Business Operations

Making and delivering the product

Operations is the part of a business that actually makes the product and gets it to the customer. Marketing may win the order, but operations has to deliver it, well, on time and at the right quality. There are three main ways to produce goods, and the right one depends on the product: - Job production makes one item at a time, built to a customer exact needs, such as a wedding cake or a tailored suit. - Batch production makes identical items in groups, then switches, such as a bakery making one kind of loaf and then another. - Flow production makes many identical items continuously on a line, such as bottles or cars. Alongside production, operations manages quality, stock and suppliers, and the procurement and logistics that move goods in and out. This module works through each.

Words for operations

Five terms you need before you use them. Learn what each one means.

Match the method to its description

Control against assurance

Two approaches to quality sound similar but work in opposite directions. Knowing the difference is a common exam point.

Name the method

A bakery makes a large group of white loaves, then cleans down and makes a group of wholemeal loaves. Which production method is this?

• batch production
• job production
• flow production
• quality control

Spot the true operations facts

Tap the TWO statements that are true.

• Flow production is well suited to making many identical items cheaply
• Just-in-time keeps stock levels low by having it delivered as needed
• Job production is the cheapest way to make thousands of identical items
• Holding far too much stock never costs a business anything

Getting stock right

Stock is a balancing act, and getting it wrong is expensive either way. Too much stock ties up money that could be used elsewhere, takes up storage space, and risks going out of date or out of fashion before it sells. Too little stock risks running out, which means disappointed customers, lost sales and a damaged reputation. Many businesses use just-in-time, where stock arrives just as it is needed rather than being held in advance. It cuts the cost of holding stock, but it depends completely on reliable suppliers, because one late delivery can stop production. Weigh that trade-off when you judge it.

Why use flow production

Select the TWO genuine benefits of flow production.

• The cost of making each item is usually low
• The items are highly consistent with one another
• It is ideal for one-off, made-to-measure orders
• It can switch product easily from minute to minute

Order the operations flow

Put the stages of getting a product to a customer, from supply to sale, in order.

• Buy the materials needed from suppliers
• Produce the goods using a suitable method
• Check the quality of what has been made
• Store and manage the finished stock
• Sell and deliver the product to the customer

From supply to sale

Here is the operations of a small bicycle maker followed from start to finish, to show how the parts fit together. Getting supplies in: the maker orders frames, wheels and parts from trusted suppliers, keeping just enough in store to keep working without tying up too much money. Making and checking: the bicycles are assembled, and each one is checked before it leaves, so a fault is caught rather than sold. Storing and delivering: finished bicycles are stored, then sold and delivered to shops and customers, with good service that keeps them coming back. Every one of those stages is part of operations, and a weakness in any single one, a late supplier or a missed fault, can undo the good work of all the others.

Complete the operations facts

Making one item at a time to a customer exact needs is _____ production. Making identical items in groups, then switching, is _____ production. Producing many identical items continuously on a line is _____ production. Obtaining the goods and services a business needs from suppliers is _____.

Build the operations rule

Choose the words that complete this statement about stock.

The operations run

Five questions on business operations. Three lives.

Advise the business

Read each case and choose the best advice, then think about why.

• A company plans to make thousands of identical plastic bottles as cheaply as possible. Which production method suits it best?
• A firm keeps running out of a key part and having to halt production. What operations change would help most?
• A manager wants to reduce the number of faulty products reaching customers. Which approach tackles the cause?

Explain business operations

A student in the year below does not understand what operations does in a business. Explain business operations using what this module has covered.

• Explain the difference between job, batch and flow production
• Explain the difference between quality control and quality assurance
• Explain the problem with holding too much or too little stock
• Explain what procurement and logistics each do
• Finish by explaining why good customer service matters to a business