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Business Operations Flashcards

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1
Q

Define production (or operations) management

A

All the activities in managing the transformation process.

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2
Q

Define production

A

Process of changing inputs such as labour services into goods and services that can be sold

Inputs ——> Transformation ——> Outputs

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3
Q

Define job production

A

Method of production in which a product is supplied to meet the exact requirements of a customer

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4
Q

State four examples of job production

A

Garden design

Tailors

Personal trainers

Restaurants

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5
Q

When is Job production used?

A

When a customer requires individual, unique products with a unique design based on the customer’s specification

When it is not possible to use technology to produce large quantities of similar products

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6
Q

What are the four advantages of job production?

A

As workers are skilled, they are paid more than those who make products by flow production. As a result, productivity is high and staff motivation throughout the entire hierarchy is high

The business can justify higher prices because it supplies a personal service. This can help compete over larger rivals and gain greater market share, whilst maintaining profit

Products are usually very high quality, which attracts consumers and stimulates customer loyalty and attraction to the business activity

Flexible

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7
Q

What are the two disadvantages of job production?

A

Requires the recruitment and training of highly skilled labour and there is a high labour-to-capital ratio. This means that production can be very labour intensive and so business owners need to make an opportunity cost: increase employees’ wages, or risk declining motivation and productivity if investing in other areas such as expansion

Expensive and takes a longer duration of time than flow production. Unless the business is sure it can charge high prices, it may find it difficult to make a profit

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8
Q

Define flow (mass) production

A

When an item moves continuously from one stage of the process to another. All products are identical and the aim is to produce as many outputs as possible along an assembly line

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9
Q

When is flow production used?

A

As demand increases and firms need to produce on a large scale

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10
Q

When considering which production method is appropriate for a particular business, what should be taken into account?

A
  • The cost
  • The level of demand
  • The need for flexible production
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11
Q

What are the advantages of flow production?

A

Allows firms to produce huge volumes of output and therefore sales are rapid assuming the demand is there

Allows for specialisation or division of labour. This can speed up the production process and makes staff more productive. It also makes it easier to recruit and train staff because recruits have fewer tasks to learn

It has relatively cheap average unit cost so businesses experience economies of scale and so can sell for competitive prices, whilst increasing profit. Technical economies of scale may also be observed because these businesses can afford to buy and operate more advanced machinery such as robots. The law of increased dimensions states that a factory that is 10x as big will be less than 10x expensive

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12
Q

What are the disadvantages of flow production?

A

Highly capital-intensive. A production line can cost millions of pounds

It is risky. The danger is that demand will decline and expensive equipment will not be used efficiently. If the business ends up producing only a few items, this results in increased average unit costs and so diseconomies of scale

Lacks flexibility. It is not possible to produce to the exact specification of the customer

Specialisation and division of labour can lead to dissatisfaction. Absenteeism and a high proportion of people leaving can be expensive and disruptive

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13
Q

Define specialisation or division of labour

A

When the production process is broken down into a series of stages, allowing staff to focus on a limited number of tasks and become more efficient in what they do through repetition

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14
Q

Define efficiency

A

How well a business is using its resources to produce

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15
Q

How can the efficiency of a business be measured?

A

Observing the average unit cost. If a business does not use many resources to produce, then its cost per unit should be low

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16
Q

What factors impact efficiency?

A

How well employees are managed

How good suppliers are

Investment in machinery and technology

The way in which products are produced

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17
Q

What are four examples of waste in a business?

A

Items that have to be thrown away or donated if production exceeds demand

Wasted time

Faulty products that need to be re-made

Holding stocks and buffer stock that can get damaged or stolen

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18
Q

Define lean production

A

An approach to production that aims to minimise waste and increase efficiency

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19
Q

What are two types of lean production techniques?

A

Just-in-time production (JIT)

Kaizen production

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20
Q

Define JIT production

A

Producing to order; holding as little stock as possible. Items are ordered just in time to be used

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21
Q

Define Kaizen production

A

Continuous improvement. Aims to achieve change from a series of small steps in which all employees are involved in improving how things are done

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22
Q

What are the advantages of JIT production?

A

Reduces waste caused by throwing unwanted items away

Minimal stocks are held

Useful with technology. Computer systems calculate stock levels and automatically order more when required

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23
Q

What are the disadvantages of JIT production?

A

Degree of uncertainty. Suppliers must be able to respond very quickly to orders and must deliver functional products

Businesses can’t always predict the level of demand

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24
Q

What is the impact of lean production on employees?

A

Managers need to work closely with employees to make sure that relations between them are good and there are no stoppages

Kaizen requires employees to be motivated and wanting to help in finding better ways of doing things

To avoid waste, employees need to check the quality at every stage of the process. This requires additional training and some may view it as more work and become demotivated

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25
To be effective, lean production needs a workforce that is ___________ and wants to help. This means that the ______ style must encourage _______ and _______. The business will all also need to focus on preventing mistakes rather than _______ them and on working with ______ that can produce just in time
Co-operative Management Involvement Participation Fixing Suppliers
26
What are the two types of stock control?
JIT stock control JIC stock control
27
Why are stocks important for a business?
Required to operate and produce. Having stocks can also be attractive because it may mean you have a wide range of products to show customers
28
Why are stocks disadvantageous to a business?
All the money that is invested into stock could be in the bank earning interest; this means stock has an opportunity cost Unsold stock has to be discounted or discarded, leading to far less profits forecasted
29
Why is context important when recommending how to manage stocks?
The nature and importance of stock will vary from business to business. For example, a supermarket will hold significant amounts of stock on its shelves - this represents money tied up in stock; there are millions of pounds worth of goods on the shelves at any moment
30
What are the advantages of Just-In-Time stock control?
There is less money tied up in stock and a lower opportunity cost There are fewer materials to be damaged or stolen while waiting to be used by consumers Reduced cost as there is less space needed to warehouse stocks. This land can be therefore sold off and reinvested back into the business, or put to another use
31
What are the disadvantages of Just-In-Time stock control?
There are more deliveries, so this may have an environmental impact and cost more. High carbon dioxide emissions that result in global warming is poor for brand image and their attitudes to sustainable business activity and so may deter environmentally conscious customers away from the activity of the business The business is vulnerable to any delays from suppliers as this will halt production The business looses out on purchasing economies of scale as firms only buy small quantities of stock at a time rather than in bulk
32
Define Just-in-case (JIC) production
Holds stocks just in case there is a delay from suppliers or a sudden unexpected increase in demand
33
Define purchasing economies of scale
Occurs when the cost per unit falls if large orders are placed with suppliers due to a bulk discount
34
Businesses need to balance the advantages of a JIT approach (which means the business is leaner) with a JIC approach (which means the business has spare stock if demand increases). The trend in recent years has been towards a JIT approach
Understand this concept
35
Zara orders smaller amounts of stock very frequently. This means that it can respond quickly to changes in fashion and change its stocks regularly. It has very little stock at any moment so rarely has to reduce the price to sell it. This helps improve profits. However, it does have to pay for frequent deliveries. What is this type of stock control?
JIT stock control
36
Uniqlo holds large quantities of relatively few product lines. It orders classic and timeless items in bulk, enabling it to benefit from economies of scale and relatively few deliveries. What is this type of stock control?
JIC stock control
37
What are the advantages of JIC stock control?
Can meet sudden increases in demand due to buffer stock Lower risk if there are problems with suppliers Benefit from purchasing economies of scale by buying large quantities in bulk. This means less transport costs and environmental impact due to infrequent deliveries
38
What are the disadvantages of JIC stock control?
Holds stocks that might expire and need to be discounted or thrown away, meaning it is less lean Higher stockholding costs due to buffer stock held just in case
39
Define Jidoka
Jidoka is a lean manufacturing concept that means when a problem occurs, the production line stops immediately, preventing defective products from being produced
40
State three types of supplies a business may invest in
General items such as energy, cleaning products and telephones Materials used in production such as engine parts and seats for a car factory Purchases used to create the production process such as production line equipment in factories
41
Define procurement (or purchase)
Involves selecting suppliers, establishing the terms of payment and negotiating the contract
42
Define the supply chain
Refers to all the businesses, people and activities that take part in the production processes from the start until it gets to the customer
43
Example of a supply chain
A supermarket may sell a packaged meal that was produced by a business that bought its vegetables from another business that bought this from a farmer who bought tractor equipment from another supplier Businesses now trade all over the world and so the supply chain can be very complex. On the shelves of your local supermarket, think of how many different businesses were involved internationally to get those products on the shelves
44
What is the value of dependable, effective supply chain management?
If suppliers can produce efficiently, this will reduce the costs of the business and enable it to provide its products at a better price or increase its own profit margins If suppliers provide quality products, this will help reputation and attraction. There will be minimal problems with defects and returned items Cuts any waste and unnecessary costs to create a streamlined process and fast production times If suppliers are reliable and deliver quickly, a business can hold relatively little stock because it can be replaced, reducing stockholding costs. The business will not run out of stocks and can meet demand
45
What are the factors affecting the choice of suppliers?
The costs The quality The range of products that can be supplied The speed of delivery The flexibility of the supplier The reliability of the supplier The reputation The payment terms The contract terms (For example, what financial compensation would be paid if deliveries were late)
46
Define logistics
Refers to the movement of goods, services, information and money throughout the production process
47
What are the effects of having effective procurement and logistics on a business?
Improves efficiency as the business will have what is required due to effective logistics. This means that there will be no breaks in production and materials do not have to be wasted Reduces overall costs, time-efficient and reliable
48
Students should be able to analyse the factors that affect the choice of suppliers for a given business
Note!
49
Define quality
Quality products are those that meet the customer’s requirements. A business should set targets for its operations to achieve this
50
Once a business has set standards for quality, it can then measure whether or not these have been achieved. How can this be measured?
Customers -> complete surveys. The business may also undertake other forms of primary market research Mystery visitors -> use the product in secret to test the quality of the service. Provides an outsider’s view, however staff may feel spied on Staff -> check the quality of the work done, either at each stage of the process or at the end
51
What is quality control (QC) and quality assurance (QA)?
QA is where systems are used to prevent defects from occurring (prevention) QC is where systems are used to ensure a final good or service meets a certain level of quality to prevent issues (inspection)
52
What are the consequences of quality problems?
- Customer dissatisfaction - Cost of recalling faulty products - Cost of replacing goods - Cost of waste - Cost of legal action if the business is sued HOWEVER, it depends on how the company also responds and the scale of the issue. If the business reacts quickly and fairly such as through compensation, customers may be comfortable being confident in the firm’s quality again
53
How can a business maintain consistent quality?
- Make suppliers reliable and high quality - Train staff - The business may become a franchisor, ensuring quality is consistent across franchises - The business may outsource some of its tasks to high quality firms - Invest in necessary equipment - Use Kaizen groups
54
Define total quality management (TQM). What are the advantages of a business using it?
An approach to quality in which everyone is focused on preventing errors occurring and ensuring quality at each stage of the production process Adv: Increased customer satisfaction and reductions in costs by cutting down on waste
55
Why might employees be resistant to TQM?
They have to monitor their own work and be prepared to return work that does not match quality standards. This is additional responsibility and can demotivate, reducing productivity
56
How can rapid growth make it difficult to maintain consistent quality?
The business may become overwhelmed with production and so increase the speed, leading to defects and cutting corners Quality control may become expensive New staff will need training and this is expensive —-> Businesses are scalable to a certain point. Decisions of maintains quality depend on the scalability of the business, as reduced costs have to be outweighed against the quality of service
57
What are the disadvantages of a business becoming a franchisor and outsourcing its tasks in terms of quality?
Ensuring quality across franchises is expensive, involves training and regular inspections It is expensive to outsource to a firm that delivers high quality. However, using a cheaper form can lead to a decline in quality so this is an opportunity cost
58
What are the benefits of maintaining quality?
- Improves brand and product reputation - Businesses can manipulate marketing strategies and justify higher prices due to consistent quality - Encourages customer loyalty - Additional sales
59
Define customer service
Customer service is the part of a business’ activities that is concerned with meeting customers’ needs as fully as possible
60
What are three methods of good customer service?
Product knowledge Customer engagement (being kind and helpful and improving satisfaction such as using one day delivery - HR and operations) Post-sales service
61
How is good product knowledge a technique used for good customer service?
- Helps inform decisions on products customers buy - Customer engagement with the product will be helped by trained staff that can recommended suited products. They may be able to sell additional products to go with their initial purchase - Employees will be more helpful and respond quickly to customer queries, increasing loyalty and confidence in buying from the firm
62
Define customer engagement
Occurs when customers have a positive experience from their contact with the business
63
Define post-sales or after-sales service
Meeting customer needs after they have purchased a product
64
How is post-sales service a technique used for good customer service?
- The business can deal quickly and fairly with complaints and defects - The firm may offer user training - Some firms have after-sales helplines
65
For hotels, shops and restaurants, why is maintaining premises important for customers?
- Customers expect good facilities - Disabled customers will feel dissatisfied if they are unable to utilise products - Premises should be clean - especially in culinary firms - Customers should be able to find their way around the premises such as in a hospital (sign posting)
66
What is the golden rule in customer service?
Do not over-promise. Make sure promises are met or exceeded
67
What are the benefits of good customer service?
- Helps businesses become competitive. It is one way in which businesses can be distinctive and employ differentiation strategies against rivals - Attracts new customers and therefore increases customer spend. This in turn increases customer loyalty and the profitability of the business. It may also lead to increased market share due to good publicity
68
Why does poor customer service occur?
Business promises too much and does not meet expectation Poor communication Poor management External factors such as delays from suppliers
69
What are the dangers of poor customer service?
Dissatisfied customers Poor reputation via word of mouth so difficulty attracting customers Reduction in revenue and profits
70
Define ICT
The computing and communication systems that a business might use to help to exchange information with stakeholders
71
How has using websites allowed customer service to develop?
- Increases product knowledge so customers can make informed decisions - Method of advertising the business activity and range of products, increasing sales - Can include answers to frequently asked questions and offer advice
72
Define E-commerce
The act of buying of selling a product using ab electronic system such as the internet
73
Define M-commerce
Buying or selling products through wireless handheld devices such as smartphones
74
Define global markets
Made up of customers from across the world
75
How has E-commerce and M-commerce allowed customer service to develop?
- Customers can view products at any time across the world, encouraging a global market - Customers can observe reviews - Customers may benefit from penetrated prices as online businesses do not have to pay high street rents
76
How has social media allowed customer service to develop?
- Accesses large numbers of existing and potential customers - Builds brand awareness - Form of marketing new products and collaborations - Businesses can get feedback from customers and monitor satisfaction through online surveys
77
How has data analysis allowed customer service to develop?
Businesses can remarket products to you through personalised advertisements to encourage sales Businesses can monitor shopping and browsing history to recommend suitable products Businesses can understand and predict sales and therefore know what to stock due to demand trends and behaviour
78
What are some steps in the sales process?
-Finding potential customers and approaching them -Assessing customer needs -Presenting -Closing -Follow-up

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