Topic 3

• What is production?

  Production is the process of turning raw materials into goods and services that can be sold.
• Describe the production process.

  Inputs -----> Transformation -----> Outputs
• What are the types of production?

  • Job production
  • Flow production
• What are the benefits and drawbacks of job production?

  Benefits:

  • products are likely to be higher quality.
  • the variety of work may mean employees are less likely to become bored and demotivated at work.

  Drawbacks:

  • expensive to produce as each product is different.
  • employees need to be skilled and may require training.
• What is flow production?

  The continuous movement of items through the production process. Flow production uses production lines to manufacture products.​
• What are the advantages and disadvantages of flow production?

  Advantages:

  • the business is able to produce large volumes of products.
  • employees can specialise in a small number of tasks. This is also known as division of labour.
  • producing in large quantities reduces the cost per unit.

  Disadvantages:

  • High initial costs of machinery to set up the business.
  • A lack of flexibility, as all products need to be identical or fairly similar.
  • Employees may become bored or demotivated due to their limited range of tasks.
• What is efficiency?

  Efficiency is how well a business uses its resources to produce products.
• How do we measure efficiency?

  A business can measure its efficiency by calculating the cost of producing one product or unit. This is known as the average unit cost. The lower the average unit cost, the more efficient a business is.
• What is lean production?

  An approach to production hat aims to minimise wasted resources whilst ensuring quality.
• What are the different types of ways that firms create waste?

  • Over production - leading to products that are not demanded.
  • Waiting time - for stock to arrive/breakdowns to be resolved.
  • Transport - deliveries not arriving when they are expected.
  • Stock going out of date/fashion.
  • Motion - in terms of the production line.
  • Defects - quality issues.
• What is just-in-time (JIT) stock management?

  Just in time means inputs arrive and outputs are produced just when they are needed.
• What are the benefits and drawbacks of just in time?

  Benefits:

  • Having less stock that could go out of date will reduce waste.
  • Smaller but more frequent deliveries mean that the products will be fresher.
  • JIT reduces production costs.

  Drawbacks:

  • It can be hard for businesses to react to unexpected changes in demand.
  • Businesses are unable to use bulk-buy discounts if they only buy in small quantities.
  • Customers could receive a poor service if the business misjudges the amount of stock it needs and allows products to go out of stock.
• What is meant by kaizen (continuous improvement)?

  A firm that has implemented kaizen introduces constant small improvements to its business processes.  Employees are encouraged and are often best placed to suggest improvements, as they deal with the processes on a daily basis.​
• What are the advantages of kaizen?

  • Improves quality and efficiency.
  • Easier to implement, as ideas come from the employees.
  • Improves motivation and productivity.
  • Reinforces team working.
  • Improves staff retention.
• What is the role of procurement?

  Procurement is the whole process of managing the ordering and receipt of the goods or services in the business.
• What does procurement involve?

  • Deciding what is needed​
  • Selecting suppliers​
  • Terms of payment​
  • Negotiating contracts between the business and its suppliers​
  • Managing how goods are ordered and received​
  • Managing logistics ​
• What is meant by just in case stock management?

  The business holds buffer stocks of raw materials/finished goods just in case there is a problem with deliveries or there is an unexpected surge in demand​.
• What are the benefits and drawbacks of just in case stock management?

  Benefits:

  • Increases the level of customer satisfaction.
  • Reduce the chance of running out of stock.
  • Benefit from bulk-buy discounts.

  Drawbacks:

  • Buffer stock space requires more storage space at more cost to the business.
  • Products kept in stock for a long period of time may lose their freshness.
  • High amounts of cash tied up in stock.
• What is a supplier?

  A business or individual that provides goods or services to a business.
• What are the factors that affect a business' choice of suppliers?

  • price
  • quality
  • reliability
  • communication
  • capacity
  • reputation
  • speed of delivery
  • flexibility
• What is logistics?

  A process which plans, implements and controls the distribution and storage of goods and services from when they are received from the supplier to when they are delivered to the customer.​
• What is the supply chain?

  The network of organisations that get products to customers.

  
• What does the supply chain management do?


  Ensures that the right quantity of goods are in the right place at the right time and these are provided at the right quality and at a price that represents value for money.​ This should create value for the customer and profit for the businesses within the supply chain.​
• What are the benefits of effective supply chain management?

  • Increased efficiency
  • Lower unit costs
  • Competitive advantage
  • Improved flexibility
• What are the potential problems of supply chain management?

  • Quality can suffer if costs are driven down too low e.g. suppliers may not be dedicated if they are not paid a fair price​.
  • Sophisticated IT systems to monitor the supply chain can be expensive to implement​.
  • Reliance on other members of the supply chain means a business does not have full control over its operations​.
• What is meant by quality?

  A product is of good quality if it meets the needs and expectations of the consumer.
• How do we judge quality?

  • Design
  • Functionality
  • Reliability
  • Consistency
  • Durable
  • Good after sales service
  • Price/value for money
• What are the consequences of quality issues?

  • Loss of customers
  • Reputation of the business goes down
  • Costs of recalling, scrapping, re-working/re-making
  • Costs of replacements
  • Costs of reducing the price of products that no-one wishes to buy
  • Legal action might be taken against the business
• What are the benefits of greater quality?

  • Customer satisfaction
  • Repeat purchase
  • Customer recommendation
  • Lower marketing costs
  • Higher customer loyalty
• How can quality be measured?

  • Level of product returns
  • Mystery shoppers
  • Customer loyalty
  • Customer complaints
  • Customer satisfaction rates
  • Failure/reject rates
• What is quality control?

  Traditional method in manufacturing.  All or a sample of products are checked at the end of the production process.​
• What is Total Quality Management (TQM)?

  Total quality management is a quality assurance approach where all employees have a target of ‘zero defects’ and are therefore responsible for quality, through ensuring that their ‘internal or external’ customers are fully satisfied. As part of this initiative, quality circle meetings may take place, involving staff from all levels of the business.​
• What are the advantages and disadvantages of TQM?

  Advantages:

  • cost reduction.
  • increased efficiency.
  • increased customer satisfaction.
  • reduced waste and errors.

  Disadvantages:

  • the cost of training.
  • can be difficult and time consuming to introduce.
  • all employees must believe in TQM for it to be successful.
• What is quality assurance?

  Quality assurance is a process of carrying out quality checks at specific stages during the production process. This ensures that faults and sub-standard products are found sooner rather than at the end of the production process

  Quality assurance makes quality the responsibility of the employees involved in the production process. 
• What is customer service?

  The methods used by a business to look after its current and future customers.
• What are the methods of good customer service?

  • Product information knowledge
  • Customer engagement
  • Post sales service
  • Good or service meets the needs of customers
  • Manage customer expectations
• What are the benefits of providing good customer service?

  • Increased sales
  • Customer retention/loyalty
  • Word of mouth promotion
  • Enhanced public image
  • More effective workforce
  • Lower costs
  • Improved profitability
• What are the dangers of providing poor customer service?

  • Loss of loyalty
  • Loss of sales
  • Customers may not report problems
  • Unhappy customers spread the word
• What are the benefits to a customer of the use of e-commerce?

  • Convenience - products can be viewed and purchased at any time of day from any part of the world​.
  • Ability to see reviews of products which can inform purchasing decisions​.
  • Access to online support or chat to help with product selection.​
  • Customers may be able to compare products, before purchase, between different firms to gain the lowest prices​
  • Personal information and payment details can be saved to make checkout faster​
  • Preferences can be saved and products recommended based upon purchase history​