Operations

Question 1

What’s a supplier

Answer 1

Suppliers are companies that provide goods or services that a company or business requires producing its products or achieving its aims.

Suppliers can influence a business’s ability to produce a product or provide a service.

Question 2

What are the factors that can influence a businesses choice of a supplier

Answer 2

price
location and transport costs
lead time
product quality
reliability
Reputation

Question 3

Describe PRICE that influences a businesses choice of supplier

Answer 3

The price of supplies will have a direct effect on how much it costs the company to produce a product. A higher cost ofraw materialswill lead to a highercost of production. If a company can find a cheaper supplier, it could lead to increased profit.

Question 4

Describe LOCATION & TRANSPORT COSTS that influences a businesses choice of supplier

Answer 4

If a supplier is located near to your company the transport and delivery costs will be lower. If the product being supplied isperishableit would be better to source a supplier close to your business as they will be able to deliver the goods quickly.

Question 5

Describe LEAD TIME that influences a businesses choice of supplier

Answer 5

the amount of time taken between an order being placed and an order being received. Some companies will require stock tobe delivered quickly especially if the products are perishable or the company is usingjust in time (JIT)stock

Question 6

Costs and risks of overstocking

Answer 6

Money tied up in inventory could be invested elsewhere in a business.
Inventory can go out of fashion or spoil meaning the business will have to write it off as a loss.

Having too much inventory results in higher storage costs in terms of both overheadsand security.

Having too much inventory is better than having no inventory, as this would prevent any production. Overstocking has the benefit that it allows a business to meet any unexpected orders. But as a rule, it makes financial sense for businesses to keep down the amount of stock they hold.

Question 7

Costs and risks of under stocking

Answer 7

Business cannot fulfil orders on time.
Production may stop due to the lack of available materials.

It will never be possible to meet unexpected large orders.

The business will be viewed as unreliable, and its reputation will be damaged.

Question 8

Describe RELIABILITY that influences a businesses choice of supplier

Answer 8

If a supplier does not deliver at the agreed time, or with the correct goods, this can affect a business’s ability to produce and deliver their product to the customer

Question 9

Describe REPUTATION that influences a businesses choice of supplier

Answer 9

Suppliers that have a good reputation will be more likely to fulfil orders on time and provide a high-quality product. If a supplier has a bad reputation, you may not be able to rely on them to provide the quality supplies that your company requires.

Question 10

What to think of when choosing a supplier

Answer 10

Does the supplier offer discounts?
Does the supplier offertrade credit?
Are there any additional charges?
Can the supplier deliver on time?
Are the supplier’s prices competitive?
Is the supplier able to supply the quantity needed?
Are the supplier’s goods of an acceptable quality?

Question 11

What is inventory management (stock)

Answer 11

Inventory is the materials held by a business in order to produce the product being sold

Question 12

What are the three different types of inventory

Answer 12

Raw materials
Works in progress
Finished goods

Question 13

How does a business mange inventory

Answer 13

Businesses will have a system in place to ensure they have sufficient inventory held in thewarehouse.
The system may utilize modern technology.

For example, barcodes may be used on products to relay information about sales to the warehouse via an ICT system. Then when the inventory reaches a set level or trigger point the business will be alerted to reorder and restock the levels of inventory.

Businesses must avoid the problems of having too much inventory, calledoverstockingand the problems of not having sufficient inventory, calledunderstocking.

Question 14

What IS methods of production

Answer 14

The way a product is made will vary depending on:
the type of product
how specialized or customized the product is
the level of skills required by the workers

Question 15

What ARE the methods of production

Answer 15

Job production
Batch production
Flow production

Question 16

What is job production

Answer 16

Job production concentrates on producing one product from start to finish. Once one product is complete, another can begin. It is highly specialized and very labor intensive.

Some examples:
making a wedding dress
painting a house
building an oil rig

Question 17

What are the advantages to job production

Answer 17

High quality product
Can customise orders
Workers involved in tier production start to finish

Question 18

What are the disadvantages to job production

Answer 18

Production cost likely to be high
Production time might be longer
Investment in machinery might be higher as special equipment might be needed

Question 19

What is batch production

Answer 19

Batch production enables items to be created stage by stage in bulk (‘a batch’).
Used in food production
Example croissants

Question 20

What are the advantages to batch production

Answer 20

Allows flexible production

Inventories of part-finished goods can be stored and completed later

Question 21

What are the disadvantages to batch production

Answer 21

Making many sale batches can be expensive

If production runs are different there might be additional costs and delays preparing equipment

Question 22

What is flow production

Answer 22

Flow production is also known as continuous production. It enables a product to be created in a series of stages on.anassembly line.

Large numbers of the same goods are produced continuously in this production process.
Example car assembly plant

Question 23

What are the advantages to flow production

Answer 23

Automatic assembly lines saves money and time

Quality systems can be built into the production at each stage

Question 24

What are the disadvantages of flow production

Answer 24

Standardised product used

Workers find work repetitive and boring

Question 25

What is quality

Answer 25

Those features of a product or service that allow it to satisfy customers’ requirements. “Fit for purpose!”

Question 26

What is quality methods

Answer 26

This section of operations looks at ways of improving the quality of the products or services that the firm produces or delivers The ways in which a firm can improve the quality are

Question 27

What are quality methods

Answer 27

``` Quality Control Quality Assurance Benchmarking Quality circles Total quality management BSI Other trade organisations. ```

Question 28

What is quality assurance

Answer 28

This is where the manufacturer checks the quality of the product at regular intervals throughout the production process All aspects of the process are looked at to ensure there are no errors

Question 29

What is quality control

Answer 29

This where the manufacturer passes a sample of their raw material and the final product through a quality control check Unacceptable products are discarded as waste or reworked to the acceptable standard

Question 30

What is quality circles

Answer 30

Small groups of workers meet at regular intervals to discuss where improvements can be made to the production process Suggestions are made to management for approval before being implemented Production workers know more about the production process than “managers” Workers are motivated by being involved and consulted about production problems (empowerment).

Question 31

What is benchmarking

Answer 31

Benchmarking is the process of setting competitive standards, based on the achievements of other firms, against which an organisation will monitor its progress Benchmarking tends to focus on the “best in class” companies, but for specific functions a company may compare itself to an organisation in a different industry.

Question 32

What are the types of benchmarking

Answer 32

Internal - comparison with a function within the organisation External - comparison with other organisations Competitive - direct comparison with a competitor Generic - comparing general business activities (eg recruitment) Customer - contrasting the level of fulfilment of customer expectation.

Question 33

What is the British standards intuition(BSI)

Answer 33

BSI is an organisation that produces national standards for certain products A ‘Kite’ mark symbol is awarded to products that are proven to have met certain quality and safety standards Although the paperwork and process of achieving the standard is lengthy, it provides the organisation with a competitive advantage as consumers have confidence in their product Various International Standards (IS) can also be achieved.

Question 34

What is other trade organisations

Answer 34

Certain trade organisations introduce standards and logos to be displayed on products to say they have met agreed standards of quality and safety.

Question 35

What is quality management

Answer 35

This is a system of getting it right first time every time! From the suppliers’ quality procedures through the manufacturing process and onto the retail quality controls and distribution No errors are tolerated! All staff, regardless of their position or job are expected to be involved in ensuring a quality end product Every aspect of the business is scrutinised Staff recruitment and training are viewed as essential Constant auditing of processes to ensure they are working Teamwork and employee empowerment at all levels of the organisation are seen as essential.

Question 36

What is labour and capital

Answer 36

All production operations combine the two factors of labor and capital. The importance of labor and capital to a specific business are described in terms of their intensity.

Question 37

What is labour intensive

Answer 37

Labour intensive is when products are mainly produced by human workers. Machines and special tools may be used too, but overall it requires human creativity and effort to produce the product.

Question 38

What are the advantages to labour intensive

Answer 38

Customised products are easier to make Less expensive machinery costs Humans can use their own initiative and problem solve

Question 39

What are the disadvantages to labour intensive

Answer 39

Quality of products can vary due to the worker Skilled workers take time to train Skilled workers will be paid more than others

Question 40

What is capital intensive

Answer 40

Capital intensive is when products are mainly produced by machines and robots, meaning the initial outlay and maintenance, will be very high.

Question 41

What are the advantages to capital intensive

Answer 41

Less employee wage and costs Quality can be standardised Machines can work 24/7

Question 42

What are the disadvantages to capital intensive

Answer 42

More difficult to customise in orders Breakdowns in production can be costly Initial set up costs for machinery high

Question 43

What is ethical and environment

Answer 43

All businesses must be socially responsible and adhere to government guidelines on how they can operate in terms of their effect on the environment and disposal of waste.

Question 44

What are the ways a business can operate ethically and environmentally

Answer 44

Renewable energy- solar panels or wind turbines could be used to help generate some of the electricity used in the production of products. This would reduce carbon energy consumption and in turn reduce energy costs incurred by the business. Reduce energy consumption- special controls can be fitted to lights and machinery so they automatically switch off when not in use. This would reduce energy consumption. Reduce transport- reducing transport requirements will reduce the carbon footprint of the organisation and will reduce pollution. Recycling- using recycled packaging or recycling waste products would mean that an organisation may reduce production costs and meet their environmental aims. This would also reduce the amount of rubbish that goes to landfill sites.

Question 45

Costs of recycling (cons)

Answer 45

Recycled material may reduce the quality of the finished product Image of the product may be perceived as inferior Recycled materials need to be sorted which takes time

Question 46

What are the benefits of recycling

Answer 46

Can save money if recycled materials are used to make products Can be used as a unique selling point Reduces cost as landfill is required

Question 47

What is minimising packaging

Answer 47

Businesses use packaging to help preserve their product, transport it, protect it from damage and to attract customers. To help the environment and reduce costs most businesses aim to reduce the amount of packaging they use.

Question 48

Costs of minimising packaging (cons)

Answer 48

Increased risk of damage due to the insufficient packaging | May become less attractive to customers

Question 49

Benefits to minimising packaging

Answer 49

Can improve brand image | Reduces cost because landfill is required