business operations

• The Purpose of Business Operations:

  • Operations ensure that customers receive the products/services they buy.
  • The marketing department creates demand, but operations physically produce and deliver the product/service.
  • For manufacturers, operations involve sourcing supplies, setting up production, manufacturing, and delivering products.
  • For service providers, operations include processes from booking to delivering the service.
• Production Processes-

  1. Job Production

  • Definition: One-off production for a single customer.
  • Advantages:
  • High flexibility, meets customer needs.
  • Satisfying work, requiring skills.
  • Disadvantages:
  • Expensive in developed economies.
  • Skills may be in short supply, limiting business growth.
• 2. Batch Production

  • Definition: Produces a limited number of identical products.
  • Advantages:
  • Some cost savings due to bulk production.
  • Can still offer customer variation (e.g., different colors).
  • Disadvantages:
  • Less automation, making it costlier than flow production.
  • Not as flexible as job production.
• 3. Flow Production

  • Definition: Continuous production of identical products with high automation.
  • Advantages:
  • High automation = cost efficiency.
  • Produces consistent, identical products.
  • Disadvantages:
  • Expensive to set up and inflexible to change.
  • Consumers may prefer personalised products.
• Impacts of Technology on Production

  Production Costs

  • Technology (especially robots) can lower production costs by:
  • Working without breaks, weekends, or extra pay.
  • Performing dangerous tasks (reducing the need for 'danger money').
  • Allowing lower prices, increasing customer demand.
• Productivity

  • Definition: A measure of efficiency (e.g., Nissan’s productivity in 1999 was 98 cars per worker per year).
  • Replacing humans with machines increases productivity and reduces labour costs.
• Quality

  • Machines ensure consistency, improving product quality.
  • Technology makes quality checks more accurate than human inspection.
• Flexibility

  • Technology has traditionally lacked flexibility—machines do repetitive tasks well but struggle with variation.
  • Recent advancements in production robots aim to improve flexibility.
• Key Definitions

  • Automation: Machines operating without human involvement.
  • Robots: Machines programmed to perform human-like tasks (e.g., welding, painting).
  • Flexibility: The ability to switch tasks easily.
• Exam Tip

  • Replacing employees with robots negatively impacts short-term cash flow due to redundancy payments.