Operations of business Flashcards
Operations department tasks
Choosing suppliers Monitoring inventory levels Production of the product Ensuring the quality of the product Taking into account the ethical and environmental issues faced by operations.
Phases of production
Input
Process
Output
Input definition
The part of production where raw materials are gathered
Process definition
The part of production where the raw materials are manufactured into the final product
Output definition
The part of production where the product is distributed to the location the product is sold.
Factors to consider when selecting a supplier
Quality of raw materials Price of raw materials The reliability of the supplier (its reputation) The location of the supplier Scales of economy Lead time Supplier values
Supplier definition
A business which provides raw materials for another business in exchange for money. (Typically in large quantities)
Inventory management definition
Inventory management is where a business controls the amount of stock they have to ensure that they aren’t overstocking or under stocking on materials.
Manual inventory management
Where the stock level has to be physically updated by staff in the business
Advantages of manual inventory management
Works when the power is out
Is cheaper than buying lots of machinery
Computerised inventory control
Where computers automatically reorder stock and keep a track of the number of stock being held by the business, usually done by EPOS
Disadvantages of manual inventory control
More human error
Less secure because thief’s can steal stock without you knowing
You have to reorder raw materials yourself.
Decreases productivity as staff have to stop to update inventory.
Advantages of computerised inventory management
Less human error so more reliable
Easy to tell if thief’s are stealing stock so more secure
Costs less than hiring someone to do the job in the long run
Reorders stock quickly and automatically so more difficult to under stock and overstocking
Inventory control diagram
Inventory control diagram has A minimum level, A maximum level, A reorder level, Buffer stock, Lead time, Stock on y axis Time on x axis
Minimum level
Is the lowest amount of stock your business can have in its inventory without understocking or using buffer stock.
Maximum inventory level
Ensures that the business isn’t over stocking
Reorder level
Ensures that the raw materials will be delivered by the supplier before the business goes below the minimum inventory level and has to under stock.
Buffer stock
The stock left in the back of a business in case of an emergency
Lead time
The time taken for the supplier to manufacture/gather and deliver the raw materials to your business.
Consequences of overstocking
The cost of storage will increase or you won’t be able to store some of your stock securely as you will have no space.
Perishable items could go out of date
Change in fashion trends could lead to the stock becoming unsellable
Money tied up in capital
Under stocking consequences
Production may have to stop because not enough raw materials
Firms may lose out on discounts from scales of economy
Not all customers will be able to purchase product and may decrease customer satisfaction
Businesses might struggle to cope with unexpected orders if under stocking
Admin charges will increase
Methods of production
Job
Batch
Flow
Job production definition
Where the business produces a one off product tailored to the customers specific needs
Batch definition
Where products are made in groups of products and each group is slightly different to the one before , however products made in the same group are identical.
Flow production definition
Where the product is manufactured on a capital intensive assembly line and is continually added to, each stage will add value to the product and makes standardised products.
Advantages of job
High customer satisfaction as customers get exactly what they want due to customisability.
Higher prices as seen better quality seen from skilled workers and the fact it is unique.
Workers are skilled and passionate so will be able to solve problems on their own and high productivity in the business.
Disadvantages of job
It’s expensive to recruit and train specialist staff.
Training is usually required to ensure employees have a high standard of work and so can initially decrease productivity
Materials will be bought in smaller quantities so no scales of economy.
Individuals can take long periods of time to manufacture one product.
Human error is low due to having skilled workers but will still happen
Workers will need breaks and machinery doesn’t.
Advantages of batch production
Batches can be altered to suit the main customer tastes and trends.
Main ingredients can be bought in bulk using scales of economy to reduce spending
Less skilled Labour is needed so there won’t be long periods of time where workers are away training.
Can be capital or labour intensive to suit your business.
Disadvantages of batch production
Slower than flow production
Has less customisability than job
Whole batches can be ruined by mistakes
Machinery may need to be cleaned between batches.
Flow production advantages
Capital intensive so the wages cost will be lower
Raw materials can be bought in bulk meaning the price of products will decrease per unit (scales of economy)
Machines can work 24/7 so production doesn’t need to stop.
Produces standardised products so they are all of the same quality
Faster than other methods.
Flow production advantages
Capital intensive so the wages cost will be lower
Raw materials can be bought in bulk meaning the price of products will decrease per unit (scales of economy)
Machines can work 24/7 so production doesn’t need to stop.
Produces standardised products so they are all of the same quality
Flow production disadvantages
Equipment cost a lot to set up which small businesses won’t have access to.
Equipment breaking down can completely stop production and get mechanics in straight away
Cannot be individualised or standardised per person
A large demand is needed because you are producing products so fast.
Factors to consider before choosing a method of production
The finance available, for instance low finance won’t be able to set up flow production
The nature of the product, does it need to be identical or can it be different for every customer.
The demand and the units needed to be produced, if there is a low demand you will want job to produce products at a slower pace, with a higher price.
Skills of the workers and the availability workers.
The amount of labour needed to complete production.
Automation definition
Where companies buy machines to do jobs instead of workers because they are faster and cheaper for the long run.
Automation definition
Where companies buy machines to do jobs instead of workers because they are faster and cheaper for the long run.
Technology in operations
CAM: computer aided design CAD: computer aided manufacturer Email Websites EPOS
CAM
Computer aided manufacturer used to quickly produce the business product without human error 24/7.
Metal detectors
Used to ensure the quality of products and make sure they have no unwanted metals in them.
CAD
Computer aided design is used to speed up product development and make it so there is no need for any physical prototypes.
Emails
Are used to contact suppliers quickly
Websites
Websites are used to compare suppliers.
EPOS
Stands for electronic point of sale and allows for easy inventory management and stock control and instantly contacts supplier when stock needs replenished.
Methods of ensuring quality
Quality control
Quality assurance
Quality training
High quality raw materials
Quality control
Where the product is checked for standard at the end of production
Quality assurance
Where the priciest is checked for standard at the end of every stage of the process meaning less waste.
Quality training
Where the employees are given additional training to ensure they can produce products, quickly, safely and with low error to keep production going.
High quality raw materials
Where the business only selects the good raw materials to be used in their products or uses a better quality and reputation supplier.
High quality raw materials
Where the business only selects the good raw materials to be used in their products or uses a better quality and reputation supplier.
Ethical and environmental operations
Ensuring that the business doesn’t do anything that is seen as wrong when manufacturing their product.
Advantages of ethical production and environmental production
Will attract customers with the same values
Associated with higher quality
Used as a marketing tool
Staff recruitment will be easier because the workers will be passionate about the cause.
Disadvantages of being ethical and environmental in operations
Makes supplier more difficult to choose because they must align with your business values
Costs more to buy ethical raw materials
Productivity will decrease.
