Business Operations Flashcards
(25 cards)
What are business operations?
The activities needed for the business’s day-to-day functioning
What does a supply chain consist of?
The group of firms involved in the various processes to make a finished product or service:
- Supplier - provider of raw materials
- Manufacturers - make products
- Distributors - usually buys products from manufacturer and sell to businesses
- Retailers - sells to customers
What are 3 important factors to consider when choosing a supplier?
- Price - total cost of getting product
- Quality - needs to be consistent
- Reliability - need to deliver high quality products - on time
What is procurement?
Means finding and buying things that a firm needs from suppliers outside the firm
What are logistics? (in supply chains)
Means getting goods and services from one part of the supply chain to another
Why is having effective procurement and logistics systems important?
Improves efficiency of a business
- Business will have the supplies it needs at the right time - so no breaks in production and no wasted materials
Could reduce overall costs
- if supplies are bought at best price and doesn’t waste money by being inefficient overall costs will be lower - Reduces unit cost
Why is managing a supply chain effectively important?
- Good relationship with suppliers - make sure processes are being carried out in efficient and cost-effective ways
- Can find best price and value
- Reducing waste and unnecessary costs - can make business more efficient (e.g if trucks are only ever half full then can buy smaller, cheaper trucks)
What is job production?
Making one thing at a time
- Makes individual, unique products based on customer’s specification
Often require high skilled labour - have high labour-to-capital ratio (lots of workers are needed
Highly labour-intensive
- Expensive but high quality
E.g suit tailors
What is flow production?
AKA mass production
Continuous production of identical products
Aim is to gain from economies of scale so have low average unit cost for competitive prices
Highly capital-intensive (needs a lot of money for machinery and space for product storage)
Used for mass market products
E.g chocolate, phones, TVs
What is lean production?
Where a business aims to use as few resources as possible and have as little waste as possible
Makes production more efficient
What is just-in-time (JIT) production?
A form of lean production
Aims to keep stock levels at a minimum (preferably zero)
Ideally all raw materials come in one door, are made into products and go straight out
Computer systems are usually used to calculate stock levels and automatically order more when supplies are needed
What are the two methods of managing stock?
Just-in-Time (JIT)
Just-in-Case (JIC)
What are the benefits and drawbacks of using Just-in-Time to manage stock?
Benefit:
- Reduces cost of having to keep stock
Drawback:
- Requires lots of coordination between firm and suppliers
- Needs frequent deliveries - more costly for firm
- If don’t come in time can run out if stock
- Buy in small quantities so no economies of scale
What is Just-in-Case production? What are the benefits and drawbacks of using Just-in-Case to manage stock?
Method of operating a product and distribution with buffer stocks
Benefits:
- Not effected if there is a supply shortage / customer demand increases unexpectedly / problem with deliveries of raw materials
- Always enough to satisfy demand
Drawbacks:
- Can be left with stockpile of items - can be costly to store
What are the benefits and costs of maintaining quality?
Benefits:
- Higer price - customers will pay more for better products as long as its a good value for money
- Increased sales - the customers are likely to make repeat purchases
- Better reputation and image - new customers will be attracted and existing customers will stay (loyal customers)
Costs:
Staff training - need better training for better products
Inspection - need quality checks - costs time and money
What can the costs be of failing to maintain quality?
- Disrupted provision of services - may disrupt services and lose potential sales
- Product recalls - products need to be safe or they may have to be recalled - customer would get refund or replacement which can be costly and negatively affect their reputation and image
What are three different ways a firm can measure quality?
- Specify the physical properties of a product (e.g colour/ingredients) and test a random sample to make sure they meet the specifications
- Monitor how many products get returned and amount of customer complaints
- Carry out customer surveys to assess customer satisfaction
What three stages of production are the products usually checked?
Stage 1: Check raw materials from suppliers
Stage 2: Random samples taken to check quality of work in progress
Stage 3: Random samples taken of finished products - removed if standard is not met
What is the Total Quality Management (TQM) strategy?
Aims to make quality the responsibility of every employee in the firm - quality remains consistent
Getting things right the first time reduces costs by cutting down waste
After-sales service as well as quality of production to increase customer satisfaction
Downside - Takes a long time to introduce - workers may need training - employees can get demotivated because of extra work
Why is rapid growth of a business bad for quality? What is a solution?
It’s output for products must increase rapidly
- Some corners may be cut like some quality inspections to make products quicker
Solutions:
- Take on new employees (takes time to train new workers)
- Business might become a franchisor - making sure quality is maintained (can involve staff training and regular inspections - expensive)
- Business may outsource some tasks (can be expensive but cheaper firms may fall in quality)
What six steps might a sales process involve?
- Finding potential new customers - ask people to leave contact details
- Approaching potential customers - contact the people
- Assessing the customer’s needs - find out what the people want
- Presenting - telling them about the product - persuading them to buy one
- Closing - getting them to formally agree to buy the product
- Follow-up - making sure the customer is happy with the product
How can firms provide great customer service throughout a sales process?
1 - Have excellent product knowledge
- questions can be answered quickly and accurately
- can sell product best suited to customers needs
- customers feel more confident when buying
2 - Engaging well with the customer
- ensure every experience with the customer is as positive as possible
- make customer feel important and valued
3 - Offering post-sales service
- firm needs to be available for customers after as well - some businesses have after-sales helplines
- some products may need to be serviced throughout their lifespan (e.g cars and boilers)
How are customer services developing?
1 - Websites and E-commerce
- Companies may buy and sell goods online - easier for customers
- Many sites provide answers to frequently asked questions (FAQs) - also have contact details to make enquiries or complain - some have live chats so employees and customers can speak immediately
- Some firms let customers make online accounts to access services on the web (e.g top up phone credit)
2 - Social Media
- Includes websites and apps to - communicate and share content online
- Easy for customers to contact business - can be seen by everyone so business must respond quickly and kindly for positive image
What are the benefits of good customer service?
- High levels of customer satisfaction - more loyal customers and repeat purchases
- Customers may be persuaded to spend more
