national 5 business management 2.2 operations
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National 5 Business Management SlidesTRANSCRIPT
OperationsN5 Business Management
Role of OperationsOperations is about ensuring the
right resources are bought and used to make a finished product.
PurchasingStock ControlProductionQuality ManagementDistribution
Advantages of Operations Management
Lower Costs
Improved Quality
Customer Satisfaction
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1-5
StockStock exists in 3 types:
Raw materialsWorks in progressFinished goods
Stock Management
Holding too much stock
Stock ready to go when ordered
Money can be invested elsewhere in business
Stock can go out of fashion or spoil
Not having enough stock
Can’t fulfil orders
Production may stop
Poor reputation
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6-11
Stock Control
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12-18
Purchasing Mix
PriceReliabilityQuality of raw materialsQuantityLocationDelivery Time Working with
Suppliers
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19
Factors of Production
Land – all natural resources used in production
Labour – all people used in production
Capital - all items used to make other things in production
Enterprise – the art of bringing together the other factors of production and being successful
Methods of Production
Job
Batch
Flow
Added Value
How do we select a method of production?
The nature of the product itself
Is it labour or capital intensive?
Projected sales?
Finance available
Technology available
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20-23
In PairsDescribe the Factors of Production for:Shell OilRoyal Bank of ScotlandAppleEasyJet
Job ProductionJob Production concentrates on
producing one product from start to finish. Once one product is complete, another can begin.
It is extremely labour intensive
Some examples:Wedding dressPaintingHouse extension
Job Production +/-High quality
productCan customise
ordersWorkers involved
in entire production process from start to finish
Production costs likely to be high
Production time may be longer
Investment in machinery may be higher as specialist equipment may be needed
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24-25
Batch ProductionBatch production enables items to be
created in bulk (‘a batch’)
General purpose equipment and methods are used to produce small quantities of items that will be made and sold for a limited time only
Commonly used in food production
Big MacsGregg’s Rolls
Batch Production +/-Allows flexible
productionStocks of part-
finished goods can be held and completed later
Production runs of small batches can be expensive to produce
If production runs are different there may be extra costs and time delays in setting up different equipment
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26-27
Flow ProductionAka continuous production, flow
production enables products to be created in a series of steps.
Large amounts of goods produced and is highly capital intensive (machinery, automation)
Cars are massed produced for a large market using flow
production
Flow Production +/-
Economies of scaleAutomated
production lines save time and money
Quality systems can be built into the production
Standard product produced (opposite of customised)
High set-up costs of automated lines
Repetitive and boring work
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28-31
N5 Bus Man – 2.2: Operations © BEST Ltd 25
ICT Task
Prepare a presentation which compares the different methods of production:
JobBatchFlow
Ensure you have appropriate text, images & examples
Include some advantages & disadvantagesAlso include a short quiz to test other
learners
QualityWhat is quality?
Why is quality important?
Definitions of Quality“The standard of something as measured against
other things of a similar kind; the degree of excellence of something.” – Oxford English Dictionary
"Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for.“ - Peter Drucker
"Degree to which a product/service fulfils customer requirements.“ - ISO 9000:
"Number of defects per million opportunities.“ - Six Sigma
“Quality is everyone’s responsibility”
- W. Edwards Deming
Quality Methods
Employees – Investors in People
Raw Materials – GIGO
Quality Control
Quality Assurance
TQM - Quality Management
Total Quality Management
Commitment - Everyone is involved in quality
Get it right first time - aims for zero defects & wastage
Quality Circles
Kaizen – continuous improvement
Other Quality Methods
BSI Kitemark
Benchmarking
ISO 9000
ISO 9000ISO 9000 is an international standard. Inspectors check if the
company: can answer these questions.
Does it have a quality policy? Is the policy understood by employees? Does it make decisions about quality systems based on
recorded data Are the Quality systems regularly evaluated? Do they have records of where raw materials & products were
sourced? Does it communicate with customers about product
information, inquiries, orders, feedback, and complaints? Does it plans new product development, with appropriate
testing at each stage? Does it regularly review performance? Does it deal with past & potential problems?
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32-38
HomeworkAs part of Literacy across learning, you
will prepare and present a solo talk on this question:
“What does Quality mean to you?”
Ethical and EnvironmentalFirms now have to socially
responsible. They can do this by:
RecyclingLess wasteBiodegradable packagingLow pollution levelsFair employee working conditionsPay workers a fair wage
N5 Bus Man – 2.2: Operations © BEST Ltd 36
N5 Bus Man – 2.2: Operations © BEST Ltd 37
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39-42
Go Further
Research the following events/issues:Exxon ValdezBhopal – Union CarbideDeepwater HorizonWalmart in China
DistributionBy road, rail, air or sea?Or pipeline?
Decided by:
CostInfrastructureProduct/service type
An Oil Pipeline in Saudi Arabia
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43-48
Operations is affected by:Internal Factors
External FactorsTechnolo
gy
Labour
Finance
Political Economic Social Technological Environmental Competitive
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49-54