Unit 3-Business Operations Flashcards
What is efficiency?
How well a business uses its resources to produce products.
What is lean production?
It is a strategy used to make production more efficient, the business will aim to use as few resources as possible to reduce waste, involves workers to think about ways to improve their productivity.
What are some types of waste?
-Excess products, stock going out of date and transport.
What is Kaizen?
When a firm has implemented kaizen it introduces constant small improvements to its business processes. Employees are encouraged and are often best placed to suggest improvements, as they deal with the process on a daily basis.
Advantages of Kaizen?
-Improves quality and efficiency
-Easier to implement
-Improves motivation and productivity
-Improves staff retention
What does production mean?
Process of turning raw materials into goods and services that can be sold.
What is Job production?
A method of production where a product is produced that meets the specific customer requirements.
What are the benefits of Job production?
-Products are high quality
-Higher prices can be charged
-Business may find it easier to differentiate itself from rivals
What are some drawbacks of Job production?
-Unit costs are higher than using flow production
-Requires skilled employees, who may demand higher wages
What is flow production?
Method of production where all products are identical and the aim is to produce as many as possible.
Benefits of using Flow production?
-Businesses can produce on a large scale and use less labour
-Production can operate 24/7 and consistently
-Lower unit costs than job production
Drawbacks of using Flow production?
-Jobs are repetitive for employees and can lower motivation
-Initial purchase and set up costs can be high
-Product may be too similar to rivals so they will have to compete on price
-If machinery breaks down then they cannot make products
What are some factors that influence the type of production method?
-The level of demand of products-Flow production is most suitable for products that are sold to the mass market
-Target Market-Job production would be most suitable as customers may depend on high quality unique products.
What does procurement mean?
It means finding and buying the things that a firm needs from suppliers in order to produce the product.
What does Procurement involve?
-Managing logistics
-Deciding what goods/services need to be bought
-Finding suppliers
-Purchasing raw materials
What is stock management?
Involves ensuring the right quantity of stock is always available at the right time, quality and price.
Whay are the two types of Stock management?
-Just in Time
-Just in Case
What is Just in Time production (JIT)?
Minimum levels of stock are held by the business.
What are the benefits of using Just in Time production
-Less storage space required
-Less money is tied up in stock
-Stock is less likely to go out of date or be wasted
What are the problems of using Just in Time production?
-No spare stock is held if mistakes occur
-Reliant on suppliers delivering on time
-No economies of scale
What is Just in Case (JIC) production?
When a business holds buffer stocks of raw materials/goods in case their is a problem with deliveries of unexpected demand of product.
What are the benefits of using Just in Case production
-Stock is available for replacing faulty products or to meet high demand
-Business is less reliant on suppliers
-Spare products are available to meet unexpected orders
-Economies of Scale are possible
What are the problems of using Just in Case production?
-Need more storage space which increases rent
-Money is tied up in stock and unavailable for other purposes
-If there is a build up of unsold products it will lead to higher stockholding costs
What is a supplier?
A business or individual that provides a business with goods or equipment. It is important for a business to have a good relationship with them.
What are the factors that make suppliers effective?
Price-Good value for money
Quality-Are they consistently providing the quality that is expected by the customer
Reliability-Do they deliver on time and do products work as described
Communication-Are they easy to communicate with and easy to place orders
Financially secure-Can maintain a long-term relationship
Capacity-are they able to handle increases volumes of supply
What are some factors that affect the choice of suppliers?
Price-If the business chooses cheaper suppliers it can increase profit margin or allow the business to reduce its prices but it could affect the quality of the product.
Quality-If the raw materials are of good quality then the product can also be good quality which would increase customer satisfaction but suppliers would increase prices
Reliability-If you know that the supplier can meet deadlines and quality it may decrease stress
What does Logistics mean?
It means getting goods and services from one part of the supply chain to another.
What is a supply chain?
A network of organisations that get products to customers
What does management mean?
They ensure the right quantity of goods are in the right place at the right time and are provided at the right quality and at a price that represent value of money.
What are the benefits of an effective supply chain?
-Increased efficiency
-Lower unit costs
-Competitive advantage
-Improved flexibility
What are some issues to consider when making supply decisions?
-Quality can suffer if costs are driven too low
-Using IT systems to monitor the supply chain can be expensive
-Reliance on other member of supply chain mean a business does not have full control
What does quality mean?
A product is of good quality if it meets the needs and expectations of the customer
How can we judge quality?
-Design, functionality, reliability, consistency, durable and if it is value for money.
What are some consequences of quality issues?
-Loss of customers
-Reputation decreases
-Have to pay for replacements or refunds
-Cost of reducing price on a product no one wants to buy
Why is quality important?
-Customers are able to complain about poor quality on the internet.
-If the business is able to develop a reputation for high quality it will have an advantage over competitors.
What are the benefits of higher quality?
-Customer satisfaction
-Repeat purchases
-Lower marketing costs
-Higher customer loyalty and customer recommendation
What dies Quality Control mean?
It is a traditional method of checking quality. All or some products are checked at the end of the production process.
What are the benefits is Quality control?
-Can protect standard of product
-A opportunity to receive feedback on product
What are th drawbacks of Quality control?
-Products that do not meet requirements will be wasted
-Cost of Inspectors may be high
What is Total Quality management?
A quality assurance approach where all employees are responsible for quality, by ensuring their internal or external customers are satisfied.
What are the benefits of Total Quality management?
-Quality is embedded into the organisation resulting in few quality issues
-Improved employee motivation resulting in increased efficiency resulting in an increase in sales
What is the importance of maintaining quality?
-Increased customer loyalty
-Strong brand image and reputation
-Fewer returns
-Helps to attract/retain high spending customers
What are the costs of maintaining quality?
-Cost and time of training
-Cost of maintaining consistent levels of quality
-If standards are not met it may affect reputation
What is ICT to a business?
-Computing and communication systems a business uses to exchange information.
What is M-Commerce?
The act of buying or selling a product using a smartphone or similar handheld device.
What is E-Commerce?
The act of buying or selling a product using an electronic system such as the internet.
What are the benefits to a customer of using E-commerce?
-Convenient as products can be purchased all around the world at any time
-Ability to see reviews of products and get online support
-Can compare prices between different businesses
-Delivery can be directly to you wherever you are
What are the benefits to a business of heing E-commerce?
-Quick and easy way to communicate with customers
-Easy to monitor satisfaction and collect feedback
What are the problems to a business of using E-commerce?
-Poor reviews can be seen by many people which can affect reputation
-Has to be constantly updated and reviewed by business
What does customer service mean?
Methods used by a business to look after its current and future customers
How can a business have good customer service?
-Meeting customer needs before, during and after the sale
-Focusing employees on meeting customer needs
-Accurate product information
-Positive customer experience and being efficient
What is the importance of providing good customer service?
-Can increase sales
-Increased customer relations
-Enhanced public image
-Promotion by word of mouth
What are some dangers of providing poor customer service?
-Loss of customer loyalty
-Loss of sales
-Unhappy customers may spread their experiences leading to less customers.
