BU3

• What does benchmarking involve

  finding the best practice in your industry and then copying your competitor but adding some extra value or USP to the product.
• Benefits of bench marking

  - Provides goal for employees which will increase motivation with workers

  - Make organisation more competitive in the market

  - Identifies best practice in the market which will improve performance if these methods are adopted by the organisation
• Costs of bench marking

  - Difficult to gather required information from competitors

  - Can be time consuming to study techniques used by other competitors

  - Internal factors such as lack of finance may prevent the adoption of competitors practices
• What are quality circles


  small groups of workers of different levels in the firm who come together to discuss and solve problems in production.

  
  

  Managers, assembly line workers and engineers mix together and everyone's opinion is valued and respected. Membership of quality circles is voluntary
• What are employees involved in quality circles

  - may become more motivated as they feel valued within the company. - Employees who are doing the job often have a better idea on how to improve processes.
• Why are mystery shoppers employed

  By the company to ask as customers
• What do mystery shoppers do

  report back to the company on their experience. This feedback is used by the company to help improve their service or product.

  
  

  They don't identify themselves to the company therefore are gaining an accurate reflection on the service provided to customers
• Mystery shopper benefits


  Motivates employees to improve,

  Encourages communication and teamwork

  Help identify issues or potential hazards in the business.
• Mystery shopper costs


  - Businesses need to pay mystery shoppers, often through an agency, increasing costs.

  • Staff may resent a mystery shopper evaluating them, if they are aware of it, and may take the feedback personally.
• Continual improvement of process and system

  organisations should always attempt to improve quality, even if it has met its objectives.
• Continual improvement of process and system benefits

  - The business stays ahead of the competition.

  - The business can react easily to changing external factors.
• Continual improvement of process and system costs

  The business can have high staff development costs.

  Employees may feel under pressure to continually keep improving.
• Quality circle benefits


  - increases organisation's productivity and competitiveness

  - improves customer satisfaction

  - raises awareness of quality control among employees

  - improves the status of the company brand and gains consumers' confidence
• Quality circle costs


  Employees unsure of purpose,

  Not enough relevant training,

  Quality circles are not empowered to make decisions.
• Mystery shopper description


  people are employed to purchase products, ask questions, register complaints or behave in a certain way and then provide feedback about the experience they had.
• Quality management description


  incorporates not just one method but takes into account a variety of methods, including quality assurance, quality improvement and quality circles. Ensures all people in a business are committed to quality to ensure zero errors are occurred.
• Quality management benefits


  - Should result in zero errors, which drastically reduces waste

  • Staff are motivated as they are constantly consulted on improving quality.
• Quality management costs


  - Substantial staff training to ensure no mistakes are made//will increase costs and result in lost work time

  • Requires the commitment of all staff, which could require a stricter selection process
• What is maximum stock level

  the highest amount of stock that can be stored at one time. Stock costs will be at the minimum per unit since the organisation is at full capacity.
• What is minimum inventory level

  the lowest amount of stock that should be stored at one time. There is a danger that stock levels could fall too low and halt production.
• What is re-order quantity


  the quantity of stock that must be ordered to bring levels back to the maximum stock level.
• What is re-order level


  the quantity at which more stock is ordered.
• What is lead time


  the time that passes between ordering stock and it arriving.
• What is buffer inventory


  stock which is held incase deliveries are held up or there is an unexpected large order.
• What happens when there's not enough stock (under-stocking)

  Stop production,

  Repeatedly needing to re-order,

  Unable to take advantage of bulk buying,

  Loss of sales and profits
• What happens when there's too much stock (over-stocking)

  Risk of theft,

  Additional storage costs,

  Cash-flow problems,

  Inventory going out of stock.
• What is just in time

  > A JIT system delivers materials and components to as they are need and uses them straight away

  > It saves space on storage

  > They don't tie up money in unused materials

  > However, it need the materials to be on time and fault free
• What is decentralised storage


  when inventory is held at various locations within the organisation, each branch/department is responsible for ordering and storing their own stock
• What is centralised storage


  when a company chooses one central location to store all the stock for the organisation and distribute raw materials to factories or finished goods to retail outlets
• Advantages of centralised storage

  It can reduce costs as bulk purchasing uses economies of scale

  
  

  Storage costs can be better controlled

  
  

  Specialised staff can be employed to manage inventory, which will reduce theft and improve efficiency
• Disadvantages of centralised storage

  High costs incurred due to specialist equipment and large storage facilities If

  
  

  large amounts are held there is an increased likelihood of wastage

  
  

  Time delays between ordering and receiving the inventory
• Advantages of decentralised storage

  Better decisions to be made about inventory to buy and how much to order

  
  

  Inventory is always available for production

  
  

  Small amounts of stock being held which reduces waste
• Disadvantages of decentralised storage

  Can be expensive

  
  

  Security may not be as effective leading to increased theft
• Benefits of just in time

  Less cash is tied up in stock,

  Less storage and warehouse space is required,

  Wastage should be reduced as only stock required is ordered,

  Changes in external environment will have a reduced impact
• Costs of just in time

  Suppliers who are reliable are required,

  Production can stop if stock is not delivered when required,

  Less environmentally friendly as more journeys with less stock,

  Delivery costs higher due to more journeys
• Features of effective warehousing

  Ground level only

  
  

  Mechanical forklifting

  
  

  Suitable environment for products

  
  

  Large loading bays with easy access

  
  

  Technology utilised to improve speed and accuracy
• What is ethical


  describes practices which display thought for the treatment of humans and animals in the production process
• What is environmental


  refers to issues relating to how an organisation helps to take care of the planet
• What is impact


  Who does my decision affect or harm?
• What is fairness


  Will my decision be considered fair by those affected?