1. Finishing Unit 5 5.4 Quality Assurance 5.5 Location 5.7 Stock Control and Production planning

2. Production review and quality control introduction http://www.youtube.com/embed/nd5WGLWNl lA?rel=0 http://www.youtube.com/embed/nd5WGLWNl lA?rel=0

3. IB Specifications Understand and analyze the move from traditional quality control to Total Quality Management theory Explain the causes and consequences of location and relocation as related to production, both domestically and internationally Explain the difference between just in case and just in time stock control

4. Quality Assurance vs Quality Control Syllabus 5.4 Textbook 5.3 Quality Assurance Quality Control Total Quality Culture Analyze the move from traditional quality control cultures to ‘Total Quality Management’

5. Quality Assurance

6. The process whereby quality is at the forefront of every stage of the development, design, marketing, manufacturing and selling process. ‘Quality’ is influenced by the internal philosophy of the business and the external influences -

7. External Agency Regulation ISO International Organisation for Standardisation ensure compatibility, quality and conformity  ISO 9000 and ISO 14000 set standards on quality and the environment. Consumers Research produces the magazine and provides surveys to inform consumers about quality and value for money of competing products.

8. External Agency Regulation Trade Associations Draw up codes of practice to which members adhere membership of such an association is an indication of quality.  National Association of Builders Government Agencies OSHA Occupational Safety and Health Administration  Responsible for health and safety in the workplace. FTC Federal Trade Commission  Toy/product safety FAA Federal Aviation Administration  In-air flight management USDA US Department of Agriculture: Food safety

9. Quality Control Is the process of checking the quality and the accuracy of raw materials and supplies as they arrive at the business, and also of the finished products as they leave the business en route to retailers and customers. Emphasis on reducing defects, etc. before it gets to the final stage of production and certainly to the consumer This is usually carried out either by quality inspectors or by the employees themselves. The philosophies of zero defects and Kaizen require stringent quality control systems, in order to reduce the costs and time associated with both waste and the correction of low quality output.

10. TQM (Total Quality Management) Name given to quality control Features of TQM: Quality Circles meetings of relevant workers to discuss issues relating to maintenance and improvement of quality in the business  may also double as a form of empowerment and motivation. Statistical Process Control statistical data generated to inform the evaluation of processes within the business Zero defects systems in place to ensure that no product leaves the business with a defect  important in building supplier relationships, image, reputation Continuous Improvement (Kaizen) Kaizen is a Japanese word which means ‘change for the better’.  A business will often be facing increasing demands from customers to add new features to their products, as well as facing pressures from their competitors who are producing new and improved products, or offering improved after-sales service.

11. Location Syllabus 5.5 Textbook 5.4 National Causes and consequences International Causes and consequences Analyze the impact of location on different business functions Marketing, production, finance, human resources

12. Location Industrial location is a function of Cost and Availability of Land Labor Communications Infrastructure Transportation Infrastructure Raw Materials Government Incentives

13. Industrial Inertia refers to the situation when a business or an industry decides to remain in its original location and is very reluctant to relocate, even after the reasons for it locating there in the first place are exhausted. Possible reasons for this include: The cost of moving may be very large. Strong links with the local community and with other local businesses may have been developed and a move away from there may destroy those links. Some areas and products have an international reputation which may be difficult to establish if the business were to locate elsewhere. However, industrial inertia can actually make an area become depressed if that area depends on a particular industry or business for employment and wealth-creation. If the industry goes into decline and no other industries or businesses wish to move to this area, then mass unemployment is created, and many of these unemployed will not be trained to perform any other jobs.

14. International Location Includes consideration of the earlier mentioned factors plus: Language issues Capital availability Stable political environment Ownership rights protected Legal environment Economy international differences in input prices international differences in productivity labour skills entrepreneurial and managerial skills learning by doing low-cost access to local markets taking advantage of government policies

15. Comparison of the 10 largest MNC’s (by gross revenue) and selected countries (by GDP): 2002

16. The product life cycle and the MNC the launch phase multinational spread likely to be limited the growth phase MNC likely to shift production abroad in order to retain cost competitiveness maturity MNC increasingly seeks markets abroad as growth in home market slows late maturity and decline MNC increasingly seeks both markets and ever lower cost production abroad Business Strategy in a Global Economy

17. language barriers selling and marketing cultural issues relations with host governments relationships between subsidiaries possible diseconomies of scale easier if subsidiaries are run independently Problems Facing Multinationals

18. MNC Investment and the Host State Advantages of MNC investment employment balance of payments technology transfer tax revenues Disadvantages uncertainty power and control by the MNC over the host the environment

19. Stock Control and Production Planning Syllabus 5.7 Textbook 5.6 Research and Development Patents, copyrights, trademarks Intellectual property rights Factors affecting innovation Stock control Just in case Just in time Outsourcing and sub-contracting

20. Innovation vs R&D Innovation Endowment of an existing resource with a new use turning an idea or that new use into a commercial reality satisfactory exploitation of new ideas. Improving an existing product Enables our culture/economy to move forward rather than remain stagnant Is factor of production as we improve our productivity, our GDP will increase R&D carrying out extensive scientific research into the product and its design then developing a range of prototypes, each to a slightly different specification.

21. Innovation and R&D Ideas lead to innovation. Research and development is one of the ways to generate ideas Or the idea generates the need for R & D.  innovation is highly dependent upon R & D.. R & D is crucial to economic and business continuity

22. Goals of R&D Enable the process of innovation Develop products which have a unique selling point Develop higher quality products Develop products which better meet customer needs and wants Develop more efficient ways of production in order to reduce the cost per unit of product

23. Considerations for the Exam Understand how the Boston Matrix can be used to analyze a product portfolio for both Innovation and R & D purposes. Don't confuse market research with research and development. Still, the two are linked and often the product development is an outgrowth of market research

24. Just in Time vs Just in Case Just-In-Time Minimise the amount of stock held in pure systems, the stock arrives as it is needed. Computerisation enables this  allow companies to be able to keep accurate stock control processes  Use of bar codes has facilitated this  Allows constant flow of information to distribution centres. relies on excellent relationships with suppliers requires excellent communication and infrastructure links between suppliers and businesses Improves working capital Reduces amount of capital tied up in stocks Reduces costs Storage, shrinkage, spoilage, wastage

25. Just in Case Buy stock to be held in reserve (store it) Reduces pressure on cash flow Encourages buying in bulk, which can reduce costs Buffer stocks can help cope with sudden surge in demand Do not have to wait for parts or stock to arrive No delivery issues  Smoothes out volatility of lead times Suppliers less likely to charge an outsourcing premium  Since they are holding your stock

26. Just in Case: Stock Control Costs: Storage costs warehousing Depreciation costs wear and tear, perishability, shelf-life, shrinkage Opportunity cost zero revenue earned on stocks sitting around! Administration costs monitoring stock levels, ordering and processing

27. Stock Control Stock Level Time Maximum Stock Level Minimum Stock Level Re-order level The Traditional Stock Control Model Maximum stock levels achieved after stock delivery. Stock levels decline during production. When the stock level reaches the re-order level, it triggers a new order. The difference between the time of re-order and delivery is the ‘lead time’. Lead Time Re-order triggered