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Higher Business Management

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Presentation on theme: "Higher Business Management"— Presentation transcript:

1 Higher Business Management
Unit 2 Learning Outcome 5 Operations BM Unit 2 - L05

2 Operations/Production
Three distinct phases Inputs  Process  Outputs BM Unit 2 - L05

3 Inputs Raw materials Labour BM Unit 2 - L05

4 Process Converting raw materials into something useful
Use of machinery and other processes Assembly BM Unit 2 - L05

5 Output The finished product! Packaging Storage Distribution Transport
BM Unit 2 - L05

6 Factors Affecting Production Systems
Nature of the product Quantity to be produced Resources available Labour Capital BM Unit 2 - L05

7 Methods of Production Job Production Batch Production Flow Production
MASS PRODUCTION IN LARGE FACTORY BM Unit 2 - L05

8 Job Production A house built to your own design A custom-built boat
A piece of artwork A hand-turned wooden bowl BM Unit 2 - L05

9 Batch Production A number of similar products (repeated jobs)
The same house repeated on a building site Bakery produce - each batch may differ slightly BM Unit 2 - L05

10 Flow Production Mass production of almost identical products Cars
Washing machines BM Unit 2 - L05

11 Quality Control ‘Bolting the door after the horse has gone’
Leads to waste and scrap Can be very “costly” BM Unit 2 - L05

12 Quality Assurance Making sure the horse cannot bolt
Getting it right first time All aspects of the business including the commitment of the workforce BM Unit 2 - L05

13 Quality - A Definition Those features of a product or service that allow it to satisfy customers’ requirements BM Unit 2 - L05

14 Measuring Quality Tangible Intangible Appearance Reliability
Durability Functions Suitability After sales service Maintenance Intangible Image and brand (‘street cred’) Reputation Exclusivity BM Unit 2 - L05

15 Quality Systems Total quality management Benchmarking Quality circles
BM Unit 2 - L05

16 Total Quality Management (TQM)
Right first time Consistent, clear message on quality Staff commitment to ongoing improvement Partnership with suppliers Educate and train staff Supervisors encourage and help Eliminate fear of failure Departments integrate and share problems Set clear, achievable goals Help employees to take pride in their work Train and educate Establish a structure and culture to support these aims BM Unit 2 - L05

17 Features of TQM Commitment to customer needs
Close links with the supply chain Personal responsibility by employees Company-wide policy for all staff Emphasis on teamwork Clear measures of “quality” Information gathering to support these measures Well-used 2-way communication systems BM Unit 2 - L05

18 Benchmarking - A Definition
Benchmarking is the process of setting competitive standards, based on the achievements of other firms, against which an organisation will monitor its progress. Benchmarking tends to focus on the “best in class” companies, but for specific functions a company may compare itself to an organisation in a different industry. BM Unit 2 - L05

19 Types of Benchmarks Internal - comparison with a function within the organisation External - comparison with other organisations Competitive - direct comparison with a competitor Generic - comparing general business activities (eg recruitment) Customer - contrasting the level of fulfillment of customer expectation BM Unit 2 - L05

20 Quality Circles Production workers know more about the production process than “managers” Workers are motivated by being involved and consulted about production problems (empowerment) BM Unit 2 - L05

21 Types of Stock Raw materials, components, etc
Work in progress (unfinished work) Finished goods BM Unit 2 - L05

22 The Importance of Stock Control
“Stock out” = lost sales and poor reputation Excess stock = high storage costs Excess stock runs risk of damage, obsolescence, “opportunity costs” (alternative use for the money tied up in stock) BM Unit 2 - L05

23 Factors Influencing Stock Levels
The level of demand Unpredictability of demand Degree of spoilage/perishability Rental costs for storage Bulk-buying discounts Reliability of suppliers Competition - luxury/necessity BM Unit 2 - L05

24 Elements of Stock Control
Maximum stock levels Minimum stock levels Rate of consumption Lead time - ordering to receipt Re-order level BM Unit 2 - L05

25 Just-in-time (Kanban System) Advantages
Stock exactly matches production Improves cash flow (less tied up) Savings on purchase and storage costs Less stock wastage Production delays prevented Can respond to changes in demand Close ties with suppliers established BM Unit 2 - L05

26 Just-in-time (Kanban System) Disadvantages
High dependency on suppliers to meet delivery and quality standards Suppliers must be willing to participate (can be high-risk - ‘all the eggs in one basket’ - M&S suppliers) Increase in order processing costs BM Unit 2 - L05

27 The Purchasing Function
Having sufficient stock available Avoiding wastage of stock Having the correct quality In the factory when needed Competitive prices paid Building good relationship with suppliers BM Unit 2 - L05

28 The Purchasing Mix Best quality Lowest price
Delivered in correct quantities Delivered at the correct time BM Unit 2 - L05

29 Transportation Problems
What can cause transport problems? Reliability of suppliers Location of suppliers – Overseas and could need planes or ships to transport Weather Legislation Industrial action/strikes Breakdowns in transport method BM Unit 2 - L05


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