National 5 Business Management - Management of Operations

A supplier provides materials and resources for a business to manufacture its product.
The purchasing mix includes cost, discounts, material quality, location, lead time and the supplier's reliability/reputation.

Understocking: Holding too little inventory, which can lead to production slowdowns, unfulfilled orders, and increased costs.
Overstocking: Holding more inventory than required, tying up money, risking deterioration, and increasing storage costs.
Inventory control diagram: Includes maximum/minimum inventory levels, re-order level/quantity, and lead time.
Computerized inventory management (e.g., EPOS systems) provides up-to-date inventory levels and automated re-ordering.

Job Production: One-off, customized products. Advantages: bespoke products, higher prices. Disadvantages: high costs, slow lead time.
Batch Production: Products made in small groups (batches). Advantages: some customization, economies of scale. Disadvantages: equipment changes, potential for waste.
Flow Production: Mass production of identical products on an assembly line. Advantages: high economies of scale, consistency.
Disadvantages: no customization, high initial costs.
Factors in choosing a method: product nature, demand, labor/technology availability, and premises size.

Quality inputs (raw materials, employees, technology) are essential.
Quality control: Inspections at the start (raw materials) and end (finished goods).
Quality assurance: Inspection at every stage of production.
Quality circles: Employee groups discussing quality improvement.
Benchmarking: Matching the quality standards of the best in the market.
Benefits of quality: Improved reputation, higher prices, customer satisfaction, gaining a competitive edge.

Ethical operations: Paying a living wage, avoiding child labor, ensuring high farming standards and animal welfare, and supporting initiatives like Fairtrade.
Benefits: Improved reputation, potentially higher prices.
Costs: Increased production expenses.
Environmental operations: Reducing packaging/waste, recycling, using renewable energy, and minimizing carbon footprint.
Benefits: Potential cost reduction and better public perception.
Costs: recycling can be time-consuming, perception of lower quality by consumers, increased costs.

Electronic Point of Sale (EPOS) systems: Track inventory levels and automate orders.
Databases: Manage supplier information.
Computer-Aided Manufacturing (CAM): Automate production with computer-controlled machinery.
Computer-Aided Design (CAD): Create digital product models.
Internet: Source and compare suppliers.
Global Positioning System (GPS): Track deliveries.