operations presentation
TRANSCRIPT
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SG BUSINESS
MANAGEMENT
OPERATIONS
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Learning Outcomes
Input, process, outputPurchasing mix choice of supplier
Factors affecting choice of supplierPurchasing stock Stock controlJust-in-time production
Methods of production job, batch, flowAdvantages and disadvantages of each methodQuality Quality Control, Total Quality Management,Quality Circles, Benchmarking
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What is Operations?
Everyone has needs and wants. These canbe goods or services.
The operations area of the business is thetransfer of raw materials into a finished
article offered for sale.
This is sometimes called Production.
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Operations
Raw Materials
Manufacturing
Finished product and distribution
Customer
INPUT
PROCESS
OUTPUT
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Which supplier?
A business must consider the following
when choosing the right supplier of materials:
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Which supplier? cont
Price the best price possible - a cheaper pricewill reduce costs and increase profits
Quantity ability to supply quantity required
Quality needs to be consistent
Reliability confidence that delivery quantitiesdelivered to a deadline
DeliveryTime
Some raw materials may be perishableand require speedy delivery
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STOCK CONTROL
The purpose of holding stocks is to have asupply of goods (raw materials) availablefor the production process and fordistribution (finished goods) to customerswhen needed.
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3 main types of stock are
Raw Materials resources
waiting to be used
Work in Progress semi-finished
goods in the processFinished Goods products waitingto be distributed
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Benefits of holding stocks are
Supplies are availablewhen needed
Discounts - for bulk buying
Customers orders canbe met immediately
Any increase indemand can be met
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Costs of holding stocks are
Money which is tied up instock might be put tobetter use
Insurance
Labour costs involvedin stock control
Warehousing
Risk that the moneyvalue of stock will falleg due to changes infashion
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Businesses will have an effective stock controlpolicy. Decisions will be made on Maximum
Stock Level, Minimum Stock Level and ReorderLevel. Depending on usage and Lead Time.
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Businesses must have an effective stock controlpolicy 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 abuffer stock to allow new supplies to be delivered
before old stock runs out
Re-order level the point when new stock isautomatically re-ordered, determined by deliverytimes etc.
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S t o
c k
Time
ReorderLevel
LeadTime
MinimumLevel
MaximumLevel
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Just In Time Stock Control (JIT)
Materials are only ordered when required for production
This is a Japanese way of controlling stock which is now used bymany companies in the UK.
The characteristics of this system are:
Close linkage with the firm and suppliers
No emergency or back-up stocks are held
Cost savings are made as stock levels are almost non-existentComputers can be used to connect demand, productionand delivery
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PRODUCTION
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METHODS OF PRODUCTION
Job Production
Batch Production
Flow Production
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JOB PRODUCTION
This is when a product is made individually tomeet specific orders from customers.
Often involves skilled labour or craftspeople.
It is labour intensive.
EXAMPLE: A designer dress is made fromstart to finish
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Advantages and Disadvantages of
Job ProductionADVANTAGES
It meets the customersneeds and is produced totheir own specifications
More motivating forworkers as they see theproduct through all stagesof production
DISADVANTAGES
High labour costs as theprocess is labourintensive.
Higher wage bill as theworkers are highly skilled
Costs are not recovereduntil the completion of the
project
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BATCH PRODUCTION
This is where a range of similar products aremade.
Workers usually specialise in one job, so becomeskilled in one area.
EXAMPLE: one batch of white bread is madefrom start to finish, then a batch of brown rollswill be made from start to finish.
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Advantages and Disadvantages of
Batch ProductionADVANTAGES
Batches can be changed tomeet the requirements of the customer
Less skilled workers arerequired as only one partof the process iscompleted by a particularperson
DISADVANTAGES
Careful planning is neededfor the operation to runsmoothly
Workers motivation isreduced because they donot see the process fromstart to finish
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FLOW/MASS PRODUCTION
This is the continuous production of the samegood.
It is used for making large quantities of anidentical product.
Economies of scale can be made with this process.
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Advantages and Disadvantages of
Flow ProductionADVANTAGES
Economies of scalescan be met due to thelarge production of goods
DISADVANTAGES
A large amount of moneyis required for set up costsEach product is identicalLack of motivation for
workers because they onlywork on a small part of theprocess
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Flow production example
Car manufacturing uses flow production
Chassisof car
Engine Gearbox Seats OuterShell
Dashboard
and wiring
Windscreen
andwindows
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Division of Labour
Both batch and flow production use division of labour which means that each worker specialisesin 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 forunskilled workers.
It is more common for workers to be multi-skilledand do different jobs, or work in teams.
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Quality Products and Services
All businesses must ensure they provide agood quality product or service which meetscustomer needs in order to survive.The business must decide minimum qualitylevels and who is responsible for ensuring
that quality is maintained at the lowestpossible cost.
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Quality Control
Quality Control is the checking of a product or service bycarrying out an inspection. This usually happens at the endof the production process.
May lead to large amounts of waste.
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Quality Standards
Many products are made to standards whichare laid down by quality assurance bodies,such as the British Standards Institute (BSI).
The organisation draws up a standard for awide range of products such as the ISO9000 award and the Kitemark.
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Total Quality Management
TQM is a method by which a business focuses onquality by making it an important aim of every
worker in the organisation.
Samples of products are tested at random and atdifferent stages of the production process.
See Nissan diagram
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TQM
Benefits
Improved productIncreased productivityReduced wastage of resourcesIncrease inprofitability/marketshare
Barriers
Lack of managementcommitment/unwillingto change
Culture changeLack of planning
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Benchmarking
This is where one business compares itself to another similar organisation, usually themarket leader. By doing this a business canidentify what it is required to do to remaincompetitive.
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Customer Service
Customers need to be treated well by all employeesAny queries or complaints should be dealt with in a calm andknowledgeable manner otherwise pass to a senior colleagueCustomer Service Departments will have set procedures to deal withafter sales; complaints and to give information and advice.Poor customer service can lead to
Bad reputationLoss of customersLoss of Sales/ProfitsLoss of Market Share
Good Customer Service will result in:Loyalty and repeat salesCustomers recommendations leading to new customersGood Reputation leading to increased sales etc.