1. UNIT 5 PRODUCTION

2. Production Manufacturing Making Operations Construction

3. What is Production? Bringing together all the resources to make a finished product Resources – building/factory, labour/employees, machinery/tools

4. STAGES OF PRODUCTION 1.Planning 2.Purchasing 3.Holding stocks 4.Production 5.Finished goods Then to SALES

5. 1. PLANNING What? How? Where? Target market? How to sell? NEED TO CARRY OUT RESEARCH AND DEVELOPMENT

6. RESEARCH AND DEVELOPMENT RESEARCH Desk and field research DEVELOPMENT Suitable materials Prototype Analyse prototype PRODUCT MUST BE VIABLE TO GO INTO FULL PRODUCTION

7. 2. PURCHASING The Purchasing Department must source goods and services required in production. Find suppliers Get quotations Select best option – price, quality, time etc

8. 3. STOCKS STOCK CONTROL has to be used Problems if firm OVERSTOCKS or UNDERSTOCKS

9. STOCK LEVELS SET MAXIMUM LEVEL – upper limit at any time MINIMUM LEVEL – lowest level at any time (includes buffer stock) REORDER LEVEL – point at which more stock is reordered

10. JUST IN TIME If goods are produced JUST-IN-TIME then the firm may minimise stocks held – stocks arrive to go straight to production line Money not tied up in stock Less stock/warehouse costs Less handling of stocks Less wastage as spares are not available

11. 4. PRODUCTION Three methods of production: Job Batch Flow

12. Job Production Single, unique item/job Eg building, bridge, painting, restaurant meal, aircraft, ship High quality work Motivated workers Customer satisfaction – unique specifications BUT high costs – high wages

13. Batch Production Number of products made – change ingredients/machines – different/varied product Specialised workers, specialised machinery, lower unit costs, product range Stocks of goods required, time to clean/reset machinery, repetitive work, movement of products

14. Flow Production Work-in-progress FLOWS past workers, complete one operation then moves on Continuous production used for standardised items Can use machinery for complex products/procedures Needs a lot of equipment, equipment may not be adaptable, breakdown may close production line Monotonous for workers A lot of money tied up in work in progress

15. Using Machinery Lower labour costs More accurate Can work 24/7 Increased speed – increased output Can do dangerous or monotonous work BUT machines can break down

16. LEAN PRODUCTION and Just in time stock control Production using minimum resources:Production using minimum resources:  Reduce space required by reducing stocks held  Reduce use of raw materials  Reduce no of workers  Introduce new technology Reduce overall production costs JUST-IN-TIME STOCK CONTROLJUST-IN-TIME STOCK CONTROL Not buying in large quantities Reduce warehousing costs Suppliers guarantee to deliver quality stocks on time Reduced quality checks required

17. Cell Production Production broken down into ‘cells’ Each cell/group carries out a number of processes Team-working – higher quality and more output

18. QUALITY QUALITY = producing goods/services to a standard which satisfies the needs of the customer 2 AREAS:  Quality Assurance  Quality Control oTraditional oTotal Quality Management

19. Quality Assurance Assuring the customer of quality  Signs and symbols  Eg the kitemark, the Lion mark  Other quality guarantees  Eg warranties, written guarantees, after-sales service

20. QUALITY CONTROL Checks during/after production to ensure quality TRADITIONAL METHOD Checks on raw materials, at end of some stages, at final good stage Carried out by specialised quality control staff BUT time consuming, lot of wastage, costly

21. TOTAL QUALITY MANAGEMENT Idea – to get production right first time (cut down on wastage) Requires: Quality raw materials Checks at every stage Problems identified early and corrected Use of teamwork

22. UNIT 6 LOCATION

23. Factors in deciding location of a business Availability of raw materials/components Availability of labour Availability of land Competition Distance to market Transport costs Infrastructure Health and Safety regulations Technology and Information Technology Governments loans and grants EU incentives Footloose business?

24. INFRASTRUCTURE Travel facilities Roads, railways, air links, ferry ports Gets goods/ customers/employees in and out OTHER FACILITIES Schools, hospitals, offices To support workers in living, provide training for employees Utilities – gas, water, electricity, telecommunications links

25. COSTS AND BENEFITS COSTS Premises Rates Wages Transport BENEFITS Market Lower rent Lower rates Lower wage rates Better transport links Financial assistance

26. GOVERNMENT ASSISTANCE Want to Reduce unemployment Make better use of derelict land/buildings Help ‘depressed’ areas Through CENTRAL and LOCAL GOVERNMENT ASSISTANCE – Regional Policy

27. Central Government Aid Assisted Areas Regional Selective Assistance (job creation grants) Regional Enterprise Grants (to small business – capital investment and product development) Enterprise Zones Urban Development Corporations Training and Enterprise Councils

28. Local Government Aid To encourage businesses to set up in their area: Start up grants Research and development grants Job creation grants Relocation grants Cheaper/free rent and rates Reduced rate loans Advice – general, financial advertising

29. European Union Single market Inward investment Social charter Regional policy Monetary union

30. Globalisation Now – one large world market Due to Transportation Communication Developing markets Removal of barriers

31. Multi-National Business Organisation sell/operate in more than one country GLOBAL BRAND Advantages Disadvantages

32. UNIT 7 FINANCE

33. Business Plan Required to show to potential investors Includes: Details of business (name, address, type…) The product or service The market The people Finance Expected costs, revenues, profits….

34. Sources of Finance CAPITAL/INTERNAL OWNER SHAREHOLDERS RETAINED PROFITS BORROWING/ EXTERNAL Bank – overdraft, loan Other lenders Debentures Hire purchase Leasing Credit Factoring

35. Cash Budget A forward plan Shows: Opening cash balance Cash in Cash Out Closing cash balance Projects figures – shows possible problems

36. OTHER POSSIBLE QS COMMUNICATION Purpose? Different types  written, spoken, using ICT INFORMATION TECHNOLOGY Word Processing, Spreadsheets, Databases Internet, e-mail

37. OTHER POSSIBLE QS Why do some businesses fail?  Lack of finance  Cash flow problems  Lack of sales  Not enough profit LACK OF PLANNING