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2.3 Making Operational Decisions, Quality control (QC), Quality assurance…
2.3 Making Operational Decisions
2.3.1 Business Operations
Job Production
One product is made at a time to customer requirements.
Advantages
High quality.
Skilled workers.
Customised products.
Disadvantages
Slow.
High labour costs.
Flow Production
Continuous production of identical products.
Advantages
Low unit costs.
Fast production.
Economies of scale.
Disadvantages
Difficult to customise.
Expensive machinery.
Batch Production
Products are made in groups (batches).
Advantages
Workers can specialise.
Continuous production.
Disadvantages
Careful planning needed.
Money tied up in stock.
Storage required.
Cost
No expensive tooling needed.
Reduces production costs.
Productivity
Faster production.
Shorter lead times.
Products reach the market quicker.
Quality
Produces precise, complex designs.
Improves product quality.
Flexibility
Easy to customise products.
Cost-effective for small production runs.
Factors that influence the sourcing of raw materials
Quality
Raw materials must meet standards.
Poor quality leads to poor products.
Delivery
Materials must arrive on time.
Delays can stop production.
Availability
Raw materials must be available when needed.
Cost
Keep costs low while maintaining quality.
Trust
Reliable suppliers provide quality materials on time.
Just in Time (JIT)
Definition
Raw materials are ordered only when needed, rather than stored.
Advantages
Lower storage costs.
Improves cash flow.
Better supplier relationships.
Less wasted storage space.
Disadvantages
No bulk buying discounts.
Harder to meet sudden demand.
Higher ordering costs.
Delays from suppliers can stop production.
Requires careful planning.
2.3.3 Quality
Method
Explanation
Benefits
Drawbacks
Checks products at the end of production.
✔ Cheap and simple. ✔ Ensures finished products meet standards.
✘ Faults found too late. ✘ Waste from rejected products. ✘ Doesn’t prevent future defects.
Checks quality throughout production.
✔ Finds problems early. ✔ Products can be reworked. ✔ Prevents future defects. ✔ Can reduce long-term costs.
✘ Expensive to implement. ✘ Requires skilled staff and training. ✘ Reworking can slow production.
2.3.4 Sales Process
Steps in the sales process
Gain customer interest
Make customers aware of the product.
Advertising, branding, sponsorship, sales promotions, PR, knowledgeable sales staff.
Provide speedy & efficient service
Make buying quick and convenient.
Fast production/delivery, easy-to-use website, delivery options, fewer queues, multiple contact methods.
Engage the customer
Keep customers informed during the buying process.
Regular updates, answer questions, negotiate, approve customised products.
Provide post-sales service
Support customers after purchase.
Help using products, complaints, returns, repairs, servicing, warranties/guarantees, customer feedback.
Achieve customer loyalty
Encourage repeat purchases and positive recommendations.
Good communication, ongoing support, maintain reputation, meet customer needs, loyalty promotions.
How businesses develop customer loyalty
Customer Service
Good service encourages repeat purchases and positive word of mouth.
Loyalty Cards
Reward repeat customers with points, discounts or offers.
Saver Schemes
Customers save money over time and receive bonuses or discounts.
Quality control (QC)
Quality assurance (QA)