Business Operations

• Business Operations what is job production? give examples Involves the manufacture of an individual good from start to finish. • Each product is different and offers a unique good for the consumer or meets specific consumer requirements. Eg. Wedding dresses, Hairdresser, Birthday cakes
• Business Operations Job production advantages and disadvantages advantages: ☑ Unique ➔ bespoke ➔ to customer specification. ☑ Higher quality ➔ product is made one at a time ➔ everyone different. disadvantages: ☒ Expensive ➔ workers tend to have higher skills and therefore higher wages. ☒ Time-consuming ➔ completion takes longer due to greater attention to detail and high quality. ☒ Replacements more difficult to find ➔ products were made for a specific purpose to a particular design.
• Business Operations Whats batch production? give example Found when a small number of identical products are made at once. Each batch goes through one stage of the production process before moving onto next stage. Eg. Clothing Manufacturer, Bakery
• Business Operations Batch production advantages and disadvantages advantages: ☑ More products can be produced ➔ allow for higher sales. ☑ Costs for producing each product (unit costs) are lower. ☑ Production is more efficient ➔ workers can specialize in performing specific tasks. ☑ Specialist machinery can be used ➔ speed up production. disadvantages: ☒ Products no longer produced to a unique specification ☒ Quality is not as high compared to job production ➔ less time and care is taken on individual products ☒ High level of stock may be needed ➔ materials have to be stored and this is ex...
• Business Operations Whats flow and mass production and give example Goods are produced continuously usually on a production line. Partly finished goods move along the assembly line with parts being added through the process. eg golf balls.
• Business Operations Flow/Mass production advantages and disadvantages advantages: ☑ Efficient use of labour and machines ➔ division of labour. ☑ Produces similar/identical goods ➔ production quicker. ☑ Reduce unit costs of production ➔ benefit from economies of scale. disadvantages: ☒ Machinery is expensive ➔ smaller businesses may not be able to afford it. ☒ Lack of flexibility ➔ flow production produces identical products ➔ what if the customer wants a slight modification? ☒ Bored workers ➔ could lead to lower quality.
• Business Operations what is Quality and how will businesses try to achieve it? Involves meeting a standard for a good or service to meet consumer needs and expectations. Businesses will try to achieve quality through: • Purchasing the right raw materials and components ➔ the quality of the materials will directly influence the quality of the end product. • Having the best production processes ➔ ensure that each stage is completed to the required standard. • Employing the right people ➔ making sure that they have the right skills and level of motivation to take pride in work. • Training emp...
• Business Operations Why is Quality important to a business? Satisfying and increasing customer expectations • To gain and retain customers • Repeat custom • Word of mouth advertising • Brand loyalty Increasing sales • Reputation of the business • Positive image to consumer • Positive word of mouth • Improved customer satisfaction Reducing cost and waste • Reduce product returns and recalls • Avoid negative publicity • Cost of recall and reworking faulty goods • Dealing with customer complaints • Loss of trust
• Business Operations Whats Quality Conrol, list pros and cons : Involves inspecting a sample of goods produced at the end of the production process to ensure that specifications have been met. Goods which do not meet the standards are scrapped or are sold as seconds. Advantages: ☑ Inspection is carried out by a specialist ☑ Reduces the risk of a faulty product reaching the customer ☑ Problem areas can be identified and action taken. Disadvantages: ☒ Waste levels can be high as a fault will only be found at the end of the process ☒ Requires specialist personnel ☒ Operatives may feel demoti...
• Business Operations what is Quality assurance and list pros and cons A guarantee given by producers to consumers that certain standards have been met throughout the production process. Legal standards have been met and / or codes of practice have been followed. Quality assurance involves: • checking/inspecting quality at each stage of the production process • quality is the responsibility of everyone throughout the process • achieved through a system of total quality management • making everyone in a business responsible for quality • each employee treats the next person as if they are a...
• Business Operations what is Total Quality Management TQM Creates quality through continuous improvement, development of systems and products and by creating an organisational culture of quality. For TQM to be effective a number of production management and control methods need to be used: • Quality chains ➔ the next person in the production process (chain) is treated as a customer and customer satisfaction is the objective. • Empowerment ➔ giving employees control over tasks completed. • Monitoring ➔ checking that standards at each link in the chain are being achieved and the use of statist...
• Business Operations whats Procurement? Involves obtaining or buying of goods and services from an external source. These are to be used in the production process or are to be sold on.
• Business Operations Whats Supply Chain? A complex system of businesses, people, activities, information and resources involved in moving goods and services from source to customer.
• Business Operations Factors of choosing suitable suppliers: The choice of suppliers is a critical one for businesses because it will affect the success of what they do. The choice will involve a number of factors: • Cost • Quality • The range of products that can be supplied • Speed of delivery • Flexibility of the supplier ➔ in terms of the quantities that can be produced and the times of deliveries • Reliability ➔ e.g. the ability to deliver within a certain time slot • Reputation ➔ what have others said about working with this business • Payment terms ➔ e.g. how long does the busine...
• Business Operations What is logistics Involves the management of the movement of goods from where they are to where they are needed: often between the manufacturer and the consumer. Logistics is the flow of materials: • Into a business from suppliers ➔ Delivery and transportation from suppliers ➔ Correct quantity and quality on time • Within a business as raw materials are transformed into a finished product ➔ Warehousing and stock management ➔ Inventory of supplies and finished goods ➔ Packaging of finished goods ➔ Security of supplies and finished goods • Out of a business to reach the c...
• Business Operations What is Stock Raw materials that have not yet been used or products that have been made, but not sold. It can also include semi-finished goods or finished goods. Holding stocks are important in order to: • have supplies to keep production going • have stocks to meet customer demand.
• Business Operations Just-In-Case (traditional) [stock control method] Holds stock just-in-case there is a delay from suppliers or a sudden unexpected increase in demand. advantages: ☑ Stock usually available ➔ not held up by bottlenecks / delays in delivery ☑ Bulk purchases ➔ discounts available ➔ lower prices ➔ lower costs ☑ Quality of stock can be checked ➔ longer time available ☑ Stock can be kept in correct environment disadvantages: ☒Need to find storage ➔ warehousing can be expensive ➔ may be lost depending on other business ☒ Stock needs to be moved from where it is stored to factor...
• Business Operations Just-In-Time [stock control method] Requires businesses who adopt the idea to keep their stocks of finished goods and / or materials to a minimum. • Goods will only be produced when orders are received and / or materials are only received when they are needed. • This process saves storage costs and avoids having assets tied up in stocks. advantages: ☑ Stock only bought when needed ➔ no need for warehouse ➔ lower storage cost ☑ Materials generally in good condition ➔ straight from manufacturer ☑ Up-to-the-minute materials bought ➔ based on current technologies ☑ Little was...
• Business Operations Impacts a supplier can have on a business Selecting the right supplier is important as they will impact on a business in the following ways: • costs. • quality of finished goods. • price changes. • customer satisfaction. • reputation. • sales. • profits.
• Business Operations The impact of supply decisions on stakeholders: The owners of the business ➔ supply decisions impact on features such as quality of the products, the costs and the speed of delivery ➔ this will affect sales, profits and dividends The local community ➔ transportation of products will impact on air pollution and congestion ➔ choice of local suppliers can create jobs and help grow the community The suppliers themselves ➔ if a supplier wins a contract it may be able to expand and reward its own staff and investors ➔ if they lose a contract then they may see sales and profits fa...
• Business Operations Picking a supplier Suppliers will affect unit costs in the following ways: • The price of the components directly affects the cost of a product. • Discounts may be offered for buying in bulk. • Appropriate payment terms will help businesses avoid bank charges. • If a supplier can deliver reliably and regularly then stock holding costs can be reduced. Suppliers will have a direct influence on prices as: • High quality components allow businesses to charge a higher price. • Reliability and speed of supply can add value to a product and allow a premium price to be charg...
• Business Operations where to source supplies Locally v globally and less developed countries • Ethics ➔ Are suppliers paid a fair rate? ➔ Can ethical behaviour be tracked back through the e-supply chain e.g. working conditions or child labour? ➔ Impact on local economy e.g. jobs • Costs ➔ Do cost savings justify the uncertainties or risk to quality? • Logistics ➔ Delivery time ➔ Risk of stock not arriving or being damaged
• Business Operations whats computerized stock control Stock control systems can be computerised. When a specified quantity is reached new stock is automatically ordered. Stock levels are recorded using barcodes and scanners i.e. each time materials are removed from a warehouse they are scanned and the stock level updated. Relies on accuracy e.g. all workers remember to scan, no loss of stock, system is set up correctly.
• Business Operations How to source and distribute supplies This will depend on the: • frequency and size of deliveries • storage requirements e.g. security or special conditions such as refrigerated • flow of materials through the production process • distribution of finished goods • right quantity and quality at the right time • ability to match supply to demand to achieve customer satisfaction.
• Business Operations The relationship between the functional areas of a business and its supply chain Marketing • Cost of raw materials and manufacturing to inform pricing decisions • Product features and functions • USP e.g. ethically sourced • Quality of product ➔ leading to brand loyalty and repeat sales • Customer satisfaction • Place available to end customer Operations • Quality of supply will affect the quality of the product • Frequency of delivery will affect the operations process Finance • Cost of raw materials • Payment terms negotiated with suppliers, impacting on cash ...
• Business Operations whats Lead Time The amount of time that elapses between placing an order and the delivery of that order.
• Business Operations whats Buffer Stock The amount of stock held between the minimum stock holding and zero stock. Used in case of late deliveries or extra orders.
• Business Operations stock control chart
• Business Operations whats the sales process? Involves a series of steps taken from when the potential buyer meets the prospective seller until after the final sale is made.
• Business Operations whats customer service : Customer service involves the interaction between the business and the customer in which the business understands consumer needs before, during and after the sale of a good or service. Positive reactions to service can provide benefits for the business in relation to reputation and future sales.
• Business Operations impacts of good and bad customer service Good customer service can result in: • Increased customer loyalty • Increased customer spend • A good reputation • Attracting new customers These should then lead to increased sales revenue, higher market share and increased profits. Poor customer service will lead to: • Dissatisfied customers who may not return to the business ➔ this will affect revenue and profits • Difficult to attract new customers ➔ customers are likely to take their business elsewhere
• Business Operations features of customer service • Greeting the customer ➔ this does not just include the face to face interaction with employees, but also the presentation of the outlet and the products, the signage and the processes the business uses to deal with customers. • Interacting with the customer ➔ ask questions to make sure the customer is shown the right product that will satisfy their needs and wants. • Identifying customer needs and wants ➔ ensures that products are recommended that meet the customer specific requirements. • Encouraging feedback from the customer ➔ customers r...
• Business Operations whats online customer service When buying online a customer will still expect a certain level of customer service and a business will have to adapt the features of good customer service to their website. This can be done by: • The website design ➔ ensuring that it is easy to use ➔ offers search facilities ➔ details of the product ➔ customer reviews ➔ live chats with customer service agents • Data analysis of the customer ➔ monitor browsing and purchasing history ➔ recommend particular products / tailor their advertising
• Business Operations whats After-Sales service : The meeting of customers’ needs after they have purchased a product – for example, by repairing or servicing the product.
• Business Operations the various stages involved in the sales process  Preparing through good product knowledge  Identify sales opportunities  Understanding needs and wants of customers  Informing customers of the features and benefits of the product or service  Closing the sale  Following up and after sales