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Think Business
Programme 2: Operations
'Think Business' consists of five TV programmes. Each programme comprises a number of short case studies describing the activities of a wide range of real-life successful Scottish organisations including a range of different forms of business from the small-scale sole trader to larger limited companies. A Scottish charity and a workers' co-operative are also represented.
The five programmes use the real case studies to focus on particular areas of interest. These areas are described in each programme's title.
Programme 2 Operations: illustrates the different types of production by examining how four Scottish organisation manage their production.
The programme aims to introduce learners to:
- the production process;
- the importance of efficient production systems and consistent product quality.
Learning Outcomes
Learners will:
- understand the role of production in the satisfaction of consumer wants;
- understand that production is a system involving inputs, conversion and output;
- know the features of the different types of production; job, batch and mass / flow / line;
- understand the importance of managing production in the most efficient and low-cost way;
- identify and select relevant information from the programmes to support coursework.
The programmes will be useful to support learning in Standard Grade Business Management, Intermediate 1, 2 and Higher Grade Business Management. Similar GCSE and AS /A level courses in England and Wales and Ireland could also use the programmes to enhance learning.
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Four short case studies of Scottish firms each illustrate and explain some aspects of production (manufacturing) and all emphasise the importance of seeking efficiency in the production process and maintaining consistency of output quality.
0.00–3.45: in Case Study 1, Don't go round in Circles, get Organised, Sally Ho, the owner of Sally Ho Dressmaking, explains how she uses job production techniques to make one-off specialised dresses for clients, and how this has developed into batch production where a small number of ready-made dresses are produced.
3.45–9.25: in Case Study 2, Get the right Tools for the Job, Ben Dawson, Managing Director of Ben Dawson Furniture Design Ltd, a specialist furniture manufacture, explains how using computer-aided design (CAD) and manufacturing (CAM) equipment can benefit an organisation.
3.45–9.25: in Case Study 3, Think Batch, the work of Mackies Ice Cream Ltd, a vertically integrated organisation, is described by Maitland Mackie, Chairman. This specialised manufacturer of quality ice cream operates in a very competitive market so production has to be efficient and the product has to be of consistent high quality.
14.15–18.35: in Case Study 4, Go with the Flow, the mass / flow production techniques used at Tunnocks Bakeries Ltd are described by Boyd Tunnock, Managing Director, who also highlights how automation of the production process can increase productivity and increase competitiveness.
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In Scotland
Standard Grade Business Management
Area of Study 3 What resources do businesses use?
3.3 How do businesses operate?
Intermediate 1 Business Management
Business Activities
Learning Outcome 3 Describe the operations function in an organisation
Intermediate 2 Business Management
Learning Outcome 4 Explain the operations function in an organisation
Learning Outcome 5 Explain the uses and importance of IT to the operation of an organisation
Higher Grade Business Management
Business Decision Areas
Learning Outcome 5 Analyse operations decisions
In England
A/AS Business Studies: Operations Management
In Northern Ireland
A/AS Business Studies: Marketing and Operations Management
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Some key terms:
The words 'Production' and 'Operation' are used to describe the process of manufacturing / providing goods or services. Similarly the words 'Mass', 'Flow' and 'Line' are interchangeable when discussing this particular method of production.
'Productivity' measures the rate of production per unit of input, eg at present a factory is producing 100 units per worker / hour. One of the aims of the production manager might be to increase the labour productivity rate so more is produced per worker / hour and unit cost reduced. Redesigning the work undertaken, using capital equipment and working smarter could achieve this.
'Competitiveness' describes the ability of an organisation to compete (normally on price / service) with its competitors. Competitiveness can be increased when the production process is efficiently run with vigorous cost control and increasing productivity. Price increases for the output sold can therefore be avoided. Production managers are constantly seeking ways to improve the efficiency of production and maintain consistent quality.
Aims of Production
The efficient production of goods / services is critical in order to satisfy human needs and wants at the lowest cost. The production of goods takes place in organisations that will have specialised areas (workshops, factories, plants) in which the goods will be produced. Organisations who provide services will also have specialised areas (surgeries, offices, shops, restaurants, leisure centres) to deliver the service to patients, customers, clients, etc.
The Production Process
The production process is a system that takes inputs (raw materials, equipment, labour, management) and combines and manages these inputs in a production process. An output of goods or services results. The production process 'adds value' in that the value of the finished goods is greater than the value of the inputs used, ie the inputs alone are less valuable than when they are combined into a product or service that consumers demand and are willing to pay for.
Growing by Integration
Often an organisation that is producing goods or services will try to gain control or integrate with another organisation at an earlier stage in the production process, eg buying a raw material supplier. This is known as backward vertical integration. Similarly if the organisation bought the distributor of the product - a later stage in the production process - this would be known as forward vertical integration. Both approaches are designed to improve the efficiency of the production and distribution system by reducing costs and gaining economies of scale. Horizontal integration takes place when an organisation integrates with another at the same stage of production, eg a biscuit manufacturer integrates with another biscuit manufacturer.
Aims of Producers
Producers constantly seek ways of reducing their costs of production by managing:
- inputs more efficiently, eg buying inputs in bulk to reduce costs, constantly seeking ways to minimise waste or spillage of materials;
- the production process more efficiently, eg using equipment to increase the rate of production and improve quality, working 24-hour shifts to fully utilise equipment and so reduce costs;
- output more efficiently, eg avoiding over-production with large quantities of stock building up, organising production on a Just-in-Time basis so that output closely matches orders, and minimising warehousing costs.
Types of Production
Production can be classified into three types:
- Jobbing Production: production of specialised one-off items that are normally made to order, eg dresses for individual customers, customised furniture for specialised customers.
- Batch Production: production of a large number (batch) of similar items made in batches and moving through the stages of production in batches, eg batches of ice cream, batches of chemicals.
- Mass / Flow / Line: production of a very large number of identical items produced in a set sequence of operations and usually involving equipment arranged in a production line, eg motor cars, chocolate bars.
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NOTE:
Two types of activities / tasks suggested for learners have been laid out below.
- Activities / tasks based on information given in the case studies and requiring the learners to view the case studies.
- Other activities / tasks that can be done without viewing the case studies.
Also
- The activities / tasks available at Standard Grade and Intermediate 1 are often similar.
- Learners can use the activities / tasks at lower levels for reinforcement.
Activities and Tasks based on the Case Studies
Standard Grade Business Management
Case Studies 1 & 2 (Sally Ho, Ben Dawson Furniture Design Ltd)
- Identify the features of job production shown in the two Case Studies.
- List the main sections of the Business Plan that Sally Ho constructed and describes in the Case Study.
- List the equipment that a dressmaker / furniture maker might use in production. Explain how each item you identify might improve / increase output.
- Explain how a dress designer might use information technology to:
- help in the design of the clothing to be produced;
- help in the general administration of the business.
- Using Case Study 2 (Ben Dawson Furniture Design Ltd), explain the advantages of using computer-controlled machinery in production.
- Explain why the furniture producer emphasised the importance of ensuring the quality of his production.
Case Study 3 (Mackies Ice Cream Ltd)
- Identify and discuss the features of batch production.
- Explain the advantages to Mackies Ice Cream of controlling the cream supplies with which the ice cream is made.
- What particular production advantage resulted from the automatic milking of the farm's cows.
- Describe how the quality of the ice cream is maintained and explain why Maitland Mackie emphasised the importance of ensuring consistent quality of his production.
- List the problems Mackies Ice Cream might have exporting to Korea.
Case Study 4 (Tunnock's Bakeries Ltd)
- Identify and discuss the features of mass / flow / line production.
- The process of biscuit production looks very 'capital intensive'. Explain the meaning of 'capital intensive' and list the advantages to Tunnock's of using this method of production.
- Explain how increasing the amount of automation in Tunnock's factory might increase productivity and competitiveness.
Intermediate 1 Business Management
Case Studies 1 & 2 (Sally Ho, Ben Dawson Furniture Design Ltd)
- Identify and discuss the features of job production shown in the two Case Studies.
- List the main sections of the Business Plan that Sally Ho constructed and describes in the Case Study.
- List the capital equipment that a dressmaker / furniture maker might use in production. Explain how each item you identify might improve / increase output.
- Explain how a dress designer might use information technology to:
- help in the design of the clothing to be produced;
- help in the general administration of the business.
- Using Case Study 2 (Ben Dawson Furniture Design Ltd), explain the advantages of using computer-controlled machinery in production.
- Explain why the furniture producer emphasised the importance of ensuring the quality of his production.
Case Study 3 (Mackies Ice Cream Ltd)
- Identify and discuss the features of batch production.
- Explain the advantages to the Mackies Ice Cream of controlling the cream supplies with which the ice cream is made.
- What particular production advantage results from the automatic milking of the farm's cows?
- Describe how the quality of the ice cream is maintained and explain why Maitland Mackie emphasised the importance of ensuring consistent quality of his production.
- List the problems Mackies Ice Cream might have exporting to Korea.
Case Study 4 (Tunnock's Bakeries Ltd)
- Identify and discuss the features of mass/flow/line production.
- The process of biscuit production looks very 'capital intensive'. Explain the meaning of 'capital intensive' and list the advantages to Tunnock of using this method of production.
- Explain how increasing the amount of automation in Tunnock's factory might increase productivity and competitiveness.
Intermediate 2 Business Management
Case Study 2 (Ben Dawson Furniture Designs Ltd)
- Explain why Ben Dawson emphasised the importance of ensuring the quality of his production.
Case Study 3 (Mackies Ice Cream Ltd)
- Explain why Maitland Mackie emphasised the importance of ensuring consistent quality of his production.
- List the problems that Mackie's Ice Cream might have exporting to Korea.
Case Study 4 (Tunnocks Bakeries Ltd)
- Explain how increasing the amount of automation in Tunnock's factory might increase productivity and competitiveness.
At Higher Grade
Case Study 2 (Ben Dawson Furniture Design Ltd)
- Explain the advantages to the Ben Dawson of using computer-controlled machinery in production.
- Explain why Ben Dawson emphasised the importance of ensuring the quality of his production.
Case Study 3 (Mackies Ice Cream Ltd)
- Explain why Maitland Mackie emphasised the importance of ensuring consistent quality of his production.
- List the problems Mackies Ice Cream might have exporting to Korea.
Case Study 4 (Tunnocks Bakeries Ltd)
- The process of biscuit production looks very 'capital intensive'. Explain the meaning of 'capital intensive' and list the advantages to Tunnock's of using this method of production.
- Explain how increasing the amount of automation in Tunnock's factory might increase productivity and competitiveness.
Other activities
NOTE:
Probably the best way for learners to learn about production is to simulate a production situation in the classroom. By producing eg, paper chains, calendars, the principles of production can be demonstrated and experienced by pupils and post-simulation discussion can focus on methods of increasing production / productivity, the application of equipment, the control of quality and the role of labour in the process.
Visits to organisations to see production and to have the process explained by a production manager are also very useful approaches. However, such visits / explanations should be carefully planned with a pre-visit to the site by the teacher to see if the process is relatively simple to comprehend. A pre-meeting with the production manager to agree exactly what he/she should focus on when guiding the learners around the production process or talking about the process itself is crucial.
At Standard Grade Business Management
- Identify one product at home that is likely to have been made using each method of production, Job, Batch and Mass.
- In groups select an everyday product and examine it. Write down all the resources that you think might have been used to produce it and discuss with your group the production stages that it might have gone through before it became the finished product.
- List the advantages and disadvantages of using equipment in production to:
- a manufacturing organisation;
- a production worker.
- explain how you might measure the efficiency of production for:
- a football team;
- a lemonade factory;
- a restaurant.
Intermediate 1 Business Management
- Identify one product at home that is likely to have been made using each method of production, Job, Batch and Mass.
- In groups select an everyday product and examine it. Write down all the resources that you think might have been used as inputs in its production and discuss with your group the production stages that it might have gone through before it became the finished product.
- List the advantages and disadvantages of using equipment in production to:
- a manufacturing organisation;
- a production worker.
- Explain how you might measure the efficiency of production of:
- a football team;
- a lemonade factory;
- a restaurant.
- List the main activities you would be likely to be carrying out if you were a production manager.
- What factors would you have to consider if you were employed to buy the following inputs for production:
- food ingredients for a restaurant making take away pizzas;
- a new professional footballer for a premier league football team;
- stationery resources for an office, eg paper, envelopes, pens, pencils, etc.
Intermediate 2 Business Management
- In small groups, list possible reasons why a number of UK manufacturing firms are setting up production facilities overseas.
- Explain how a producer might measure the quality of the output produced in the factory. How might benchmarking be used to assess the quality of output produced.
- Identify the measures a producer of fast food might take to ensure the quality of production is at least maintained at a consistent level and hopefully enhanced.
Higher Grade Business Management
- In small groups, list possible reasons why a number of UK manufacturing firms are setting up production facilities overseas.
- Explain how a producer might measure the quality of the output produced in the factory. How might benchmarking be used to assess the quality of output produced.
- Identify the measures a producer of fast food might take to ensure the quality of production is at least maintained at a consistent level and hopefully enhanced.
- Explain how mass / flow / line production can lead to economies of scale.
- Explain why stock control is important to a producer. Identify some of the problems faced by a production manager when trying to establish the level of stock to hold on the premises.
- Explain what is meant by a 'quality standard'? Identify possible quality standards that might be established for:
- a restaurant;
- a call centre;
- a swimming pool;
- an ice cream manufacturer.
- What is meant by 'total quality management' and what are some of the features you would expect to find in an organisation that practised total quality management?
Suggested Solutions
- Often in the area of Business Management there is no one correct answer but a number of plausible solutions may exist. The solutions offered here are simply suggestions; teachers and learners may well be able to identify other plausible alternatives.
- A number of activities involve learners in investigating local businesses, etc. In such cases, no suggested solutions can be offered.
Activities and Tasks based on the Case Studies
Standard Grade Business Management
Case Studies 1 & 2 (Sally Ho, Ben Dawson Designs Ltd)
| 1. |
Features of job production: |
Unique, single, one-off product produced for individual customer. |
| 2. |
Main parts of business plan: |
Marketing Section
Explanation of how business idea is to become a reality
Finance Section dealing with start-up / running cost finance. |
| 3. |
Dressmaker's equipment: |
Scissors, needles, rulers, chalk, etc.
Patterns / templates used to quickly cut shapes out of cloth
Sewing machine to speed up sewing process
Workshop
All would help to maintain and increase output. |
|
Furniture maker's equipment: |
Electric saws / screwdrivers, hammers, pliers, chisels, etc.
Work-benches, factory / workshop would all help to maintain and increase output. |
|
4 IT for designing: |
Garments can be designed on-screen allowing customers to see and discuss the final product. Shape / design can be manipulated to achieve the best 'look'. Design thus becomes a very flexible process. |
|
IT for admin: |
Databases for customers/suppliers/designs
E-mail for communication externally
Internet to see designs from other suppliers. |
| 5. |
Advantages of using computer-controlled machinery: |
Reduces the need for high-cost craftsmen to machine parts
Accurate, efficient and fast production
Cost of cutting out parts for products reduced
Computer-aided design allows flexibility at design stage |
| 6. |
Importance of quality: |
If high quality is maintained customers will be satisfied and remain loyal
Quality differentiates the organization from competitors using mass production techniques |
Case Study 3 (Mackies Ice Cream)
| 7. |
Features of Batch Production: |
Production of a large number / amount of similar items all passing through the same stages of production together (in batches). |
| 8. |
Advantages of controlling cream supplies: |
No disruption of cream supplies
Control of quality / quantity of cream supplied. |
| 9. |
Production advantage of automatic milking: |
Cows were less stressed and so gave 20% more milk. |
| 10. |
How is Quality maintained? |
By tasting panels. |
|
Why is maintaining quality important? |
Mackies operates in a competitive market and consistent quality will retain customers and market share. |
| 11. |
Problems of exporting to Korea: |
Changes in the value of currencies will affect sales income
Transporting the product to Korea
Establishing agents/office/distribution system in Korea |
Case Study 4 (Tunnock's Bakery Ltd)
| 12. |
Features of Mass Production: |
Huge amounts of identical products moving through a set sequence of stages of production and using large amounts of equipment. |
| 13. |
Meaning of 'capital intensive': |
Production of output using large amounts of equipment in relation to labour. |
|
Advantage 'capital intensive': |
Large volume of output with high fixed costs (equipment)but relatively low unit costs as the fixed costs are spread over increased output (technical economies of scale)
Equipment can run 24/7
Capacity can be fully used with little down time (providing the market is demanding the output!). |
| 14. |
How does automation increase productivity and competitiveness: |
Productivity: output per worker increased as machinery aids workers to produce more in the same time
Competitiveness: automation can reduce unit costs and so allow the price of finished products sold to be low / lower than competitors' prices. |
Intermediate 1 Business Management
Case Studies 1 & 2 (Sally Ho, Ben Dawson Designs Ltd)
| 1. |
Features of job production: |
Unique, single, one-off product produced for individual customer. |
| 2. |
Main parts of business plan: |
Marketing Section
Explanation of how business idea is to become a reality
Finance Section dealing with start-up / running cost finance. |
| 3. |
Dressmaker's equipment: |
Scissors, needles, rulers, chalk, etc.
Patterns / templates used to quickly cut shapes out of cloth
Sewing machine to speed up sewing process
Workshop
All would help to maintain and increase output. |
|
Furniture maker's equipment: |
Electric saws / screwdrivers, hammers, pliers, chisels, etc.
Work-benches, factory / workshop would all help to maintain and increase output. |
| 4. |
IT for designing: |
Garments can be designed on-screen allowing customers to see and discuss the final product. Shape/design can be manipulated to achieve the best 'look'. Design thus becomes a very flexible process. |
|
IT for admin: |
Databases for customers / suppliers / designs
E-mail for communication externally
Internet to see designs from other suppliers. |
| 5. |
Advantages of using computer-controlled machinery: |
Reduces the need for high-cost craftsmen to machine parts
Accurate, efficient and fast production
Cost of cutting out parts for products reduced
Computer-aided design allows flexibility at design stage. |
| 6. |
Importance of quality: |
If high quality is maintained customers will be satisfied and remain loyal
Quality differentiates the organization from competitors using mass production techniques |
Case Study 3 (Mackies Ice Cream)
| 7. |
Features of Batch Production: |
Production of a large amount of similar items all passing through the same stages of production together (in batches). |
| 8. |
Advantages of controlling cream supplies: |
Control of quality / quantity of cream supplied. |
| 9. |
Production advantage of automatic milking: |
Cows were less stressed and so gave 20% more milk. |
| 10. |
How is Quality maintained? |
By tasting panels. |
|
Why is maintaining quality important? |
Mackies operates in a competitive market and consistent quality will retain customers and market share. |
| 11. |
Problems with exporting to Korea: |
Changes in the value of currencies will affect sales income
Transporting the product to Korea.
Establishing agents / office / distribution system in Korea. |
Case Study 4 (Tunnock's Bakery Ltd)
| 12. |
Features of Mass Production: |
Huge amounts of identical products moving through a set sequence of stages of production and using large amounts of equipment. |
| 13. |
Meaning of 'capital intensive': |
Production of output using large amounts of equipment in relation to labour. |
|
Advantages of 'capital intensive': |
Large volume of output with high fixed costs (equipment) but relatively low unit costs as the fixed costs are spread over increased output (Technical economies of scale)
Equipment can run 24/7
Capacity can be fully used with little down time (providing the market is demanding the output!). |
| 14. |
How does automation increase productivity and competitiveness? |
Productivity: output per worker increased as machinery aids workers to produce more in the same time
Competitiveness: automation can reduce unit costs and so allow the price of finished products sold to be low / lower than competitors' prices. |
Intermediate 2 Business Management
Case Study 2 (Ben Dawson Designs Ltd)
| 1. |
Why is quality important? |
If high quality is maintained customers will be satisfied and remain loyal.
Quality differentiates the organization from competitors using mass production techniques. |
Case Study 3 (Mackies Ice Cream Ltd)
| 2. |
Importance of quality: |
Mackies operates in a competitive market and consistent quality will retain customers and market share. |
| 3. |
Problems with exporting to Korea: |
Changes in the value of currencies will affect sales income
Transporting the product to Korea
Establishing agents/office/distribution system in Korea. |
Case Study 4 (Tunnock's Bakeries Ltd)
| 4. |
How does automation increase productivity and competitiveness? |
Productivity: output per worker increased as machinery aids workers to produce more in the same time
Competitiveness: automation can reduce unit costs and so allow the price of finished products sold to be low / lower than competitors' prices. |
Higher Grade Business Management
Case Study 2 (Ben Dawson Designs Ltd)
| 1. |
Advantages of using computer-controlled machinery: |
Reduces the need for high-cost craftsmen to machine parts
Accurate, efficient and fast production
Cost of cutting out parts for products reduced
Computer-aided design allows flexibility at design stage. |
| 2. |
Why is quality important? |
If high quality is maintained customers will be satisfied and remain loyal.
Quality differentiates the organization from competitors using mass production techniques. |
Case Study 3 (Mackies Ice Cream Ltd)
| 3. |
Importance of quality: |
Mackies operates in a competitive market and consistent quality will retain customers and market share. |
| 4. |
Problems with exporting to Korea: |
Changes in the value of currencies will affect sales income
Transporting the product to Korea
Establishing agents/office/distribution system in Korea. |
Case Study 4 (Tunnock's Bakeries Ltd)
| 5. |
Meaning of 'capital intensive': |
Production of output using large amounts of equipment in relation to labour. |
|
Advantages of 'capital intensive': |
Large volume of output with high fixed costs (equipment)but relatively low unit costs as the fixed costs are spread over increased output (Technical economies of scale)
Equipment can run 24/7
Capacity can be fully used with little down time (providing the market is demanding the output!). |
| 6. |
How does automation increase productivity and competitiveness? |
Productivity: output per worker increased as machinery aids workers to produce more.
Competitiveness: automation can reduce unit costs and so allow the price of finished products sold to be low/lower than competitors' prices. |
3. Advantages / disadvantages of using equipment to:
|
Advantages |
Disadvantages |
| Manufacturing Organization: |
Large scale production
Low unit costs
Low skilled labour needed. |
Costly if equipment not fully used
Needs large market to be effective
Hold-up in one part of line affects all. |
| Production Worker: |
Low levels of skill needed
Beneficial if pay is based on large output |
Boring, repetitive work
Worker too specialised;
difficult to find alternative work when made redundant. |
4. Measuring Efficiency:
| Football team: |
Goals scored
Games won
League position
No of successful passes. |
| Lemonade Factory: |
No of bottles produced per hour / worker
Total time production line is in operation
Amount of spoilage /wastage (to be kept low)
Unit cost of production (to be kept low). |
| Restaurant: |
Unit cost of meals produced (to be kept low)
Amount of waste (to be minimised). |
Intermediate 1 Business Management
1 No solution offered
2 No solution offered
3 Advantages / disadvantages of using equipment to:
|
Advantages |
Disadvantages |
| Manufacturing Organization: |
Large scale production
Low unit costs
Low skilled labour needed. |
Costly if equipment not fully used
Needs large market to be effective
Hold-up in one part of line affects all. |
| Production Worker: |
Low levels of skill needed
Beneficial if pay is based on large output |
Boring, repetitive work
Worker too specialised;
difficult to find alternative work when made redundant. |
4. Measuring Efficiency:
| Football team: |
Goals scored
Games won
League position
No of successful passes. |
| Lemonade Factory: |
No of bottles produced per hour / worker
Total time production line is in operation
Amount of spoilage /wastage (to be kept low)
Unit cost of production (to be kept low). |
| Restaurant: |
Unit cost of meals produced (to be kept low)
Amount of waste (to be minimised). |
5. Activities of Production Manager:
Buying in inputs for production
Monitoring and managing stock levels and stock room / warehouse
Organizing / monitoring the production process
Organizing / monitoring stocks of finished goods in warehouse
Organizing / monitoring distribution of finished goods to customers
6. Factors influencing buying:
| Pizza Restaurant: |
Cost, availability and quality of supplies
Reliability of supplier. |
| Professional Footballer: |
Cost, age and injury record
Experience and achievements. |
| Stationery: |
Existing stock levels
Cost, availability and quality. |
Intermediate 2 Business Management
| 1. |
Reasons for producing overseas: |
Lower costs of production, particularly labour costs
Access to new / growing markets - E Europe / China
Set-up grants/subsidies available from overseas governments
Globalisation: for many companies the world is now their market and so firms are no longer tied to one country to produce. |
| 2. |
Measuring quality of output: |
Quality control during production - quality checks / inspections
Check number of 'rejected' items to assess quality of the production process itself. |
|
Use of benchmarking: |
By comparing the quality of the output with that of another known and respected producer, an indication is given about how the organization compares with the industry leader and the 'best practices' in the industry. Usually employed by an organization as an element in its Total Quality Management programme. |
| 3. |
Measures to ensure quality: |
Fast Food producer might:
- ensure the best production processes are in place and constantly monitor to look for improvements;
- provide appropriate training for all staff so they can successfully implement the production processes;
- ensure appropriate quality inputs are used in production;
- undertake spot checks on meals to ensure quality is being maintained;
- invite customers to comment on consistency of quality through suggestion / comment questionnaires.
|
Higher Grade Business Management
| 1. |
Reasons for producing overseas: |
Lower costs of production, particularly labour costs
Access to new / growing markets - E Europe / China
Set-up grants/subsidies available from overseas governments
Globalisation: for many companies the world is now their market and so firms are no longer tied to one country to produce. |
| 2. |
Measuring quality of output: |
Quality control during production - quality checks / inspections
Check number of 'rejected' items to assess quality of the production process itself. |
|
Use of benchmarking: |
By comparing the quality of the output with that of another known and respected producer, an indication is given about how the organization compares with the industry leader and the 'best practices' in the industry. Usually employed by an organization as an element in its Total Quality Management programme. |
| 3. |
Measures to ensure quality: |
Fast Food producer might:
- ensure the best production processes are in place and constantly monitor to look for improvements;
- provide appropriate training for all staff so they can successfully implement the production processes;
- ensure appropriate quality inputs are used in production;
- undertake spot checks on meals to ensure quality is being maintained;
- invite customers to comment on consistency of quality through suggestion / comment questionnaires.
|
| 4. |
Mass production and Economies of Scale: |
By producing on a large scale using mass / flow / line techniques an organization can enjoy the 'savings of size'
Eg
- Costs are spread over large output so unit cost is reduced
Inputs can be bought in bulk and discounts on inputs gained
Specialist managers can be employed whose high wages are recouped through the informed decisions they take Specialised equipment can be used resulting in increases in output which, when sold, more than pay for the equipment over time.
|
| 5. |
Importance of Stock control: |
Stocks of inputs must always be available for production
Shortfalls in stocks of inputs results in disrupted production and rising costs of production
Having too many inputs (stock-piling) increases production cost and ties up valuable money in stock lying idle.
The ideal would be to have just the right amount of stock to match production runs. This can be achieved by partnerships with suppliers and working towards a Just-in- Time stock control system where stocks arrive just as they are needed for production. |
|
Problems for Production Manager: |
Matching output to demand that often fluctuates
Matching inputs to output so no excessive/shortage of inputs
Knowing just how much stock to hold; determining what the minimum level of stock to hold should be and when to reorder
Determining the order in which to use stock; FIFO or LIFO. |
| 6. |
Quality standard: |
An indicator that shows to management the extent to which the organization is meeting its quality objectives. Sometimes this can be called a Performance Indicator. |
|
Quality standards for: |
Restaurant: |
Meals served within 15 minutes of customers arriving. |
|
Call Centre: |
Calls answered after no more than 6 rings. |
|
Swimming Pool: |
Changing rooms inspected every 30 minutes. |
| 7. |
Total Quality Management (TQM): |
An approach to management that, in order to meet customer needs, sees 'quality' as the responsibility of everybody in the organization. |
|
Features of TQM: |
- Commitment of senior management to the aims of TQM.
- Commitment of everyone to getting things right first time.
- Understanding on the part of all staff of the needs of internal and external customers.
- Improved communication between management and staff and between sections/departments.
- Staff training in the aims, processes and 'culture' of TQM.
- Meaningful measures of performance so staff can see what they are contributing and how they can improve.
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The websites of the various companies featured in the programmes offer some useful information about the workings of the companies.
This web page contains links to other websites that are not under the control of and are not maintained by Channel 4 Television. Channel 4 Television is not responsible for the content of these sites and does not necessarily endorse the material on them.
www.bized.co.uk - offers a wide range of business education information
www.bbc.co.uk/schools/gcsebitesize/business
www.bendawson.com
www.mackies.co.uk
www.tunnocks.co.uk
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