Content

• Advantages of lean production

  • Reduces waste – Cuts unnecessary inventory, time, and materials.
  • Lowers costs – More efficient processes = lower operating costs.
  • Improves quality – Focus on continuous improvement and defect prevention.
  • Faster production – Quicker lead times and response to demand.
  • Motivates employees – Involves staff through teamwork and responsibility.
• Disadvantages of lean production

  • Risk of disruption – JIT depends heavily on reliable suppliers.
  • High setup costs – Requires investment in training & systems.
  • Employee pressure – Continuous improvement can lead to stress or burnout.
  • Less flexible – Standardised processes may reduce product customisation.
  • Not suitable for all – Doesn’t work well with unpredictable demand or unreliable supply chains.
• When does lean production work best

  • Stable demand
  • Reliable supply chains
  • Products with low variability
  • Process-oriented businesses (e.g. car manufacturing, electronics)
• When does lean production not work best

  • Unpredictable demand
  • High product customisation
  • Weak supplier reliability
  • Small or less structured businesses
• Which type of business will lean production work best with

  • business with stable & predictable demand like supermarket chains as they’re like to forecast demand accurately which prevents overproduction & storage cost
  • business with reliable suppliers & logistics like fast food chains bcs they use perishable products preventing waste
  • large businesses with capital to invest as it requires training, new systems etc & big firms can usually afford the initial investment
• Which type of business will lean production not work best with

  • Small businesses with limited resources as it requires investment & training
  • Custom made businesses as stocks can’t be controlled bcs materials vary by order
  • Businesses with unreliable/distant suppliers as JIT & lean requires on time deliveries to avoid running out of materials
• How do external factors impact operational objectives

  • Inflation = higher raw material costs
  • Exchange rates = affects import/export costs
  • May force changes to capacity, suppliers, or pricing
• how do operations decisions affect other business areas

  • JIT impacts finance (cash flow), HR (training), and marketing (product availability)
  • Poor decisions in operations can limit sales and growth
• Is efficiency more important than quality

  • Efficiency reduces costs & increases profit margins
  • High quality boosts customer satisfaction & loyalty
  • Depends on market – e.g. low-cost vs premium brands
• How does tech improve operational performance

  • Automation speeds up repetitive tasks which prevents potential demotivation of employees
  • Reduces errors & labour costs, improving efficiency
• What’s the impact of poor supply chain management

  • Leads to delays, stockouts, unhappy customers
  • Higher costs due to inefficiencies or missed opportunities
  • Damages brand & sales over time
  • Judgment :Significant negative impact, especially in fast-moving or customer-facing industries
• What are the benefits of using automation & robotics in manufacturing

  • Improves consistency & reduces human error
  • Speeds up production & lowers long-term labour costs
  • High setup cost and risk of technical failureJudgment: Long-term benefits outweigh costs in high-volume production
• How effective does supply chain management reduce cost

  • Better coordination = fewer delays and less buffer stock
  • Economies of scale when negotiating with suppliers
  • Helps streamline inventory processes
• Is outsourcing suitable for a fast growing business

  • Frees up internal capacity and speeds up scaling
  • Access to expertise and reduces fixed costs
  • Risk of quality loss and reliance on third parties
  • Judgment: Suitable if managed carefully, with clear contracts and quality control
• How does a control chart help improve inventory management

  • Identifies when stock levels fall outside normal range
  • Helps spot trends or inconsistencies quickly
  • Improves decision-making and reduces stock issues
• What are the risks of relying on JIT for a global manufacturer

  • Vulnerable to supplier delays (e.g. geopolitical issues, pandemics)
  • Supply chain disruptions can halt production
  • But reduces costs and waste in normal conditionsJudgment: Risky unless supplier relationships and logistics are extremely reliable
• How can a business benefit from JIT

  • Reduces storage costs and waste
  • Increases cash flow by freeing up capital tied in stock
• Eval the importance of buffer stock for a retailer with unpredictable demand

  • Reduces risk of stockouts and lost sales
  • Essential when demand spikes (e.g. seasonal)
  • But increases holding costs and risk of wasteJudgment: Very important for retailers with volatile demand – worth the extra cost
• Does better quality always lead to higher profits

  • Higher quality = repeat customers, better brand image
  • But improving quality can be costly and slow
  • Not all markets value high quality equally (e.g. low-cost fast fashion)Judgment: Often leads to higher profits, but only when aligned with customer expectations
• Advantages of using quality assurance than control

  • Prevents errors during the process, not just at the end
  • Saves time and money on reworking defective products
• How does improving quality affect costs & competitiveness

  • Fewer defects = lower returns and rework costs
  • Higher customer loyalty = competitive advantage
  • May increase short-term costs (training, inspections)Judgment (if 16): Improves competitiveness long-term despite initial expense
• Eval whether time quality management is effective for improving customer satisfaction

  • Involves all employees in quality improvement = long-term cultural shift
  • Can reduce defects and improve customer loyalty
  • But hard to implement and results take timeJudgment: Effective in the long run, but requires strong leadership and training
• What’s a reason a business might choose to be labour intensive

  • Greater flexibility and personalisation (e.g. luxury goods)
  • Lower initial costs than investing in machinery
• What’s the benefits & drawbacks of a capital intensive approach

  • Lower labour costs, more consistent quality
  • High upfront costs and risk of breakdowns
  • May reduce workforce morale or flexibilityJudgment: Suitable for high-volume, standardised production (e.g. car manufacturing)
• What’s the impact of improved tech on operational efficiency

  • Automation speeds up production and reduces human error
  • Improves consistency and lowers labour costs
  • Expensive to implement and may need retrainingJudgment (if 16): Benefits likely to outweigh costs if tech is well-matched to the task
• Is lean production suitable for a small custom business

  • Small firms may lack resources for lean (JIT, Kaizen)
  • Custom products = unpredictable processes and demand
  • But some lean methods (e.g. waste reduction) can still helpJudgment: Not fully suitable, but selective elements can benefit quality and cost
• What’s a benefit of monitoring unit costs for a manufacturing business

  • Helps identify cost inefficiencies
  • Enables competitive pricing and improved profit margins
• What’s the impact of low capacity utilisation on a firms profitability

  • Higher fixed costs per unit = reduced profit margins
  • Unused resources waste money
  • But can offer flexibility in case of sudden demand increaseJudgment: Generally negative, but depends on industry context (e.g. seasonal businesses)
• Eval whether capacity utilisation is the best measure of performance

  • High utilisation = efficient use of resources
  • But very high levels may reduce flexibility and increase stress
  • Doesn’t account for quality or output per employeeJudgment: Useful but should be used alongside other metrics like unit cost or productivity.
• How does improving labour productivity help reduce cost

  • More output per worker = lower cost per unit
  • Reduces need for extra staff or overtime
  • May require investment in training or equipment
• Analyse how environmental objectives might affect operational decision making

  • May require sourcing sustainable materials or reducing waste
  • Could increase short-term costs
  • But improves brand image and meets legal/ethical expectations
  • Judgment (if 16): Worthwhile long-term, but depends on industry and consumer values
• Explain one operational objective a manufacturer might set

  • Reduce unit costs to stay competitive
  • E.g. investing in automation to increase efficiency
  • Leads to lower average costs and higher margins
• Assess the value of setting operational objectives for a growing business

  • Helps align operations with strategy (e.g. meeting increased demand)
  • Enables measurement of performance (e.g. productivity, cost targets)
  • Motivates staff with clear goals
  • But objectives may become outdated quickly in a fast-growing firm
  • Could lead to unrealistic targets or stressJudgment: Valuable if flexible and linked to wider business goals