Operations organise the production of goods or delivery of services. Decisions affect cost, speed, quality, flexibility and the ability to meet customer needs.
Job production makes one-off or customised products, such as a bespoke cabinet. It allows individual requirements but often needs skilled labour and has higher unit costs.
Batch production makes a group of identical products before switching to another group. A bakery can produce several varieties, but changeovers take time and stock may build up.
Flow production uses a continuous sequence of stages for standardised output. High volume can reduce unit costs, but equipment is expensive and disruption at one stage can stop the line.
Choose a process by demand, customisation, volume, skills and finance. High fixed equipment costs are harder to justify when demand is low or unpredictable.
Productivity measures output per unit of input, such as units per worker per hour. Higher output alone does not mean higher productivity if inputs rise by more.
Worked example: six workers make 240 items in a day. Labour productivity = 240 ÷ 6 = 40 items per worker per day. Compare like time periods and consider quality as well as quantity.
Automation and other technology can improve consistency, speed and productivity. Purchasing, maintenance, training and possible breakdown costs must be considered.
Technology can increase flexibility, such as programmable equipment changing designs. It can also make the business dependent on specialist staff or systems.
Lower unit costs may allow competitive prices or improved profit, but a process that damages quality or customer satisfaction may lose sales.
Fictional case: a maker of custom wedding cakes may favour job production despite higher costs. Flow production might reduce unit cost but fail to provide the designs customers are buying.
2.3.2 · Working with suppliers and stock
Procurement is obtaining the goods and services the business needs. Supplier decisions affect costs, quality, delivery and the final customer's experience.
Compare price with delivery cost, speed, reliability, availability and quality. A cheap supplier can be more expensive overall if late or defective supplies interrupt production.
Trust and clear communication can support reliable supply, flexible arrangements and resolution of problems. Dependence on one supplier also creates risk if it fails.
Stock includes materials, work in progress and finished products. Holding stock can prevent shortages but ties up cash and creates storage, damage and obsolescence costs.
A bar gate stock graph shows stock falling as it is used, then rising when a delivery arrives. The reorder level triggers an order; lead time is the delay between ordering and delivery. Stock levels, ordering and lead time
Buffer stock is a reserve for unexpected demand or supply delays. Reorder level must allow for expected use during lead time as well as the desired reserve.
Just in time (JIT) aims to receive supplies close to when they are needed, minimising held stock. It reduces storage and tied-up cash but relies on dependable suppliers and accurate coordination.
A JIT business is vulnerable to late delivery or sudden demand increases. Smaller frequent deliveries can also affect transport costs; JIT does not mean supplies are never physically present.
Worked example: stock use is 20 units daily, lead time is three days and buffer stock is 40. Reorder level = (20 × 3) + 40 = 100 units, assuming constant use and lead time.
Logistics coordinates movement and storage. Late deliveries or incorrect items can delay customers, increase costs and damage reputation even when the product itself is good.
Fictional judgement: a restaurant with perishable ingredients may benefit from frequent deliveries, but should weigh waste savings against the risk that an unreliable supplier leaves menu items unavailable.
2.3.3 · Managing quality
Quality is the extent to which goods or services meet customer expectations. It includes reliability, useful features and service standards, rather than simply using the most expensive inputs.
Quality control checks output to find defects. Inspection can prevent defective products reaching customers, but faults may already have used materials and labour.
Quality assurance builds quality into processes, for example through training, standards and checks during production. It aims to prevent faults rather than rely only on final inspection.
Businesses can use both approaches. Preventing faults and checking results are complementary; quality assurance does not guarantee that no defect ever occurs.
Poor quality can cause waste, rework, returns, complaints, refunds and lost repeat purchases. These costs can exceed the saving from cheaper inputs or less training.
Consistent quality can create a competitive advantage through reputation, recommendations and reduced failure costs. It may allow a higher price when customers value reliability.
Quality management costs money and time. The appropriate standard depends on the customer's needs and the risks of failure, but legal and safety obligations still apply.
Fictional case: a repair firm uses a checklist and staff training, then tests repaired devices. Prevention can reduce repeat repairs while final tests help identify remaining faults before return.
2.3.4 · The sales process
Product knowledge helps staff explain features, suitability and correct use. Accurate advice reduces inappropriate purchases and builds confidence; misleading advice can damage trust.
Speed and efficiency make purchasing convenient. Fast service must still be accurate: rushing can cause mistakes, returns or poor customer experiences.
Customer engagement involves listening, asking appropriate questions and responding to needs. Personal service can differentiate a business, but staffing and training create costs.
Feedback identifies strengths and recurring problems. Responding to complaints and changing processes can prevent repeat failures; simply collecting comments achieves little.
Post-sales service includes support, installation where relevant, repairs and handling returns. Good support can encourage repeat custom and recommendations.
Customer service affects reputation, sales and loyalty. An improvement may increase costs initially, so evaluate both the immediate expense and possible longer-term benefits.
Fictional chain: a computer shop trains staff to match products to customers → buyers choose suitable devices → complaints may fall and recommendations rise → revenue and avoided return costs may improve profit.
Judge service improvements by customer expectations and evidence about the problem. More staff may not solve complaints caused by defective products or unclear information.
Test yourself
40 questions · Random sets of 10. Type numerical answers without currency or percentage symbols unless instructed. These quick checks support revision; practise extended explanations and justified judgements too.
Mr Kidman's Classroom