Unit 3.4 How do Businesses Operate?

1. Unit 3.4 How do Businesses Operate? 3.4 How do businesses operate

2. What is Production? The making and providing of both goods and services  3 stages: inputs  process  output This is also known as the production mix or IPO 3.4 How do businesses operate

3. Land Labour Using the 4 Factors of Production Capital Enterprise 3.4 How do businesses operate

4. Methods of Production Depends on: 7Nature of the product 7Number of customers wanting to buy 7Labour 7Technology 3.4 How do businesses operate

5. Methods of Production • Job production • Batch production • Flow production 3.4 How do businesses operate

6. Job Production 3.4 How do businesses operate

7. Batch Production Click for video 3.4 How do businesses operate

8. Flow Production Click for video 3.4 How do businesses operate

9. Creditonly Purpose – to ensure a supply of stock (raw materials) available for the production process and for distribution (finished goods). Stock Control Types of stock: Raw materials – resources for production Work-in-progress – semi-finished Finished goods – waiting to be distributed 3.4 How do businesses operate

10. Creditonly Keeping Stock Secure Stock must be kept secure against internal and external theft 3.4 How do businesses operate

11. Creditonly Manual Stock Record Keeping(on paper) Records must be kept of stock ordered, received and used 3.4 How do businesses operate

12. Creditonly Computerised Stock Control Most organisations now computerise their stock control system. Barcodes are scanned which automatically record stock received and used. This permits stock to be recalculated automatically and is often linked to automatic ordering of new stock. 3.4 How do businesses operate

13. Creditonly Length of Storage Period Stock should not be kept for long periods of time – goods can deteriorate or go out of date. Stock also ties up money so business must hit the right balance of having enough stock to operate but not so much that it will spoil. Finished goods storage Refridgeration unit Parts storage 3.4 How do businesses operate

14. Creditonly Stock Control:  •  details of each item of stock – a record of each item held is necessary to ensure that there is never a shortage of necessary materials. • Maximum stock level – depends on space, delivery time, etc  • Minimum stock level – depends on buffer stock needed, etc • Re-order level – depends on production needs, delivery time, etc. 3.4 How do businesses operate

15. Creditonly Graph illustrating traditional Stock Control System Traditional method where stock never falls below minimum stock level 3.4 How do businesses operate

16. Creditonly Just-in-Time Stock Control JIT is where the manufacturer orders goods from suppliers only when they need stock. This means that stock levels do not build up, however there is no emergency or back-up stock. Manufacturers must be able to rely on suppliers delivering the goods immediately. Click for video 3.4 How do businesses operate

17. Creditonly Advantages/Disadvantages of Just-in-Time Stock Control 3.4 How do businesses operate

18. Creditonly Graph Illustrating Just-in-Time Stock Control Just-in-time method where stock levels fall to zero before new supplies are bought 3.4 How do businesses operate

19. Creditonly Comparison of Traditional and Just-in-Time Stock Control 3.4 How do businesses operate

20. Creditonly Benefits of holding stocks: • Supplies available when needed • Bulk buying Discounts • Customer orders/increases can be met Costs of holding stocks: • Money, and • Warehousing, insurance, risk • Labour costs of stock control 3.4 How do businesses operate

21. Retail outlet – shop eg JB Sports Mail Order - Littlewoods Wholesaler – sell to Trade and Retailers eg Bookers Internet website – MandM Direct Door-to-door - Avon Catalogue Home Delivery How do Products Get to Consumers? 3.4 How do businesses operate

22. Manufacturer to Wholesaler to Retailer to Customer 3.4 How do businesses operate

23. Manufacturer Retailer to Customer 3.4 How do businesses operate

24. Manufacturer to Customer 3.4 How do businesses operate

25. Distribution - Product must reach consumer when they want it 3.4 How do businesses operate

26. Which distribution method?  perishable/fragile – least handling possible  low value – wholesaler (holds large stocks)  specialist – personal link with customer require special installation 3.4 How do businesses operate

27. People v Machines • Mechanisation This refers to a process where workers are replaced by machines – but human input is still required eg workers operating machinery • Fully Automated This refers to a process where machines completely replace workers – machines are programmed to operated with minimum supervision. Click on pizza for video Click on robot for video 3.4 How do businesses operate

28. Advantages/Disadvantages of Mechanisation/Automation 3.4 How do businesses operate

29. Effect on Workforce of Automation/Computerisation • Many jobs have been lost especially in manufacturing where machines can do repetitive, unskilled tasks • Demand for skilled workers has increased • Skills required to manage and control production • Workers expected to be multi-skilled • Governments and industries must put money into training staff appropriately 3.4 How do businesses operate

30. The Importance of Quality • How might products or services be improved: • Better raw materials • Improved packaging • More eco friendly • More care with production process 3.4 How do businesses operate

31. Creditonly QUALITY Low quality + low price product High quality + high price product 7Must find out who you are selling to 7Can produce a range of products for different types of customers 3.4 How do businesses operate

32. Creditonly Why is Quality Important? Quality raw materials Quality of production (click for video) Quality targets should be set and monitored, and procedures should be set up to deal with areas in which quality is not meeting the targets. If quality is poor, demand will fall as customers will not return so profits will fall as the company reputation suffers. After-sales service 3.4 How do businesses operate

33. Creditonly Methods of Improving Quality • Quality Control This is where one department is responsible for checking and monitoring quality. Inspectors check final product and scrap them if they are substandard. This means, however, that substandard items are not found till the end of the process and results in high waste levels. 3.4 How do businesses operate

34. Creditonly Methods of Improving Quality • Quality Assurance/Quality Circles Workers are organised in teams to ensure quality during and after production. These teams may be known as Quality Circles. 3.4 How do businesses operate

35. Creditonly Methods of Improving Quality • Total Quality Management This is the newest form of quality control where views are sought by • Involving customers in quality monitoring by asking how satisfied they are with quality of product or service • Also involving workers in quality control • People will also work in teams to help each other 3.4 How do businesses operate

36. Advantages/Problems of Quality Checks 3.4 How do businesses operate

37. Creditonly How Can an Organisation Assess Itself?  Questionnaires to customers, suppliers, workers, etc Click for video  Why? – to find out customer attitudes, staff attitudes, levels of waste, how to develop products, need to change? etc 3.4 How do businesses operate

38. Creditonly Customer Services • Treatment of customers by staff on the phone, in the shop, at the checkout • Replacement of faulty goods • Reaction to complaints • Quality of goods, etc • After-sales service, eg installation, guarantees 3.4 How do businesses operate

39. Creditonly Methods of Monitoring Customer Service 3.4 How do businesses operate

40. Creditonly How to Improve Customer Service • Get things right, first time, every time • Improve customer experience eg by modernising business, setting up website • Ensure orders are processed accurately • Respond quickly and politely to queries • Provide products on time and to agreed price and quality • Respond fairly to customer complaints 3.4 How do businesses operate

41. Creditonly Why are Businesses More Consumer-Led? • To increase their market share • Keep existing customers • Attract new customers • SURVIVE 3.4 How do businesses operate