them a new product. This is costly. In worst case scenario it may lead to a lawsuit which damages the image and reputation of a business.
Ways quality is measured
- Specify the physical properties of a product and test a random sample ie the colour,size and ingredients. Testing random samples can see if product meets the specification.
- Monitor how many products get returned and how many customer complaints
- Customer surveys/reviews. This can tell the business what they need to improve or change
Quality Control
Is where finished products are checked by inspectors to see if they meet the set standard.
Quality assurance
is where quality is built into the production process. For example, all staff check all items at all stages of the production process for faults. In this way everyone takes responsibility for delivering quality. Successful quality assurance results in zero defect production.
Total Quality Management (TQM)
Aims to make quality the responsibility of every employee in the firm in order to make sure quality remains consistent. This can help reduce waste by getting things right the first time
Why does rapid growth make if hard to maintain quality
- May become to expensive to carry out all necessary inspections
- A business may be overwhelmed and cut corners to make products quicker
Solutions to rapid business growth
- Business may hire more employees even if it’s time consuming
- Business may become a franchisor
- Business may outsource it’s product (may be expensive to outsource to a business that delivers high quality)
