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UNIT 5

UNIT 5. PRODUCTION. Production. Manufacturing Making Operations Construction. What is Production?. Bringing together all the resources to make a finished product Resources – building/factory, labour/employees, machinery/tools. STAGES OF PRODUCTION. Planning Purchasing

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UNIT 5

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  1. UNIT 5 PRODUCTION

  2. Production • Manufacturing Making Operations Construction

  3. What is Production? • Bringing together all the resources to make a finished product • Resources – building/factory, labour/employees, machinery/tools

  4. STAGES OF PRODUCTION • Planning • Purchasing • Holding stocks • Production • Finished goods • Then to SALES

  5. 1. PLANNING • What? • How? • Where? • Target market? • How to sell? • NEED TO CARRY OUT RESEARCH AND DEVELOPMENT

  6. RESEARCH Desk and field research DEVELOPMENT Suitable materials Prototype Analyse prototype PRODUCT MUST BE VIABLE TO GO INTO FULL PRODUCTION RESEARCH AND DEVELOPMENT

  7. 2. PURCHASING • The Purchasing Department must source goods and services required in production. • Find suppliers • Get quotations • Select best option – price, quality, time etc

  8. 3. STOCKS • STOCK CONTROL has to be used • Problems if firm OVERSTOCKS or UNDERSTOCKS

  9. STOCK LEVELS SET • MAXIMUM LEVEL – upper limit at any time • MINIMUM LEVEL – lowest level at any time (includes buffer stock) • REORDER LEVEL – point at which more stock is reordered

  10. JUST IN TIME • If goods are produced JUST-IN-TIME then the firm may minimise stocks held – stocks arrive to go straight to production line • Money not tied up in stock • Less stock/warehouse costs • Less handling of stocks • Less wastage as spares are not available

  11. 4. PRODUCTION • Three methods of production: • Job • Batch • Flow

  12. Job Production • Single, unique item/job • Eg building, bridge, painting, restaurant meal, aircraft, ship • High quality work • Motivated workers • Customer satisfaction – unique specifications • BUT high costs – high wages

  13. Batch Production • Number of products made – change ingredients/machines – different/varied product • Specialised workers, specialised machinery, lower unit costs, product range • Stocks of goods required, time to clean/reset machinery, repetitive work, movement of products

  14. Flow Production • Work-in-progress FLOWS past workers, complete one operation then moves on • Continuous production used for standardised items • Can use machinery for complex products/procedures • Needs a lot of equipment, equipment may not be adaptable, breakdown may close production line • Monotonous for workers • A lot of money tied up in work in progress

  15. Using Machinery • Lower labour costs • More accurate • Can work 24/7 • Increased speed – increased output • Can do dangerous or monotonous work • BUT machines can break down

  16. Production using minimum resources: Reduce space required by reducing stocks held Reduce use of raw materials Reduce no of workers Introduce new technology Reduce overall production costs JUST-IN-TIME STOCK CONTROL Not buying in large quantities Reduce warehousing costs Suppliers guarantee to deliver quality stocks on time Reduced quality checks required LEAN PRODUCTION andJust in time stock control

  17. Cell Production • Production broken down into ‘cells’ • Each cell/group carries out a number of processes • Team-working – higher quality and more output

  18. QUALITY QUALITY = producing goods/services to a standard which satisfies the needs of the customer 2 AREAS: • Quality Assurance • Quality Control • Traditional • Total Quality Management

  19. Quality Assurance • Assuring the customer of quality • Signs and symbols • Eg the kitemark, the Lion mark • Other quality guarantees • Eg warranties, written guarantees, after-sales service

  20. QUALITY CONTROL • Checks during/after production to ensure quality • TRADITIONAL METHOD • Checks on raw materials, at end of some stages, at final good stage • Carried out by specialised quality control staff • BUT time consuming, lot of wastage, costly

  21. TOTAL QUALITY MANAGEMENT • Idea – to get production right first time (cut down on wastage) • Requires: • Quality raw materials • Checks at every stage • Problems identified early and corrected • Use of teamwork

  22. UNIT 6 LOCATION

  23. Availability of raw materials/components Availability of labour Availability of land Competition Distance to market Transport costs Infrastructure Health and Safety regulations Technology and Information Technology Governments loans and grants EU incentives Footloose business? Factors in deciding location of a business

  24. Travel facilities Roads, railways, air links, ferry ports Gets goods/ customers/employees in and out OTHER FACILITIES Schools, hospitals, offices To support workers in living, provide training for employees Utilities – gas, water, electricity, telecommunications links INFRASTRUCTURE

  25. COSTS Premises Rates Wages Transport BENEFITS Market Lower rent Lower rates Lower wage rates Better transport links Financial assistance COSTS AND BENEFITS

  26. GOVERNMENT ASSISTANCE • Want to • Reduce unemployment • Make better use of derelict land/buildings • Help ‘depressed’ areas • Through CENTRAL and LOCAL GOVERNMENT ASSISTANCE – Regional Policy

  27. Central Government Aid • Assisted Areas • Regional Selective Assistance (job creation grants) • Regional Enterprise Grants (to small business – capital investment and product development) • Enterprise Zones • Urban Development Corporations • Training and Enterprise Councils

  28. Local Government Aid • To encourage businesses to set up in their area: • Start up grants • Research and development grants • Job creation grants • Relocation grants • Cheaper/free rent and rates • Reduced rate loans • Advice – general, financial • advertising

  29. European Union • Single market • Inward investment • Social charter • Regional policy • Monetary union

  30. Globalisation • Now – one large world market • Due to • Transportation • Communication • Developing markets • Removal of barriers

  31. Multi-National Business • Organisation sell/operate in more than one country • GLOBAL BRAND • Advantages • Disadvantages

  32. UNIT 7 FINANCE

  33. Business Plan • Required to show to potential investors • Includes: • Details of business (name, address, type…) • The product or service • The market • The people • Finance • Expected costs, revenues, profits….

  34. CAPITAL/INTERNAL OWNER SHAREHOLDERS RETAINED PROFITS BORROWING/ EXTERNAL Bank – overdraft, loan Other lenders Debentures Hire purchase Leasing Credit Factoring Sources of Finance

  35. Cash Budget • A forward plan • Shows: • Opening cash balance • Cash in • Cash Out • Closing cash balance • Projects figures – shows possible problems

  36. OTHER POSSIBLE QS • COMMUNICATION • Purpose? • Different types • written, spoken, using ICT • INFORMATION TECHNOLOGY • Word Processing, Spreadsheets, Databases • Internet, e-mail

  37. OTHER POSSIBLE QS • Why do some businesses fail? • Lack of finance • Cash flow problems • Lack of sales • Not enough profit • LACK OF PLANNING

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