Escolar Documentos
Profissional Documentos
Cultura Documentos
OPERATIONS
Learning Outcomes
Input, process, output Purchasing mix choice of supplier Factors affecting choice of supplier Purchasing stock Stock control Just-in-time production Methods of production job, batch, flow Advantages and disadvantages of each method Quality Quality Control, Total Quality Management, Quality Circles, Benchmarking
What is Operations?
Everyone has needs and wants. These can be goods or services. The operations area of the business is the transfer of raw materials into a finished article offered for sale. This is sometimes called Production.
Operations
Raw Materials Manufacturing
INPUT
PROCESS OUTPUT
Finished product and distribution Customer
Which supplier?
A business must consider the following when choosing the right supplier of materials:
STOCK CONTROL
The purpose of holding stocks is to have a supply of goods (raw materials) available for the production process and for distribution (finished goods) to customers when needed.
Supplies are available when needed Any increase in demand can be met Discounts - for bulk buying Customers orders can be met immediately
Warehousing Insurance Labour costs involved in stock control Risk that the money value of stock will fall eg due to changes in fashion
Businesses will have an effective stock control policy. Decisions will be made on Maximum Stock Level, Minimum Stock Level and Reorder Level. Depending on usage and Lead Time.
Businesses must have an effective stock control policy for each item of stock:
Maximum level decided by the space available, the production needs, buffer stock and delivery time Minimum level this is decided by the need for a buffer stock to allow new supplies to be delivered before old stock runs out Re-order level the point when new stock is automatically re-ordered, determined by delivery times etc.
Stock
Maximum Level
Materials are only ordered when required for production No emergency or back-up stocks are held Close linkage with the firm and suppliers Cost savings are made as stock levels are almost nonexistent Computers can be used to connect demand, production and delivery
PRODUCTION
METHODS OF PRODUCTION
JOB PRODUCTION
This is when a product is made individually to meet specific orders from customers. Often involves skilled labour or craftspeople. It is labour intensive. EXAMPLE: A designer dress is made from start to finish
ADVANTAGES It meets the customers needs and is produced to their own specifications More motivating for workers as they see the product through all stages of production
DISADVANTAGES High labour costs as the process is labour intensive. Higher wage bill as the workers are highly skilled Costs are not recovered until the completion of the project
BATCH PRODUCTION
This is where a range of similar products are made. Workers usually specialise in one job, so become skilled in one area. EXAMPLE: one batch of white bread is made from start to finish, then a batch of brown rolls will be made from start to finish.
ADVANTAGES Batches can be changed to meet the requirements of the customer Less skilled workers are required as only one part of the process is completed by a particular person
DISADVANTAGES Careful planning is needed for the operation to run smoothly Workers motivation is reduced because they do not see the process from start to finish
FLOW/MASS PRODUCTION
This is the continuous production of the same good. It is used for making large quantities of an identical product. Economies of scale can be made with this process.
ADVANTAGES Economies of scales can be met due to the large production of goods
DISADVANTAGES A large amount of money is required for set up costs Each product is identical Lack of motivation for workers because they only work on a small part of the process
Division of Labour
Both batch and flow production use division of labour which means that each worker specialises in one job on the production line this makes the job very repetitive and boring. Many of these jobs have been replaced by machinery. This has caused unemployment for unskilled workers. It is more common for workers to be multi-skilled and do different jobs, or work in teams.
Quality Control
Quality Control is the checking of a product or service by carrying out an inspection. This usually happens at the end of the production process. May lead to large amounts of waste.
Quality Standards
Many products are made to standards which are laid down by quality assurance bodies, such as the British Standards Institute (BSI). The organisation draws up a standard for a wide range of products such as the ISO 9000 award and the Kitemark.
TQM is a method by which a business focuses on quality by making it an important aim of every worker in the organisation. Samples of products are tested at random and at different stages of the production process.
TQM
Benefits
Barriers
Improved product Increased productivity Reduced wastage of resources Increase in profitability/market share
Quality Circles
Working group consisting of representatives from both management and employees. Aim is to discuss ways of improving the production process. Benefits are:
Employees are engaged and motivated New ideas which improve efficiency Increased productivity Improved employee relations
Benchmarking
This is where one business compares itself to another similar organisation, usually the market leader. By doing this a business can identify what it is required to do to remain competitive.
Customer Service
Customers need to be treated well by all employees Any queries or complaints should be dealt with in a calm and knowledgeable manner otherwise pass to a senior colleague Customer Service Departments will have set procedures to deal with after sales; complaints and to give information and advice. Poor customer service can lead to
Loyalty and repeat sales Customers recommendations leading to new customers Good Reputation leading to increased sales etc.