IPO- input process output
Input- Gathering the resources needed to make products/service - Raw materials, machiniery, labour and finance
Proccess- Using the inputs to make finished products/services - this is known as “proccessing the inputs” Manufacturing
Output- The final products/service and the distribution of it to the customer
Factors Affecting the choice of supplier, Price
Price- How mucht the supplier charges for raw materials, or the finished product
*Price need to be as low as possible in order to maximise profit
Factors Affecting the choice of supplier, Location,
Location-Where the supplier is situated in relation to your business
*If the supplier is located further away you may be charged a higher delivery fee
Factors Affecting the choice of supplier, Reputation,
Reputation- The reviews and ratings of your supplier by other businesses
*A higher reputation increases the chances that the supplier will fufil your order consistently
Discounts Available- When the supplier reduces the price of the raw material
*Allows the business to reduce costs if putting in a bulk order
Job production defenition
A one-off product is made to a customers own specifications. Once product is finished before another is started.
Job production advantages+disadvantages
A- More motivating for employees as they see the product from start to finish
Can charge higher prices as product is customised
D- Production can be expensive and time consuming as it’s very labour intensive
If working on a job/project, then may not get paid untill it is complete
Batch production
Groups of identical products are made at the same time. One batch is completed and the machiniery is cleaned and reset for the next batch.
Batch production advantages+disadvantages
A- Each batch can be customised/altered for a specific customer order
The same machiniery can be used for each batch
Less expensive than job production as less skilled workers are needed
D- Machiniery/employees may be idle between batches which costs the organisation money
Can only manufacture one type of a product at a time
Flow production
The continuous production of products along an assembly line with parts being added at each stage, often reffered to as mass production
Flow production advantages+disadvantages
A-Production can take place 24 hours a day as it’s very capital intensiv e
Standardisation of products
Use of low skilled workers reduces the wage bill
D- Can be very expensive to purchase specilised machiniery
If machiniery breaks down then production will come to a halt
Jobs are very repetitive which can de-motivate employees
Quality inputs
Ensuring all inputs are of the highest standard
Including:
High quality raw materials
Well-trained staff
Up-to-Date/Well-mainted machinery
Quality control
Checking/inspecting the product at the end of the production process
This prevents a faulty product from reaching the customer
Quality assurance
Checking the product at regular intervals throughout the production process
Allows for mistakes to be spotted earlier which can then be re-worked back into the production process. Quality assurance prevents a faulty product form reaching the end of the production process
Quality managment
A whole-organisational approach where the aim is that every part of the business is of the highest standard with zero errors/inefficinecies
Quality cirlces
When groups of production workers meet with managment to discuss ways to improve the production process
Quality standards
Applying to have your product chekced against an industry standard in order to receive a symbol/seal of approval on your packaging.
Benchmarking
Copying the production techniques of the industry leader
Advantages of high quality
Higher prices can be charged
Customers will be more satisfied
The business will develop a positive reputation
Employees will be motivated by seeing a quality product being made
Disadvantages of high quality
It will be more expensive to have high quality inputs
Quality inputs doesnt guarantee quality outputs
Extra checks during production can be time consuming
Competitors may find other ways to gain market share such as lowering prices.
Consequences of understocking
The organisations may be unable to contiue with production
The organisation may be unable to accept an unexpected large order
The organisation is paying for workers who are not being productive
Missing out on bulk buying discounts as not purchasing in large quantaties
Max inventory level
The highest amount of inventory an organisation should hold before it incurs extra costs
Min inventory level
The lowest amount of inventory an organisation should hold below which they would become understocked.
Re-order level
The point at which a new order is placed with the supplies
Re-order quantity
The amount of inventory ordere from your supplier
