Operations Presentation

8/2/2019 Operations Presentation

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SG BUSINESS

MANAGEMENT

OPERATIONS


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Learning Outcomes

Input, process, outputPurchasing mix choice of supplier

Factors affecting choice of supplierPurchasing stock Stock controlJust-in-time production

Methods of production job, batch, flowAdvantages and disadvantages of each methodQuality Quality Control, Total Quality Management,Quality Circles, Benchmarking


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What is Operations?

Everyone has needs and wants. These canbe goods or services.

The operations area of the business is thetransfer of raw materials into a finished

article offered for sale.

This is sometimes called Production.


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Operations

Raw Materials

Manufacturing

Finished product and distribution

Customer

INPUT

PROCESS

OUTPUT


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Which supplier?

A business must consider the following

when choosing the right supplier of materials:


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Which supplier? cont

Price the best price possible - a cheaper pricewill reduce costs and increase profits

Quantity ability to supply quantity required

Quality needs to be consistent

Reliability confidence that delivery quantitiesdelivered to a deadline

DeliveryTime

Some raw materials may be perishableand require speedy delivery


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STOCK CONTROL

The purpose of holding stocks is to have asupply of goods (raw materials) availablefor the production process and fordistribution (finished goods) to customerswhen needed.


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3 main types of stock are

Raw Materials resources

waiting to be used

Work in Progress semi-finished

goods in the processFinished Goods products waitingto be distributed


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Benefits of holding stocks are

Supplies are availablewhen needed

Discounts - for bulk buying

Customers orders canbe met immediately

Any increase indemand can be met


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Costs of holding stocks are

Money which is tied up instock might be put tobetter use

Insurance

Labour costs involvedin stock control

Warehousing

Risk that the moneyvalue of stock will falleg due to changes infashion


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Businesses will have an effective stock controlpolicy. Decisions will be made on Maximum

Stock Level, Minimum Stock Level and ReorderLevel. Depending on usage and Lead Time.


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Businesses must have an effective stock controlpolicy for each item of stock:

Maximum level decided by the space available,the production needs, buffer stock and delivery

time

Minimum level this is decided by the need for abuffer stock to allow new supplies to be delivered

before old stock runs out

Re-order level the point when new stock isautomatically re-ordered, determined by deliverytimes etc.


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S t o

c k

Time

ReorderLevel

LeadTime

MinimumLevel

MaximumLevel


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Just In Time Stock Control (JIT)

Materials are only ordered when required for production

This is a Japanese way of controlling stock which is now used bymany companies in the UK.

The characteristics of this system are:

Close linkage with the firm and suppliers

No emergency or back-up stocks are held

Cost savings are made as stock levels are almost non-existentComputers can be used to connect demand, productionand delivery


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PRODUCTION


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METHODS OF PRODUCTION

Job Production

Batch Production

Flow Production


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JOB PRODUCTION

This is when a product is made individually tomeet specific orders from customers.

Often involves skilled labour or craftspeople.

It is labour intensive.

EXAMPLE: A designer dress is made fromstart to finish


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Advantages and Disadvantages of

Job ProductionADVANTAGES

It meets the customersneeds and is produced totheir own specifications

More motivating forworkers as they see theproduct through all stagesof production

DISADVANTAGES

High labour costs as theprocess is labourintensive.

Higher wage bill as theworkers are highly skilled

Costs are not recovereduntil the completion of the

project


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BATCH PRODUCTION

This is where a range of similar products aremade.

Workers usually specialise in one job, so becomeskilled in one area.

EXAMPLE: one batch of white bread is madefrom start to finish, then a batch of brown rollswill be made from start to finish.


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Batch ProductionADVANTAGES

Batches can be changed tomeet the requirements of the customer

Less skilled workers arerequired as only one partof the process iscompleted by a particularperson

DISADVANTAGES

Careful planning is neededfor the operation to runsmoothly

Workers motivation isreduced because they donot see the process fromstart to finish


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FLOW/MASS PRODUCTION

This is the continuous production of the samegood.

It is used for making large quantities of anidentical product.

Economies of scale can be made with this process.


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Flow ProductionADVANTAGES

Economies of scalescan be met due to thelarge production of goods

DISADVANTAGES

A large amount of moneyis required for set up costsEach product is identicalLack of motivation for

workers because they onlywork on a small part of theprocess


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Flow production example

Car manufacturing uses flow production

Chassisof car

Engine Gearbox Seats OuterShell

Dashboard

and wiring

Windscreen

andwindows


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Division of Labour

Both batch and flow production use division of labour which means that each worker specialisesin one job on the production line this makes the

job very repetitive and boring.

Many of these jobs have been replaced by

machinery. This has caused unemployment forunskilled workers.

It is more common for workers to be multi-skilledand do different jobs, or work in teams.


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Quality Products and Services

All businesses must ensure they provide agood quality product or service which meetscustomer needs in order to survive.The business must decide minimum qualitylevels and who is responsible for ensuring

that quality is maintained at the lowestpossible cost.


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Quality Control

Quality Control is the checking of a product or service bycarrying out an inspection. This usually happens at the endof the production process.

May lead to large amounts of waste.


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Quality Standards

Many products are made to standards whichare laid down by quality assurance bodies,such as the British Standards Institute (BSI).

The organisation draws up a standard for awide range of products such as the ISO9000 award and the Kitemark.


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Total Quality Management

TQM is a method by which a business focuses onquality by making it an important aim of every

worker in the organisation.

Samples of products are tested at random and atdifferent stages of the production process.

See Nissan diagram


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TQM

Benefits

Improved productIncreased productivityReduced wastage of resourcesIncrease inprofitability/marketshare

Barriers

Lack of managementcommitment/unwillingto change

Culture changeLack of planning


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Benchmarking

This is where one business compares itself to another similar organisation, usually themarket leader. By doing this a business canidentify what it is required to do to remaincompetitive.


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Customer Service

Customers need to be treated well by all employeesAny queries or complaints should be dealt with in a calm andknowledgeable manner otherwise pass to a senior colleagueCustomer Service Departments will have set procedures to deal withafter sales; complaints and to give information and advice.Poor customer service can lead to

Bad reputationLoss of customersLoss of Sales/ProfitsLoss of Market Share

Good Customer Service will result in:Loyalty and repeat salesCustomers recommendations leading to new customersGood Reputation leading to increased sales etc.

Operations Presentation

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Transcript of Operations Presentation