State 3 advantages of decentralised storage.
- The likelihood of stock deteriorating is reduced as turnover for small amounts of stock is faster
- Stock is stored in more than one place meaning it is always available
- Staff can access stock more easily as they do not have to travel to a centralised area
What are 3 consequences of having too little stock?
- Production may stop, meaning no goods are made but workers are still paid resulting in less profit
- Customer orders may be delayed which can cause complaints, leading to a poor reputation
- Customers may cancel orders due to delay meaning less profit i made
What are 3 consequences of overstocking?
- Extra storage may be required, this is a cost to the organisation resulting in less profit
- Stock may go obsolete meaning it is discarded and less profit is made
- There is a high risk of stock being stolen if the organisation cannot afford extra security
State 3 advantages of centralised storage.
- Security is improved because products are all stored together
- Cost of delivery may be cheaper because there is only one place to deliver stock to, meaning more profit can be made
- Procedures for ordering stock are standard as stock is only delivered to one place
What is the purpose of using a minimum stock level?
The minimum stock level ensures there is always enough stock for production whilst allowing time for new stock to be delivered
What is the purpose of maximum stock level?
The maximum stock level shows the amount of stock that the organisation can store at one time. It prevents the organisation from over/under stocking when ordering new stock. Stock costs are at their minimum per unit because the organisation is running at fill capacity
Describe a Just-In-Time stock control system.
A Just-In-Time stock control system is when stock is only ordered when it is needed for production. Goods are only manufactured when a customer makes an order
What are advantages of Just-In-Time stock control?
- Less money is tied up in stock as it is only ordered when it is needed
- Storage costs are relatively low because less stock is stored
- Waste is reduces as only the amount of stock required is ordered
- Changing external factors (e.g. Fashion) have less impact because stock js sold as soon as it is produced
What are disadvantages of Just-In-Time stock control?
- If suppliers do not deliver on time product orders can be significantly delayed, leading to a poor image
- More journeys with less stock are made which increases delivery prices and damages the environment
- It may be more difficult to take advantage of economies of sale as less stock is ordered
- There is less time to check the quality of materials and products as orders must be completed very quickly
What is total quality management (TQM)?
Total quality management is when the organisation makes all workers aware of quality standards and everyone in the organisation has a responsibility to produce a high quality product. Products are checked frequently throughout production and any flawed products are discarded.
What are quality circles?
A quality circle is a group of people who meet to identify problems with a product. The group will discuss solutions and recommend outcomes to management. All employees (including shop workers) are included and have an input
What is benchmarking?
Benchmarking is when a popular product is taken apart and redesigned by a competitor. The competitor often sells their version of the product cheaper.
How could the quality of a service be improved?
The quality of a service could be improved using a mystery shopper. A mystery shopper anonymously evaluates the performance of a business by focusing on:
- The customer experience
- The operational efficiency
- The employee integrity
Describe 3 main features of batch production.
- Batch production involves producing large quantities (batches) of identical products
- Batch production is very capital intensive
- Batches can be slightly altered to it customer specifications
- Economies of scale can be taken advantage of because large quantities of materials are used for batches
Describe 3 main features of job production.
- Job production involves making a product from start to finish before starting another
- Job production is very labour intensive
- Job production often requires specialist equipment and skills making it costly to carry out
Describe 3 main features of flow production.
- Flow production involves adding parts to a product as it travels through production
- By the time the product reaches the end of the production line it is finished
- Flow production tends to be capital intensive
- Large amounts of identical products are made
What does mechanisation mean?
Mechanisation means a manufacturer use capital as well as labour in production
How can an organisation be more environmentally friendly?
- Minimise wastage by ensuring employees are trained and machinery is in good condition
- Recycle materials by encouraging employees to put waste in recycling bins and reusing materials in production
- Minimising packaging (this will also cut costs as well as making the organisation more ethical)
- Use recycled materials for packaging
- Replace raw materials used in production e.g. A paper manufacturer plants trees to replace ones cut down to make paper
- Operate under a fair trade policy meaning suppliers are treated fairly
