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Quality-measured by the extent to which an operation meets customer requirements
Quality is important to remain competitive.
improving quality can include:
💥 market research to find out what customers want
💥 appropriate suppliers
💥 staff training,investment in technology
💥 continual review
Judging quality:
Tangible factors -good functionality -durability -reliability -what they look like -after sales service - repair costs
Intangible factors -brand image -reputation -exclusivity
A Quality process
1.a clear definition of what targets are 2.systems to achieve those targets 3.staff capable of achieving targets 4.on going measurements 5.actions to correct
Quality control-a system of maintaining standards by testing or inspecting the output against standards
✅patterns of inconsistent production can be spotted ✅defective products may be spotted
❌little to encourage individuals to improve the quality of work ❌expensive as you have to hire specialist checkers
Quality assurance-maintaining of target quality by attention to detail at every stage of the process
✅costs reduced because less waste ✅gives the workers responsibility so more motivation
❌ training cost for the workers ❌ increased demand on the workers
Systems of quality assurance
TQM=total quality management.
culture= what the business stands for
Kaizen-process of obtaining continuous improvement in the workplace through workers regularly finding small ways of improving what they do.
Efficiency is a process of continuous improvement ➡ Hands of employees can identify problems ➡ When workers are involved in decisions this leads to..... ➡ Problems being solved efficiently and workers bonding with the firm so its strengthened ➡Machines,facilities and people work together to add value
Quality circles -regular short meetings set to resolve work related problems, which involves 2 way communication and gives workers the chance to contribute to quality improvements eg school council
Bench marking- a process of comparing products and production against those judged to be the best in the industry (looking at the best in the business and copying them)
✅Set yourself clear targets ✅Reduces waste and unnecessary tasks ❌Hard to gain accurate data from the outside ❌ Doesn't lead to improvements if just copying others
Improving quality
✅Gain a competitive advantage ✅Increase in sales ✅Costs are reduced as less waste ❌ Difficulties in agreeing with workers ❌Time consuming ❌initial costs with training,systems,staff etc
Cost of poor quality
🚩Poor reputation
🚩Lower sales
🚩 Lower price
🚩More waste
🚩 Low motivation
Improving flexibility
Product flexibility=using production lines that can be quickly altered to change the end product
Volume flexibility=maintaining high levels of spare capacity
Delivery flexibility=flexible workforce and an effective database
MASS CUSTOMISATION-offers individually tailored goods or services to customers on a large scale (based on 'pull' methods which means only when someone orders it)
✅ cost reductions-'pull' techniques lead to less waste
✅competitive advantage-unique selling point created
✅ improved understanding-better understanding of customer needs and wants
❌ expensive support systems-larger capital input and ongoing maintenance short term
❌ relies on good supply chain- efficient and trustworthy suppliers
Factors required for mass customisation
-customers who value variety
-quick response to market changes, meet changing demand by using database
-scope for mass efficiency and economies of scale
Theres a difference between short (outsourcing and increasing employee hours) and long term (building factories and increasing reproduction) solutions when there are differences between supply and demand
Methods to managing supply and demand can include:
-producing to order
-use of temporary and part staff
-outsourcing
OUTSOURCING
✅use specialist skills and services therefore businesses can concentrate on what they're good at
✅can react to changes quickly
✅can focus on core skills
❌can increase costs
❌can reduce quality
❌ confidentiality issues
INVENTORY (STOCK) CONTROL 3 categories of stock -stock of raw materials -stock of work in progress -stock on finished goods
Businesses must establish minimum and maximum levels of stock. Needs to take into account.........
-storage facilities and costs (space)
-economies of scale
-opportunity costs(the cash cant be used on advertising)
-fluctuations in demand such as fireworks -nature of product
-cash flow implications eg money tied up in stock
High stock levels
✅customer demands can be met
✅benefit from buying bulk
✅no loss of customer loyalty if stocks out
Low stock levels
✅reduces warehouse costs
✅cash flow problems due to cash tied up in stock are less
✅perishable goods such as food are less liking to deteriorate
: 
Buffer stock-minimum amount of stock that the firm wishes to keep
Maximum stock-amount of stock that the firm wishes to keep
Re-order level-inventory level at which an order is placed for new inventory
Re-order quantity- actual number of products purchased from the supplier in a particular order
Lead time- time taken for supplier to deliver once order placed
Disadvantages.......
❌ a stock control chart assumes stock is used evenly over time
❌ doesn't cover unforeseen circumstances
❌ problems occur when... supplies are delayed, usage rate is faster than usual, failure to re-order on time
Establish reorder level= (number of days lead x usage per day)+minimum stock
Establish reorder day=(maximum stock days-minimum stock days)-number of days lead
Overall efficiency can be improved by:
stock rotation- used to tackle out of date stock; oldest should be used first eg front of the shelf.
computer based stock control-electric point of sale can assist in tracking stock and monitoring stock movements in the store.
Reducing the overall level of stock-JIT management can reduce cost of high stock holding
Supply chain
long term relationships with suppliers is key to having an effective supply chain.
Building relationships by paying on time, discussing future plans, minority stake in the business and long term orders
Vertical integration is when a sector works with other sectors such as secondary,primary and Tertiary eg IKEA
Effective management of the supply chain will ensure:
the right supplies arrive on time.
A fair price is paid for the items.
Products are produced in a way that is acceptable to the business
It can affect the following:
Business costs.
Whether a business can be flexible to customer requirements
Influences in choice of suppliers:
Costs
-cheaper costs means high profit margins or more competitive prices.
-larger the business,more able to negotiate lower prices.
-lower the cost,high the gross profits
Quality
-there is likely to be a trade off between price and quality
-low price but poor quality,there is likely to be operations issues,reducing customer satisfaction
Payment terms
-This relates to the timing of payments and whether credit is offered
-Credit can improve cash flow as goods can be sold before payment
-Payment is delayed so interest can be charger by supplier
Capacity
-Does the supplier have the capacity to deliver the order?
-if unique component of product,then cant use a different supplier
Reliability
-Arrive on time
-Failures can lead to delays in production and lost orders
-using JIT, frequent delivery is key eg local may be better
Flexibility
-For some businesses,its key that suppliers can cope with varying orders
-Fast moving industries will need suppliers that can adapt to change
Ethical
-is the supplier ethical