BM Unit 2 - L051 Higher Business Management Unit 2 Learning Outcome 5 Operations.
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Transcript of BM Unit 2 - L051 Higher Business Management Unit 2 Learning Outcome 5 Operations.
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BM Unit 2 - L05 1
Higher Business Management
Unit 2Learning Outcome 5
Operations
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BM Unit 2 - L05 2
Operations/Production
Three distinct phases
Inputs Process Outputs
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BM Unit 2 - L05 3
Inputs
Raw materials
Labour
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BM Unit 2 - L05 4
Process
Converting raw materials into something useful
Use of machinery and other processes
Assembly
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BM Unit 2 - L05 5
Output
The finished product! Packaging Storage Distribution Transport
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BM Unit 2 - L05 6
Factors Affecting Production Systems
Nature of the product Quantity to be produced Resources available Labour Capital
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BM Unit 2 - L05 7
Methods of Production
Job Production
Batch Production
Flow Production
MASS PRODUCTION IN LARGE FACTORY
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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
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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
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BM Unit 2 - L05 10
Flow Production
Mass production of almost identical products
Cars Washing machines
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BM Unit 2 - L05 11
Quality Control
‘Bolting the door after the horse has gone’
Leads to waste and scrap
Can be very “costly”
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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
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BM Unit 2 - L05 13
Quality - A Definition
Those features of a product or service that allow it to satisfy customers’ requirements
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BM Unit 2 - L05 14
Measuring Quality
Tangible Appearance Reliability Durability Functions Suitability After sales
service Maintenance
Intangible Image and
brand (‘street cred’)
Reputation Exclusivity
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BM Unit 2 - L05 15
Quality Systems
Total quality management Benchmarking Quality circles
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BM Unit 2 - L05 16
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
Total Quality Management (TQM)
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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
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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.
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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
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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)
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BM Unit 2 - L05 21
Types of Stock
Raw materials, components, etc
Work in progress (unfinished work)
Finished goods
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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)
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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
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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
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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
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BM Unit 2 - L05 26
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
Just-in-time (Kanban System)Disadvantages
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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
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BM Unit 2 - L05 28
Best quality Lowest price Delivered in correct
quantities Delivered at the correct time
The Purchasing Mix