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N5 Bus Man – 2.2: Operations © BEST Ltd 1 Management of Marketing and Operations 2.2 – Operations Business Management (National 5)

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Presentation on theme: "N5 Bus Man – 2.2: Operations © BEST Ltd 1 Management of Marketing and Operations 2.2 – Operations Business Management (National 5)"— Presentation transcript:

1 N5 Bus Man – 2.2: Operations © BEST Ltd 1 Management of Marketing and Operations 2.2 – Operations Business Management (National 5)

2 N5 Bus Man – 2.2: Operations © BEST Ltd 2 What is Operations all about?  The role of OPERATIONS in a business is to PRODUCE goods and services to a SUITABLE STANDARD as EFFICIENTLY (minimum in – maximum out) as possible.  Benefits of effective operations management include the following: ◦ DECREASED COSTS ◦ INCREASED QUALITY ◦ DECREASE PRICES FOR CONSUMERS ◦ INCREASED SATISFACTION AND LOYALTY ◦ INCREASED PROFITS AND PERFORMANCE ◦ INCREASED SATISFACTION AND SALES ◦ PREVENTS BANKRUPTCY AND CLOSURE

3 N5 Bus Man – 2.2: Operations © BEST Ltd 3 Stock Management  Businesses can have the following types of STOCKS (ie unused parts or unsold items): ◦ RAW MATERIALS ◦ WORK IN PROGRESS ◦ FINISHED GOODS  Having stocks can mean the following ADVANTAGES from preventing UNDERSTOCKING: ◦ PROVIDES IMMEDIATE SUPPLIES ◦ PREVENTS STOCK OUTS ◦ LARGE ORDERS CAN MEAN DISCOUNTS  Having stocks can mean the following DISADVANTAGES from OVERSTOCKING: ◦ COST (ie labour, storage, insurance) ◦ RISK

4 N5 Bus Man – 2.2: Operations © BEST Ltd 4 Stock Management (continued)  The amount of stock held to try and prevent OVER or UNDERSTOCKING will be affected by the following factors. ◦ DEMAND ◦ SEASONAL FACTORS ◦ STOCK TYPE ◦ LEAD TIME  To make sure that stock levels are maintained at the correct amounts a business will use a STOCK CONTROL SYSTEM.

5 N5 Bus Man – 2.2: Operations © BEST Ltd 5 Choosing a Supplier  Choosing a supplier deals with deciding WHO the business should buy STOCK from.  The main things that must be considered when choosing a supplier are: PRICE QUALITY CONTINUITY OF SUPPLY RELIABILITY LOCATION

6 N5 Bus Man – 2.2: Operations © BEST Ltd 6 Factors of Production  To make sure that things are made EFFICIENTLY and CORRECTLY, a business must think about its’ use of the FACTORS OF PRODUCTION: ◦ LAND ◦ LABOUR ◦ CAPITAL ◦ ENTERPRISE  The main things that must be considered about the use of FACTORS OF PRODUCTION are: PURCHASE PRICE QUALITY CONTINUITY OF SUPPLY

7 N5 Bus Man – 2.2: Operations © BEST Ltd 7 Production Methods  The main PRODUCTION METHODS (ie ways of making goods and services) are: ◦ JOB (PROJECT) PRODUCTION ◦ BATCH PRODUCTION ◦ LINE (FLOW) PRODUCTION  The choice about which one to use will depend on: ◦ THE NATURE OF THE PRODUCT ◦ NUMBER OF SALES EXPECTED ◦ TECHNOLOGY AVAILABLE ◦ LABOUR v CAPITAL INTENSIVE

8 N5 Bus Man – 2.2: Operations © BEST Ltd 8 JOB Production  The main features of Job Production are as follows. ◦ ONE PRODUCT IS MADE AT A TIME ◦ PRODUCTS ARE ALL INDIVIDUAL ◦ LABOUR INTENSIVE  ADVANTAGES of Job Production include the following. ◦ VERY FLEXIBLE METHOD OF PRODUCTION ◦ HIGH LEVELS OF BUYER SATISFACTION ◦ SATISFACTION CAN MEAN HIGH PRICES ◦ VARIETY IN WORK CAN BE MOTIVATING  DISADVANTAGES of Job Production include the following. ◦ COSTLY DUE TO LACK OF ECONOMIES OF SCALE ◦ COSTLY DUE TO STAFF SKILLS AND EQUIPMENT ◦ PRODUCTION CAN TAKE TIME ◦ LOW LEVELS OF OUTPUT  Examples of Job Production include custom jewellery, roads and buildings.

9 N5 Bus Man – 2.2: Operations © BEST Ltd 9 BATCH Production  The main features of Batch Production are as follows. ◦ BATCH (or group) OF IDENTICAL PRODUCT MADE TOGETHER ◦ DIFFERENT BATCHES CAN BE MODIFIED SLIGHTLY ◦ ALL PRODUCTS BROADLY SIMILAR ◦ SIMILARITY IN MOST STAGES OF PRODUCTION  ADVANTAGES of Batch Production include the following. ◦ BATCH FLEXIBILITY ALLOWS VARIETY IN PRODUCT RANGE ◦ VARIETY IN THE PRODUCT RANGE CAN INCREASE SALES ◦ CAN PRODUCE LARGE AMOUNTS OF PRODUCTS QUITE QUICKLY ◦ RUNNING COSTS CAN BE LOW DUE TO USE OF CAPITAL ◦ RUNNING COSTS CAN BE LOW DUE TO UNSKILLED STAFF ◦ OVERALL SIMILARITY OF BATCHES ALLOWS ECONOMIES  DISADVANTAGES of Batch Production include the following. ◦ SIMPLE SIMILAR PROCESSES CAN BE DEMOTIVATING ◦ CAPITAL PROBLEMS CAN HALT PRODUCTION AND RUIN A BATCH ◦ DELAYS FROM CHANGES IN BATCHES CAN SLOW PRODUCTION  Examples of Batch Production include pizza, soup, etc.

10 N5 Bus Man – 2.2: Operations © BEST Ltd 10 FLOW Production  The main features of Flow Production are as follows. ◦ IDENTICAL PRODUCTS ◦ PRODUCTION LINE BASED MANUFACTURING (ie stage by stage) ◦ HIGH LEVELS OF OUTPUT ◦ CAPITAL INTENSIVE  ADVANTAGES of Flow Production are as follows. ◦ QUALITY CAN BE IMPROVED ◦ RUNNING COSTS CAN BE LOW DUE TO CAPITAL AND FEW STAFF ◦ LOWER UNIT COSTS AND PRICE ◦ LOWER PRICES AND QUALITY CAN RESULT IN MORE SALES  DISADVANTAGES of Flow Production include the following. ◦ START UP COSTS TEND TO BE HIGH DUE TO CAPITAL INVOLVED ◦ STANDARD PRODUCT MAY NOT SUIT ALL AND SO LIMIT SALES ◦ WORK CAN BE REPETITIVE, BORING AND DEMOTIVATED ◦ INDIVIDUAL SYSTEM FAILURES CAN HALT ALL OF PRODUCTION  Examples of Flow Production include televisions, fridges, newspapers, etc.

11 N5 Bus Man – 2.2: Operations © BEST Ltd 11 Quality  QUALITY is about making sure that its products are of an ACCEPTABLE STANDARD for the following reasons: ◦ CUSTOMERS CONTINUE TO USE THE BUSINESS ◦ NO QUALITY STANDARD LAWS ARE BROKEN  The main ways that quality can be created and maintained are: ◦ HIGH QUALITY RAW MATERIALS ◦ HIGH QUALITY RESOURCES ◦ QUALITY CONTROL ◦ QUALITY ASSURANCE

12 N5 Bus Man – 2.2: Operations © BEST Ltd 12 Ethical and Environmental Operations  ETHICAL AND ENVIRONMENTAL OPERATIONS deals with making sure that the production process is FAIR and MINIMISES NEGATIVE IMPACTS that could cause problems and put customers off the business.  The main ways that ethical and environmental operations can be created and maintained are: ◦ FAIR TREATMENT OF STAFF ◦ RECYCLING ◦ REDUCING PACKAGING ◦ REDUCING WASTAGE ◦ EFFICIENT PRODUCTION

13 N5 Bus Man – 2.2: Operations © BEST Ltd 13 Customer Service  CUSTOMER SERVICE deals with making sure that consumers are happy with the way they are treated by the business and so continue to use it.  The main ways that positive customer service can be created and maintained are: ◦ SERVICE STANDARDS ◦ COMPLAINTS PROCEDURES ◦ LOYALTY SCHEMES ◦ PRODUCT SUPPORT

14 N5 Bus Man – 2.2: Operations © BEST Ltd 14 Method of Distribution  The METHOD OF DISTRIBUTION is the way a business transports its’ goods and services.  The main METHODS OF DISTRIBUTION are: ◦ ROAD ◦ RAIL ◦ AIR ◦ BOAT ◦ PIPELINE  The METHOD OF DISTRIBUTION used depends on: ◦ MARKET SIZE ◦ PRODUCT NATURE ◦ METHOD COST ◦ INFRASTRUCTURE AVAILABLE

15 N5 Bus Man – 2.2: Operations © BEST Ltd 15 Which factors affect the work of Operations?  The effectiveness of Operations activities undertaken by a business will be affected by the following factors. ◦ INTERNAL FACTORS  Finance  Human Resources  Capital ◦ EXTERNAL FACTORS  Political Factors  Economic Factors  Social Factors  Technological Factors  Environmental Factors  Competitive Factors


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