theme 2- Making Operational Decisions Flashcards
Operations
The business function that organises, produces and delivers the goods and services produced or provided by a business
What is production process
Involves a business using its resources to produce goods and provide services that customers can buy
Production methods
Job- custom one off, specialist skills, high profit margins, longer process, increased costs
Batch- larger volume of products, some flexibility and customisation, semi skilled workforce, some automation, lower productivity when switching between batches
Flow- high volumes and low margins, high productivity, standardised production, low skills, highly automated, expensive machinery needed tho
How is production and competitive advantage linked
Operations is linked to productivity
If a business can provide custom things (job production) it will be more desirable and therefore increase competitive advantage
On the other hand, controlling production costs can allow a business to lower prices (good for customers) or increase profit margins
Examples of technology used in business operations
Computer aided design
Supply chain management
3D printing
Positives of technology on operations
Speeds up production process
Keeps business in touch with customers
Lowers production costs
Disadvantages of technology on operations
Can involve a costly initial investment
Can become obsolete quickly
Requires employees to be trained to use new tech
What is economies of scale
Idea that average cost of production falls as volume of production increases. This is an advantage that businesses gain as they grow in size.
What is productivity
What does it lead to
How can it be improved
Output per worker, measures how much each worker produces over a period of time
Increasing productivity leads to greater competitiveness in a market
Productivity can be improved by increasing output or lowering the cost of production (input) while maintaining output.
Factors influencing the use of technology
Productivity
Cost
Quality
Flexibility
Managing stock
Managing the materials that a business holds in the most efficient and effective way
Stock graph- max stock level
Most stock a business can hold
Stock graph- re order level
Level of stock at which new stock will be ordered by the business. Difference between this level and the point at which stock increases is the time taken for stock to arrive
Stock graph- min stock level
Also known as buffer stock, lowest amount of stock a business will hold. Kept in case there is a surge in demand (safety net)
Just in time stock control (JIT)
Stock is delivered only when needed by the production system, so no stock is kept by a business. For JIT to work, a business must have good relationships with the supplier,a well organised production system and regular demand for their products
Benefits of holding stock
Unpredicted demand can be met
Damaged goods can be replaced
Discounts received for buying in bulk
Benefits of holding little or no stock
Cost saving for storage
Less change of damaged or stolen stock
Employees can focus on tasks other than managing stock
Factors considered when choosing a supplier
Good price on products and delivery
Reliable + flexible deliveries
Discounts for large orders
Quality control
One part of the chain of production. A quality controller will examine and/or test for quality after a product has been made or a service has been delivered
Quality assurance
Focusing on quality at every stage of the production process, everyone is involved and is responsible for contributing to the achievement of a quality standard. As a result, there should be zero defects
Benefits of good quality
Allows for premium price to be charged
Strong brand image
Closely linked with meeting customer needs, competitive advantage
Quality assurance checklist
Have quality as the focus of every process
Involves customers and suppliers at the design stage
Aim for zero defects
Meet a quality standard (ISO 9000)
Good customer service leads to
Satisfied and loyal customers
Positive brand image and reputation
Increased sales and repeat purchasing
Poor customer service leads to
Poor brand image
Poor customer satisfaction and low loyalty
Falling sales and repeat purchases
The sales process
1) customer interest
2) speed of efficiency of service
3) customer engagement
4) post sales service
5) customer loyalty
Factors affecting sales process
Some products will have short sales processes, some long. A business need to manage each stage of the process effectively to ensure the sale is complete and customers are totally satisfied.
