Operations Management

Job Production- where products are made on at a time. All processes are completed to that product before beginning on the next one.

Examples- wedding dresses. Wedding cakes. House extensions.

Advantages:

• Tailor product to what the customers want = customer satisfaction = repeat custom.
• Potential USP = higher selling price = higher profit margins.
• Higher job satisfaction for workers.
• Ability to meet one-off orders.

Disadvantages:

• Time consuming = less productivity = higher average cost.
• No economies of scale
• labour intensive = Higher labour cost.
• Workers rrequire extra training = higher cost
• Quality Issues

Batch Production- making products in a group or set. All parts of the batch go through the same processes at the same time.

Examples- Cakes, clothing, Shoes, Ice Cream, Crisps

Advantages:

• Quicker = higher productivity = lower average cost = higher profit margin.
• More machinery used = lower labour cost.
• Standardisation of quality.
• Bulk buy raw materials = economies of scale.

Disadvantages:

• Cannot tailor product to specific customer needs.
• No ability to meet on-off orders.
• No potential USP.
• Mistakes affect entire batch = higher wastage costs.
• Lower job satisfaction.

Operational Efficiency- producing as many goods and services as you can to an agreed quality standard, with as few resources as possible.

How a business can become more efficient:

• More machinery = increase capital input per worker.
• Motivational techniques = higher labour intensity.
• Effective leadership and management.
• Use batch production
• Specialisation.

Benefits:

• Lower average cost = higher profit margins.
• Lower average cost = lower selling price = customer satisfaction.

Average cost = total cost / number of units.

Specialisation- a business, worker, economy focusing on completing a narrow range of products.

Computer aided manufacturing- many production processes use machines to complete tasks.

Benefits:

• Quicker = higher productivity = lower average cost.
• Standardised quality.
• Lower labour cost.
• 24/7 Machinery.

Computerised Stock-control Programs- keep accurate records of goods in stock, arriving and sold.

Benefits:

• Never going to run out of stock.
• No revenue loss.
• No damage to reputation.
• Saves time and money.

Computer-aided design- enables firms to design products such as building, cars, and clothes.

Benefits:

• Allows you to make a prototype.
• Quicker.
• Saves time and money.
• Ability to make changes easily.

Communications technology- Email, phones, pages, fax machine etc.

Benefits:

• Email is instant.
• Cheaper and often free.
• More secure.
• Saves time, travel costs and expenses for meetings.

Consumer Protection- Legislation designed to protect consumers in their dealings with businesses.

Sale of Goods Act

• Goods and Services must be as described and fit for purpose.
• If not the retailer must take responsibility.
• Must issue replacement or a refund.

Consumer Protection Act:

• Compensation must be paid to a consumer who suffers injury or damage to property when using the product correctly.

Competition Act:

• Business must not agree to fix prices at a high level with other businesses.
• Price fixing is illegal
• Can be fined 10% annual revenue over 3 year period.

Consumer Protection for Distance Selling:

• Protects people who buy things over the phone/internet.
• Clear information on the good/service must be provided in writing.
• Businesses have to offer a 7 day 'cooling off' period in case customers change their mind.

Consumer Protection from Unfair Trading Regulations:

• Adverts must not mislead or decieve customers.
• Must be possible to compare prices with other businesses.

Weights and Measures Act:

• Businesses must state clearly how much of the product is included.
• Must match the advertised amount.

Customer Service- the way an organisation looks after its customers.

Customer Expectations:

• Safety and Security.
• Clear and Accurate Information
• Legal rights upheld.
• Impartiality and Objectivity.

Benefits:

• Customer Satisfaction
• Repeat Custom
• Positive Reviews and Recommendations
• Widens Customer Base
• Higher Sales Revenue = Higher Profit = Higher Market Share.
• Positive External image.
• Possible USP = higher selling price = higher profit margins.

Quality- A product that is fit for purpose and achives a certain standard which meets and exceeds customers expectations.

Quality Indicators:

• Safety.
• Functionality
• Reliable/Durable.
• Design
• Innovation
• Perfomance
• Service.
• Fit for Purpose.

Poor Quality Products

Costs:

• Cost of replacement/repair/refunds.
• Wastage costs.
• Compensation/legal costs

Damage to Reputation:

• Negative reviews
• No repeat custom.
• Poor external image.

Quality Control- check finished products to ensue they meet a specific standard.

Benefits: Stops faulty products from reaching customer so no damage to reputation.

Problem: Costs of quality control staff. Doesn't stop the product already being made- wastage cost.

Quality Assurance- Involves implementing methods that ensure quality throughout an entire process to prevent mistakes being made.

Benefits: Prevents product being made = less wastage costs = no damage to reputaion.

Problems: Slow production process and cost of training.