National 5 Business Management 2.2 Operations
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Operations involves ensuring the right resources are used to produce finished products. It includes purchasing, stock control, production, quality management, and distribution. Operations management aims to lower costs, improve quality, and increase customer satisfaction. There are three types of stock: raw materials, works in progress, and finished goods. Companies must balance holding too much versus too little stock. The document then discusses various operations management topics like purchasing, factors of production, production methods, quality, ethics, and distribution. Operations is influenced by internal factors like finance, labor, and technology, as well as external factors such as economic, political, social, technological, environmental, and competitive conditions.
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National 5 Business Management 2.2 Operations
- 2. Role of Operations Operations is about ensuring the right resources are bought and used to make a finished product. Purchasing Stock Control Production Quality Management Distribution
- 3. Advantages of Operations Management Lower Costs Improved Quality Customer Satisfaction
- 6. Stock Stock exists in 3 types: Raw materials Works in progress Finished goods
- 7. Stock Management Holding too much stock Not having enough stock Stock ready to go when ordered Money can be invested elsewhere in business Stock can go out of fashion or spoil Can‟t fulfil orders Production may stop Poor reputation
- 11. Purchasing Mix Price Reliability Quality of raw materials Quantity Location Delivery Time Working with Suppliers
- 13. Factors of Production Land – all natural resources used in production Labour – all people used in production Capital - all items used to make other things in production Enterprise – the art of bringing together the other factors of production and being successful
- 14. Methods of Production Job Batch Flow Added Value
- 15. How do we select a method of production? The nature of the product itself Is it labour or capital intensive? Projected sales? Finance available Technology available
- 16. TASK Question Bank 20-23 In Pairs Describe the Factors of Production for: Shell Oil Royal Bank of Scotland Apple EasyJet
- 17. Job Production Job Production concentrates on producing one product from start to finish. Once one product is complete, another can begin. It is extremely labour intensive Some examples: Wedding dress Painting House extension
- 18. Job Production +/High quality product Can customise orders Workers involved in entire production process from start to finish Production costs likely to be high Production time may be longer Investment in machinery may be higher as specialist equipment may be needed
- 20. Batch Production Batch production enables items to be created in bulk („a batch‟) General purpose equipment and methods are used to produce small quantities of items that will be made and sold for a limited time only Commonly used in food production Big Macs Gregg‟s Rolls
- 21. Batch Production +/Allows flexible production Stocks of partfinished goods can be held and completed later Production runs of small batches can be expensive to produce If production runs are different there may be extra costs and time delays in setting up different equipment
- 23. Flow Production Aka continuous production, flow production enables products to be created in a series of steps. Large amounts of goods produced and is highly capital intensive (machinery, automation) Cars are massed produced for a large market using flow production
- 24. Flow Production +/Economies of scale Standard product produced (opposite Automated of customised) production lines save time and money High set-up costs of automated lines Quality systems can be built into the Repetitive and production boring work
- 25. TASK Question Bank 28-31 N5 Bus Man – 2.2: Operations © BEST Ltd 25
- 26. ICT Task Prepare a presentation which compares the different methods of production: Job Batch Flow Ensure you have appropriate text, images & examples Include some advantages & disadvantages Also include a short quiz to test other learners
- 27. Quality What is quality? Why is quality important?
- 28. Definitions of Quality “The standard of something as measured against other things of a similar kind; the degree of excellence of something.” – Oxford English Dictionary "Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for.“ - Peter Drucker "Degree to which a product/service fulfils customer requirements.“ - ISO 9000: "Number of defects per million opportunities.“ - Six Sigma
- 29. “Quality is everyone‟s responsibility” - W. Edwards Deming
- 30. Quality Methods Employees – Investors in People Raw Materials – GIGO Quality Control Quality Assurance TQM - Quality Management
- 31. Total Quality Management Commitment - Everyone is involved in quality Get it right first time - aims for zero defects & wastage Quality Circles Kaizen – continuous improvement
- 32. Other Quality Methods BSI Kitemark Benchmarking ISO 9000
- 33. ISO 9000 ISO 9000 is an international standard. Inspectors check if the company: can answer these questions. Does it have a quality policy? Is the policy understood by employees? Does it make decisions about quality systems based on recorded data Are the Quality systems regularly evaluated? Do they have records of where raw materials & products were sourced? Does it communicate with customers about product information, inquiries, orders, feedback, and complaints? Does it plans new product development, with appropriate testing at each stage? Does it regularly review performance? Does it deal with past & potential problems?
- 34. TASK Question Bank 32-38 Homework As part of Literacy across learning, you will prepare and present a solo talk on this question: “What does Quality mean to you?”
- 35. Ethical and Environmental Firms now have to socially responsible. They can do this by: Recycling Less waste Biodegradable packaging Low pollution levels Fair employee working conditions Pay workers a fair wage
- 36. N5 Bus Man – 2.2: Operations © BEST Ltd 36
- 37. N5 Bus Man – 2.2: Operations © BEST Ltd 37
- 38. TASK Question Bank 39-42 Go Further Research the following events/issues: Exxon Valdez Bhopal – Union Carbide Deepwater Horizon Walmart in China
- 39. Distribution By road, rail, air or sea? Or pipeline? Decided by: Cost Infrastructure Product/service type
- 40. An Oil Pipeline in Saudi Arabia
- 42. Operations is affected by: Internal Factors Finance Labour Technology Political External Factors Economic Social Technological Environmental Competitive
Editor's Notes
- The ISO 9000 family of standards is related to quality management systems and designed to help organizations ensure that they meet the needs of customers and other stakeholders.Six Sigma is a set of strategies, techniques, and tools for process improvement. It was developed by Motorola in 1986.Six Sigma became famous when Jack Welch made it central to his successful business strategy at General Electric in 1995.Today, it is used in many industrial sectors.