Making operations and production

• Operations

  Business function that organises , produces and delivers the goods and services produced or provided by a business . It is the key function that transforms resources into finished goods and services .
• Production Process

  A business using its resources to produce goods and provide services that customers can buy .
• Production method

  Business may use Job production , Batch production , Flow production depending on the nature of the product and the level of production .
• Job production

  One - off or bespoke products

  Focus on customer needs and individual services

  Specialist skilled workforce increases costs

  High profit margins

  Longer production process
• Batch production

  Larger volumes of products than job production

  Some flexibility

  Semi-skilled workforce

  Some-levels of automation

  Productivity reduced when switching between batches
• Flow production

  High volumes and low margins Standardised production

  Low skilled workforce

  Highly automated process

  Setting up expensive machinery increases costs
• Production and Competitive Advantage 


  Operation is linked to productivity , flexibility , cost and quality . Eg If a business can provide custom products and services , this will make their products more desirable to customers . Similarly , controlling production costs can allow a business to lower prices or increase profit margins .
• Technology used in business operations examples

  Computer aided design

  Supply change management

  Geographical positioning systems

  Electronic point of sale

  3D printing

  e-commerce
• The impact of technology on operations

  Speeds up the production process

  Keeps businesses in touch with their customers

  Lowers production costs

  Ensures fewer mistakes and defects

  Can quickly become obsolete

  Requires employees to be trained to use new technology
• Productivity

  Output per worker. It measures how much each worker produces over time. Increasing productivity leads to greater competitiveness in a market. Productivity can be improved by increasing output or by lowering the costs of production while maintaining output
• Economies of scale

  Describes average costs of production falling while the volume of production increases . An advantage that the business gain as they grow in size
• Factors affecting choice of technology

  Flexibility

  Quality

  Cost

  Productivity
• Maximum stock level

  The most stock that a business can hold
• re - order level

  The level of stock which new stock will be ordered by the business.The difference between this level and the point at which stock increases is the time it takes for the stock to arrive .
• Minimum stock level

  Aka Buffer stock is the lowest amount of stock the business will hold. It is a safety net in case there is a surge in demand.
• Just in time

  Stock management system where stock is delivered only when needed by production system. No stock is kept by a business . For JIT to work , a business must have a good relationship with suppliers , a well-organised production system , and regular demand for their products .
• Benefits of holding stock

  Any unpredicted surges in demand can be met.

  Damaged goods can be replaced

  Businesses can receive discounts for bulk buying

  Limited risk of problems supplying customer demand
• Benefits of holding little or no stock

  Cost saving in not having to store stock

  Less chance of damaged or stolen stock

  Employees can focus on tasks other than managing stock

  Can reduce costs of production, which makes product pricing more competitive
• Working with suppliers

  A business may use one supplier or many suppliers .Suppliers are a key part of a business operation and finding right suppliers is crucial to a business's competitiveness and success . Loads of factors when choosing suppliers some factors may be more important due to nature of the products and business .
• What makes a good supplier

  Good price on products and delivery

  Flexible deliveries

  Reliable deliveries

  Discounts for large orders

  High-quality supplies

  Availability of products
• Suppliers and logistics

  Suppliers and logistics have a significant impact on the operations of a business . A business needs a supplier they can trust
• Quality control


  Part of chain of production . A quality controller will examine and\or test for quality once a product has been made or a service has been delivered .
• Quality assurance

  Focuses on quality at every stage of 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

  Good quality allows for a premium price to be charged .

  Good quality builds a strong brand image .

  Good quality is closely linked to meeting customer needs and can help provide a competitive advantage.

  Quality is a way of differentiating a product
• Quality assurance checklist


  Have quality as the focus of every process

  Involve customers and suppliers at the design stage.

  Aims for zero defects

  Have quality as the responsibility of every employee

  Have managers who ensure there are systems in place to assure quality.

  Meet a quality standard , such as 150 9000

  Make good quality part of the business's culture so it is something everyone aims for and is involved in.
• Good customer service 


  Satisfied and loyal customers

  Positive brand image and reputation

  Differentiated products with a competitive advantage

  Increased sales an repeat purchasing
• Poor customer service

  Poor customer satisfaction and low customer loyalty.

  Poor brand image.

  Inability to differentiate products and to charge premium prices.

  Falling sales and repeat purchases
• The sales process

  The sales process identifies the key stages of buying a product or service that contribute to customer satisfaction. This means that it is an important part of providing excellent customer service.
• Factors affecting sales process

  Some products have a short sale process while others an extended sales process over a number of months. Business needs to manage each stage of process effectively to ensure the sale is complete and customers are satisfied
• What the business need to consider depending on the product or service being sold?

  The product knowledge of its sales staff

  The speed and efficacy of its services

  Customer engagement with its products

  Its responses to customer feedback

  The post-sales service that it provides
• Questions about 5 stages of sales process

  1.How can we grab the attention and interest of potential customers ?

  2.How can we ensure we respond to customer needs promptly ?

  3.How can we build relationships with customers and meet their needs ?

  4.How can we ensure that customers remain happy after buying our products ?

  5.How can we encourage customers to continue to buy and engage with our brand ?
• 5 stages of sales process


  1. Customer interest
  2. speed and efficiency of service
  3. Customer engagement
  4. Post-sales service
  5. Customer loyalty
• Production

  1.Design

  2.Manufacture

  3.Assembly

  4.Test

  5.Control

  6.Delivery
• Business effects

  
• Flexible suppliers can help a business meet customer needs more easily
• The services provided by a supplier can directly influence the reputation of the business that uses its products
• Late deliveries can hold up production
• Securing good contracts and supplier agreements can help a business achieve economies of scale as it grows
• Poor quality can lead to dissatisfied customers and products being returned
• Using a supplier to deliver products directly to customers can be risky if they are not reliable