Making operational decisions

What does the term business operations refer to?

The part of the business that provides customers with the goods or services they ordered

What is operations responsible for?

Taking resources and using them to create finished goods or services, then ensuring timely delivery and quality

How is operations defined differently for goods and services?

Goods operations cover everything in the factory from making to delivering products; services operations cover the processes used to provide the service

What is an example of operations in a service business?

A dairy company using a website to take orders and quality control to ensure customer satisfaction

What are the three types of production processes businesses providing goods can choose from?

Job production, batch production, and flow production

What is job production?

Making individual products one at a time to meet specific customer preferences

Give an example of job production.

Tailor-made suits made to a customer’s measurements and tastes

What is batch production?

Making a set quantity of identical products called a batch

Give an example of batch production.

A bakery making batches of white bread rolls and wholemeal bread rolls

What is flow production?

Continuously making identical products, often heavily automated

What are three advantages of job production?

High profit margins, employees enjoy specialist skills, customers get exactly what they want

What are two disadvantages of job production?

Requires highly skilled staff which increases costs and training can be expensive

What are three advantages of batch production?

Can make a variety of sizes or flavours, can be partially automated, produces more products than job production

What are two disadvantages of batch production?

Less flexible than job production and not fully automated so higher costs than flow production

What are three advantages of flow production?

Able to make large quantities, consistent identical products, highly automated

What are three disadvantages of flow production?

Low profit margins in competitive markets, less tailored products, expensive machinery

Why might a business use a combination of production processes?

To suit different parts of production like batch baking and job finishing

What is productivity?

A measure of efficiency, such as products produced per worker per time period

How can businesses improve productivity?

Investing in machinery, providing worker incentives, training staff, encouraging time-saving ideas

Why is improving productivity important?

Keeps costs per unit low, allowing competitive pricing or higher profit margins

How does technology impact production?

Allows higher quantities, more consistent products, and cost-effectiveness

What must businesses balance when using technology?

Costs, productivity, quality, and flexibility

Why is flexibility important despite automation?

Because personalized products need human touch that automation cannot provide

What types of stock must businesses manage?

Raw materials, work in progress, and finished stock

What is procurement?

Getting the right supplies from the right supplier

Why is effective stock control important?

To prevent production stopping and to meet customer expectations of product availability

What happens if a business runs out of stock due to poor stock control?

They lose sales and potentially customers
What are three negative consequences of holding too much stock?

What does the maximum stock level represent?

The largest amount of stock a business can store on site

What is buffer stock also known as?

Minimum stock level

What is the purpose of buffer stock?

To allow the business to operate during delivery delays or spikes in demand and to replace damaged stock

What is lead time?

The time it takes from ordering stock to its arrival

What is reorder level?

The stock quantity at which a business must reorder to avoid falling below minimum stock

How do some businesses automate stock reordering?

By using computer software that orders stock automatically at a preset reorder level

What is just-in-time (JIT) stock control?

A method where businesses keep no raw materials stock and receive small, frequent deliveries just before existing stock runs out

What is necessary for JIT to be effective?

A good relationship with suppliers, ideally local to reduce delivery costs and lead time

What is a risk of JIT stock control?

Running out of stock due to late deliveries

Name two advantages of JIT stock control?

More sales space by removing buffer stock and fresher products due to frequent deliveries

How does JIT help reduce waste?

By having less stock that can go out of date

How does JIT affect production costs?

It reduces production costs allowing more competitive pricing

What is a disadvantage of JIT in terms of demand changes?

Difficulty reacting to unexpected increases in demand

Why might businesses not get bulk-buy discounts with JIT?

Because they buy in smaller quantities more frequently

How can poor stock estimation in JIT affect customers?

It can cause stockouts and poor customer service

Why is finding the right suppliers important for businesses?

Suppliers meet business needs and help remain competitive and successful

What are five key factors businesses consider when building supplier relationships?

Cost, quality, delivery, availability

Why is cost important when choosing suppliers?

Lower costs keep variable costs down and increase profit margins

Why must businesses consider quality from suppliers?

Because product quality affects customer satisfaction regardless of price point

How does delivery timing from suppliers impact businesses?

Late deliveries can interrupt manufacturing or cause stock shortages

How can businesses incentivize suppliers to deliver on time?

By fining suppliers a percentage of the value of late deliveries

Why is supplier availability and capacity critical?

To meet unexpected order increases without delay

Why is trust important between businesses and suppliers?

To allow trade credit and keep designs confidential

What do procurement and logistics ensure?

That the right products are sourced and arrive when needed

How can delays in procurement and logistics affect business costs?

They can increase costs and limit cash flow due to lost or damaged products

How does supplier quality impact business reputation?

Poor supplier quality or late deliveries harm reputation by affecting customer delivery

What is customer satisfaction dependent on in procurement and logistics?

Getting correct products to the right place at the right time efficiently

What defines a good-quality product?

High standards of manufacturing, use of quality raw materials, durability, and proper functioning

What is an example of good post-sales service?

Quick and efficient handling of faults

What is quality control?

Inspecting products and services to ensure high standards before customers receive them
Name three methods of quality control?

What is a disadvantage of quality control methods?

Faults are only found at the end of production when fixes are more costly

What is quality assurance?

Conducting quality checks during production to catch faults earlier

How does quality assurance affect employee responsibility?

Makes quality everyone’s responsibility during production

Why might quality assurance increase business costs?

Training and hiring skilled staff is expensive and reflected in prices

What is the main focus of quality control?

Identifying and fixing faulty goods with responsibility on a specific team

What is the main focus of quality assurance?

Improving the production process with quality responsibility shared by all involved

Why do businesses develop a quality-focused culture?

To motivate employees to care about quality, customers, and reputation

How does quality management provide competitive advantage?

By meeting customer needs with high-quality products and services

How does quality management help reduce costs?

By limiting mistakes, waste, and rework through doing things right the first time

Give an example of cost reduction through quality management?

Avoiding scrapping and replacing damaged parts during production

What happens when businesses offer higher quality at lower costs?

They gain competitive advantage, build a strong brand, and can charge premium prices

What are the five key stages of the sales process?

Customer interest, speed and efficiency of service, customer engagement, post-sales service, customer loyalty

Why is the sales process considered valuable in customer service?

Because it contributes to customer satisfaction

How is the sales process commonly represented?

As a cyclical process

Does the sales process always follow the same sequence?

No, the sequence varies for some products and services

How do businesses attract customer interest?

By using emotive language in advertising and ensuring good product knowledge and sales approaches

What example is given of using emotive language to attract customers?

Christmas television advertisements by supermarket chains featuring themes of friendship and family

Why is product knowledge important for employees?

Because customers expect a high level of product knowledge and customer service

What is an example of product knowledge adding value?

A specialist cycling shop employee advising on the correct bike for rough terrain versus road use

How do employees typically gain product knowledge?

Through training and refresher courses

What is the difference between a hard and a soft sales approach?

Hard approach actively seeks customers to encourage purchase, soft approach offers help only when requested

Why is speed and efficiency important in customer service?

It helps attract customers, makes them feel valued, and ensures quick delivery of products in perfect condition

What might customers accept paying more for?

Good quality, good value products accompanied by good customer service

What must e-tailers ensure about their websites?

That the purchasing process is efficient and user-friendly

How can physical retailers improve checkout service?

By reducing queue times or introducing self-service checkouts

What does customer engagement refer to?

Interactions between a business and its customers during the sales process

Give an example of a product requiring high customer engagement?

The sale of a house or purchase of a car

How do businesses use social media to engage customers?

By asking for likes, follows, recommendations, or customer posts using their products

Why is maintaining customer engagement important?

It helps businesses create large brands known globally

What is post-sales service?

Support provided to customers after purchase, including assistance and complaint handling

How can businesses provide efficient post-sales service?

Using online services like chat facilities with customer service personnel

Why is gathering customer feedback important?

It helps build positive customer relationships and allows businesses to respond quickly to complaints

What leads to customer loyalty?

Providing excellent customer service

Why is retaining existing customers cost-effective?

Because it is often cheaper than finding new customers through advertising

What are some factors contributing to good customer service?

Knowledgeable staff, meeting legal requirements, quick delivery, efficient service, excellent post-sales support, good product availability

Why is good customer service important for businesses?

Because it leads to satisfied customers who become regular customers and build a good reputation

What is differentiation in business?

Making a product or service different to appeal more to a target market

How can excellent customer service act as differentiation?

By providing a competitive advantage and allowing premium pricing

What can differentiation and good customer service lead to?

Increased sales through repeat purchases