5.1 Production Methods for Manufacturing and Providing a Service 5 O PERATIONS M ANAGEMENT 5.1 P RODUCTION METHODS Is operations management like puzzle solving? How do you manage and coordinate resources to reduce waste and achieve the desired outcome? Feline Foods is moving to a new factory. They have a guard dog, a cat and a pet mouse. However, the animals don’t get along in the van - so they can only take one at a time. Then there are other problems... they can’t leave the dog alone with the cat, because the dog chases the cat. They can’t leave the cat and the mouse together, because.... Well, we all know what would happen! How can they safely get all 3 of their animals to their new factory?

P RODUCTION METHODS  In this topic you will learn about  Job and batch production  Efficiency and technology  Quality issues 5.1 P RODUCTION METHODS What do you think of when you think of production? For small firms mass production is not likely to be an option.

OPERATIONS MANAGEMENT  What is operations management?  The management and coordination of resources to create a good or service  The coordination of the 4 factors of production C _ _ _ _ _ _ E _ _ _ _ _ _ _ _ _ _ _ _ _ L _ _ _ _ L _ _ _ _ _ 5.1 P RODUCTION METHODS

M ETHODS OF PRODUCTION  Job production  The production of one off items to meet the needs of each individual customer  Cheap and easy to set up, but more expensive to produce  Often a specialist service  Time consuming to produce  Meet specific needs of customers  Examples include: Tailor made clothes Specialist cakes Web designs 5.1 P RODUCTION METHODS Can you explain why using job production may allow a firm to charge higher prices? What combination of manual work and machinery are involved?

M ETHODS OF PRODUCTION  Batch Production  Identical items are produced in groups (batches), each item passing through the production process at the same time  Allows for cheaper and quicker production of individual items  More uniform products  Variation can be achieved in different batches  Examples include: Bread Jeans Garden furniture 5.1 P RODUCTION METHODS What are the stages involved in making crayons? Why are they made a colour at a time?

J OB OR BATCH PRODUCTION  What are the advantages to a small firm of using job production?  What are the disadvantages to a small firm of using job production?  What are the advantages to a small firm of using batch production?  What are the disadvantages to a small firm of using batch production? 5.1 P RODUCTION METHODS Jane is keen to use her cake making skills to try and earn a bit of extra money. She has 2 choices, she can either make batches of fruit and lemon drizzle cakes to sell at a local farm shop or make celebration cakes to order. Which option would you choose? Justify your answer.

J OB OR B ATCH 5.1 P RODUCTION METHODS Nathan runs a small but popular smoothie bar near to Exeter University. He prides himself on the fresh nature of his products. Each smoothie is made to order with the customer choosing up to 3 fruits to design their own. At busy times, Nathan has a queue outside the door, but he knows that some customers take one look at the queue and walk off. He charges between £2 to £3 per smoothie at the moment. His girlfriend, Camilla, is studying business at the University and suggests he would be better to move to batch production and lower his prices slightly. She believes this way he could cut costs, increase sales and make a greater profit. Question time 1.What is meant by the term ‘batch production’? (2 marks) 2.Explain 2 advantages of Nathan’s current production method? (4 marks) 3.Do you think that Camilla is correct to suggest Nathan switches to batch production? Justify your answer.(9 marks)

W HAT IS OPERATIONAL EFFICIENCY ?  Making the best use of inputs to achieve a given output A firm will strive to be operationally efficient in order to increase the gap between costs and sales revenue  Lower costs  Better quality  Increase capacity  Lower wastage 5.1 P RODUCTION METHODS Direct2U delivers an average of 50 parcels a day using one transit van and one driver. One of its rivals, Carry Safe, delivers an average of 80 parcels a day using two transit vans and two drivers. Which is the most efficient? What are the advantages of increased efficiency?

O PERATIONAL EFFICIENCY  How can a firm increase efficiency?  Staff training  Improved procedures  Specialisation  Reduced wastage  Improved motivation 5.1 P RODUCTION METHODS Discuss how each of these actions could lead to a fall in costs?

E FFICIENCY AND TECHNOLOGY  Technology can also be key to improving efficiency and reducing costs  The use of computers and machinery within the production process Robots  Automation of the production process  Machines not people CAD/CAM  Enhanced design and manufacturing capabilities Computerised stock control  Reduce stock holdings  Reduce wastage Communication technology  Communication between operations management and other departments  Cheaper sourcing of materials 5.1 P RODUCTION METHODS

Q UALITY I SSUES  Quality will depend on customer expectations of the product:  Is it fit for the purpose that it was bought for?  Does it at least meet minimum standards expected by customers?  Does the customer believe that the product is worth the money paid? 5.1 P RODUCTION METHODS How a quality problem nearly destroyed the dreams of one entrepreneur

Q UALITY I SSUES  Quality can be achieved through:  Quality control Checking the product at the end of the production process before it is delivered to the customer  Quality assurance Checking the product at each stage of the production process Quality assurance requires all employees to check their own work to ensure that the product is ‘right first time’. 5.1 P RODUCTION METHODS What are the advantages of quality assurance over quality control? What are the disadvantages of quality assurance over quality control?

2 M INUTE T EST  What is meant by operations management?  Distinguish between job and batch production  State one example where job production is appropriate  State one example where batch production is appropriate  State one way technology can help improve efficiency End