Operations Management - Intro

1. 5.1 Production Methods for Growing Businesses Operations Management - Intro • Which are the world’s top manufacturing countries? • Who are the world’s top manufacturers? • Who are the UK’s top manufacturers? • How much money do you think the UK industry generates in a year? • How many local manufacturers can you name?

2. 5. Operations Management 5.1 Production Methods for Growing Businesses 5.1 Production Methods for Growing Businesses Rearrange these steps to form a production process for making a cardboard box Fold Plain Card Dry Cut Glue Crease Pallet Print

3. 5.1 Production Methods for Growing Businesses Revisiting unit 1 • In unit 1 you looked at small businesses which were producing on a small scale • Can you remember the 2 production methods that were used? • Making each item individually • Groups of items all passing through each stage of the production process together • In unit 2 you are looking at larger business who are now producing goods on mass and hence can use FLOW production • Flow production leads to greater efficiency

4. 5.1 Production Methods for Growing Businesses 5.1 Production Methods for Growing Businesses • In this topic you will learn about: • Use of flow production • Efficient production methods • Lean production techniques

5. 5.1 Production Methods for Growing Businesses Methods of Production

6. 5.1 Production methods Unit 1 - Methods of production • Job production • The production of one off items to meet the needs of each individual customer • Cheap and easy to set up, but more expensive to produce • Often a specialist service • Time consuming to produce • Meet specific needs of customers • Examples include: • Tailor made clothes • Specialist cakes • Web designs What combination of manual work and machinery are involved? Can you explain why using job production may allow a firm to charge higher prices?

7. 5.1 Production methods Unit 1 - Methods of production • Batch Production • Identical items are produced in groups (batches), each item passing through the production process at the same time • Allows for cheaper and quicker production of individual items • More uniform products • Variation can be achieved in different batches • Examples include: • Bread • Jeans • Garden furniture What are the stages involved in making crayons? Why are they made a colour at a time?

8. 5.1 Production Methods for Growing Businesses Unit 2 – Operations Efficiency • In unit 2 you are looking at larger business who are now producing goods on mass and hence can use FLOW production • Flow production leads to greater efficiency • More efficient use of resources and division of labour

9. 5.1 Production Methods for Growing Businesses Unit 2 - Flow Production • Items flow along the production line in a continuous process • Suitable for mass production • Large scale • Identical items • Uses specialist machinery • Workers are each responsible for a small step along the process, this involves • Specialisation • Division of Labour Identify the stages involved in making a world cup football

10. 5.1 Production Methods for Growing Businesses Flow Production Advantages Disadvantages • Efficient process due to • Specialisation of workers • Division of labour • Use of machinery • Low cost per unit • Consistent quality • Continual output leading to less need to hold stock • High initial costs • Machinery • Computers • Training • Mistakes or problems can shut down whole process • Repetitive work leading to low motivation • Standardised products only How would you feel working on a production line?

11. 5.1 Production Methods for Growing Businesses Methods of Production The type of production used is decided by DEMAND and the industry

12. 5.1 Production methods Job or Batch Nathan runs a small but popular smoothie bar near to Exeter University. He prides himself on the fresh nature of his products. Each smoothie is made to order with the customer choosing up to 3 fruits to design their own. At busy times, Nathan has a queue outside the door, but he knows that some customers take one look at the queue and walk off. He charges between £2 to £3 per smoothie at the moment. His girlfriend, Camilla, is studying business at the University and suggests he would be better to move to batch production and lower his prices slightly. She believes this way he could cut costs, increase sales and make a greater profit. • Question time • What is meant by the term ‘batch production’? (2 marks) • Explain 2 advantages of Nathan’s current production method? (4 marks) • Do you think that Camilla is correct to suggest Nathan switches to batch production? Justify your answer. (9 marks)

13. 5.1 Production Methods for Growing Businesses Top Tricycles Ltd Top Tricycles Ltd are a leading manufacturer of children’s tricycles. All the Tricycles are built using flow production. They all pass along the same production line in an identical way and then just at the final stage of the process are split into different lines where they are sprayed and transfers added. Their current models include Bob the Builder, Dora and Pixie. Each worker is allocated a small, specific task e.g. attach pedal which they become specialists at. The production supervisor has suggested rather than specialising workers should be trained to complete a number of different tasks and then move around the process every hour or two. Question Time • What is meant by the term ‘flow production’? (2 marks) • Explain two benefits of flow production to Top Tricycles Ltd (5 marks) • Explain two drawbacks of flow production to Top Tricycles Ltd (5 marks) • Recommend to the production director of Top Tricycles Ltd whether or not they should adopt the supervisors suggestion of training workers in more than one area of specialisation. Give reasons for your answers. (9 marks)

14. 5.1 Production Methods for Growing Businesses Specialisation and Division of Labour • Check your understanding • What is meant by the term specialisation? • What is meant by the term division of labour? • How do specialisation and division of labour impact on the efficiency of a firm? • Positive impacts? • Negative impacts?

15. 5.1 Production Methods for Growing Businesses Lean Production Jack Sprat could eat no fatHis wife could eat no leanAnd so betwixt the two of themThey licked the platter clean Jack ate all the lean,Joan ate all the fat.The bone they picked it clean,Then gave it to the cat • What does the word lean mean? • What does it mean if we refer to a person as lean? • What does it mean if we like meat to be lean? • What has been cut off? • What happens to this?

16. 5.1 Production Methods for Growing Businesses Lean Production Techniques • Techniques that can be used to increase the efficiency of a firm and reduce costs • Reduces the waste of resources within a production process • Techniques include: • Just in Time • Reduces the holding of stock so materials are delivered just in time to be used and products completed just in time to send to the customer • Kaizen (Continuous Improvement) • Striving to make small but frequent improvements with the help and commitment of all employees Draw a diagram to show the costs of holding stock Could you apply this concept to your own life? Would this be better than a New Year’s Resolution?

17. 5.1 Production Methods for Growing Businesses Just in Time • Stock holdings are kept at zero or a minimum • Money saved from not holding stock can be used elsewhere in the business • Stock will not become old, damaged or no longer of value • Good relationships with suppliers are required • Need to know they will deliver the correct quantity and quality on time • Need them to be able to respond quickly to any changes in demand • However • What if materials don’t arrive on time? • What if the customer wants the product now? • What if it costs more to buy small but frequent amounts from suppliers? • What if there is an unexpected rise in demand? Some firms prefer to hold stock just in case!

18. 5.1 Production Methods for Growing Businesses Kaizen (Continuous Improvement) • Involving all workers in trying to make small but frequent improvements • Spotting and suggesting small things that could be done better • Lots of small improvements can add up to a big cost saving over time • Easier to implement than the management suggesting and making big changes • Relies upon the commitment of all employees and managers willingness to listen to ideas • May involve Kaizen Groups • Teams of workers from different levels in the business working together to achieve change

19. 5.1 Production Methods for Growing Businesses Kaizen in action – group activity • In teams look at a process that takes place within your school or college e.g. Serving of dinner in the canteen, process for reports to parents or parents evening, buses etc • Identify what is good about the process and if there are any areas for improvements • Look for a number of small changes that could be easily introduced but would improve the efficiency and/or reduce waste • Make a brief presentation explaining the recommended changes and how they could be easily implemented

20. 5.1 Production Methods for Growing Businesses Lean Production • Both JIT and Kaizen will effect the employees: • Training • Build relationship with suppliers • Manage stock inflows and outflows • Spot areas for improvement • Explain areas for improvement • Adapt to small but frequent changes • Motivation • Greater involvement • Ability to make a difference • Team work • Reduced inefficiency

21. 5.1 Production Methods for Growing Businesses Top Tricycles Ltd Top Tricycles Ltd currently orders materials from its suppliers once per month so at the beginning of each month the warehouse is restocked and full with the number of components slowly reducing over the month until in the last few days production can be stopped if for some reason there is lack of one or more components. They produce an equal amount of tricycles each month although demand is significantly higher at the start of summer and in the run up to Christmas. The production supervisor has convinced management to implement a system of job rotation, so workers will have a greater variety of tasks to do throughout the day. This has led to less mistakes and higher productivity. He is now suggesting that they make further improvements by introducing lean production techniques. Question time • What is meant by ‘lean production techniques? (2 marks) • Explain two reasons why the introduction of job rotation may have led to increased efficiency at Top Tricycles Ltd. (5 marks) • Recommend to the operations director whether a system of JIT or Kaizen would be the most appropriate to Top Tricycles Ltd. Give reasons for your answer. (9 marks)

22. 5 Minute Test (Starter) • Define Operations Management (2) • What is flow production? (2) • State one advantage of flow production (2) • What are two terms used when workers perform small tasks that they become expert at? (2) • What is lean production? (2) • Name two lean production techniques (2) End