2.3 Making Operational Decisions
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- Created on: 04-02-20 17:58
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- Making Operational Decisions
- Operations
- Activities that allow a business to produce and deliver a product or service
- Labour, Capital, Materials------ Products, services
- Needs to manage productivity, efficiency, flexibility and quality
- Process
- Different systems used to produce a product
- Batch
- Relatively large production runs which allows the business to be more flexible and vary product
- Reduced costs through large scale production
- Often downtime between batches and also difficult to predict demand
- Job
- Making one product at a time and used for making bespoke products
- Requires highly skilled workers
- Number of products produced is low so price is high
- Highly flexible and helps build positive customer relations
- Hard to find skilled workers and also cost of raw materials will be higher
- Flow
- Standardised products made on a large scale usually by automation
- Are able to buy raw materials in bulk so are able to reduce cost on them
- Low skilled workers means lower wages
- Very high initial cost of machinery
- Technology
- Reduce Costs
- CAM is very effective for mass-produced products and allows to reduce production costs
- 3D printing allows for products to be quickly made from plastic at a lower cost
- Improving Productivity
- Supply Chain Management allows for a business to easily co-ordinate delivery of materials with customer demand
- Barcode Systems allow business to monitor stock which will help reduce shortages and reduce excess levels of stock
- Improving Quality
- Can help improve customer service and the customers experience and can allow for more customer support
- Reduce Costs
- JIT
- Used to increase efficiency and decrease waste
- Stock only arrives when it is needed
- Has to be able to forecast customer demand accurately
- Reduces need to hold expensive stock, allows money to be spent on other costs
- If system fails business could be unable to fulfil customers' order
- Suppliers
- A good supplier will provide a business with the right quantity at the right time with the right quality
- Unable to complete orders, limited or no choice for customer, loss of customers and poor reputation
- Procurement is the process of sourcing and buying stock
- Some businesses set up a service-level agreement to show what level of service it expects from its supplier
- Stock
- The raw materials or ingredients and the finished product
- If business hold a large stock they can meet demand easily but will cost a lot to find a storage space. Also some of the stock may go off.
- Bar gate Graphs
- Shows amount of stock that a business is holding at any one time
- Make decisions on how much to order and how much stock a business needs to hold to meet customer demands
- Quality
- Idea of quality should be defined by the customers
- Everyone's idea of quality is different
- The product has to be fit for purpose
- Quality Control
- Checking the products quality at the end of the production by a specialist team
- Makes sure no faulty products are sent out to the customer
- Quality Assurance
- Where everyone checks the quality of the product at each stage of production
- Allows for problem to be found as soon as so product can be fixed immediately
- Quality marks ensure product is up to standards
- Quality must match price
- Can provide a competitive advantage and can help keep costs down
- Sales Process
- Customer interest
- Need to get customers attention. Branding, sponsorship, advertising
- Product Knowledge
- Hard approach- constantly talk to the customer
- Soft approach- mention they are there
- Speed and efficiency
- Some customers may not but the product due to the time it will take to revieve it
- Customer Engagement
- Some products there is little engagement where as for expensive products there is a lot more
- Post-sales
- Usually in case of the product being faulty
- Some business ask for feedback on the product and customer service
- Customer Loyalty
- Achieve a competitive advantage. Likely to have repeat customers and new customers who have been told about the business
- Customer interest
- Operations
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