Business operations flashcards

Topic 3: Business operations

Job, batch, flow and cell production

Job: one item made to order. Batch: identical items in groups, one group after another. Flow: continuous production of a standard product. Cell: small teams each making a whole part or product.

Efficiency, and two ways of improving it

More output from the resources used, or the same output from fewer, so unit cost falls. Ways: just-in-time (JIT) and Kaizen (many small improvements suggested by employees at every level).

JIT and buffer stock compared

JIT: lower storage costs and less cash tied up, but more deliveries, lost bulk discounts, and production stops if a delivery is late. Buffer stock: spare stock to meet unexpected demand, but storage, insurance and cash tied up.

Factors in choosing a supplier

Price (the total cost once delivery, discounts and credit terms are included), quality, and reliability.

A supplier charges 3.60 but 10% of its goods are unusable. What is the cost per usable unit?

3.60 ÷ 0.90 = 4.00 per usable unit.

Total quality management (TQM): what it is, one advantage and one disadvantage

Every employee in every department is responsible for quality, and faults are prevented at each stage. For: fewer defects and less waste. Against: training and time to introduce, and it needs managers’ commitment.

Consequences of poor quality

Refunds and replacements, lost sales, a damaged reputation, lost loyalty, low staff morale and possible legal problems.

Why can quality be harder to keep as a business grows?

Managers are further from daily work; with outsourcing there is less control over the other firm’s standards; with franchising one weak outlet can damage the brand.

Elements of good customer service

Product knowledge, customer engagement (greeting, listening, quick problem handling) and post-sales services (user training, help lines, servicing).

Benefits of good customer service and dangers of poor service

Good: satisfaction and loyalty, repeat custom, good word of mouth. Poor: dissatisfied customers, a poor reputation, lost sales.