Operations Management - Unit 1

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  • Created by: Jmsmcn
  • Created on: 24-09-17 17:55

Methods of Production

Businesses aim for efficient production so they have lower operating costs. Achieving efficiency depends several different factors: type of product, level of demand, and the initial cost

Job production involves making one thing at a time, it is good for individual products made to the customer's specification, they often need highly skilled labour. They are expensive and take a long time.

Batch production is making groups of identical products, this is good when products need to be identical but not many are needed. Examples include furniture, and bread.

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New Technology in the Workplace

Computers improve productivity - professional documents can be made, costs can be calculated, computer aided design helps manufactures, as does computer aided manufacture (they reduce error and increase quality). Barcodes and tills help to run shops.

Computers reduce costs and increase efficiency  but inital costs are high - networks of linked computers means easy access to information, computers are accurate, but it can be hard to keep up with technology

Entrepreneurs can take advanatage of technology - they can stay in touch wherever they are, they can automate tasks, they can help people master a huge range of tasks

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Quality Assurance

Customers expect quality from all parts of a business, the product should be good, so should the customer service, and adverts should be high quality.

Products should be good quality for their price - quality can depend on the materials and the production process of the item, customers expect the item to work and not fall apart. But good-quality products are expensive and so a higher price is charged but it is illegal to sell a product that is not satisfactory quality - even if it is very cheap.

Customers may need reassurance before they buy - businesses can get quality rewards, they can join trade associations that signify they meet certain standards, firms have to abide by a code of practice and customers can complain to the association. 

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Customer Service

Customers need accurate product descriptions, reliability (product and customer service), questions to be delt with quickly, to have the order forfilled (right thing), to get their product on time, after sales support and warranties.

Some businesses have a whole department for customer service, others train all staff to provide good service. 

Good customer service lead to higher levels of customer satisfaction and they are more likely to recommend or use the business again. Unhappy customers will not use them again and may tell people not to use the business. 

But good customer service costs money

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Government Policy - Consumer Protection

A product has to be fit for purpose - it has to do the job it is designed to do

The product should match its description - It is illegal to give a false description, this includes size, quanitity, its materials and the properties. You cannot claim a product has been endorsed or approved by a person or company if it hasn't

The product should be of satisfactory quality - it should be well made (not fall apart) and it shouldn't cause problems for the buyer (lots of noise)

Businesses need to be careful otherwise customers may demand their money back, a repair, or replacement. This costs the business money and customers will not go there again.

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E-Commerce

E-commerce can reduce costs by using less paper, hiring less staff and moving to a remote area where costs are lower. This makes the product cheaper so more people buy it.

E-commerce can reach international markets which increases the potential number of customers and therefore profits

Buying online means that consumers can shop anytime, compare sites, send card details securely, and track the order's progress

However it also means it is hard to tell if it is trustworthy, card details may be stolen, product cannot be seen before buying, delivery takes time, it is difficult to send items back, you can get lots of spam e-mail

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More on E-Commerce

Websites can provide customer service such as 24 hour ordering, FAQs, contact details, complain/question forms, and online accounts (so they can pay bills)

Running a website can be expensive because new equiptment may be needed and staff need to be trained, a web designer may need to be used, and someone has to be employed to update the website. The costs will be larger for big businesses with more complex websites.

The website must work properly, be secure and have the right tone as it is a vital part of the business. Trust is important as you need to pay before you get the product. One bad experince can turn a customer away forever.

Quality of service and reputation are more important online because of this. So to gain trust e-commerce firms need to build-up a brand image and customer loyalty

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