m


Higher Business Management

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! › anning is crucia in he
ing a firm achieve
its objectives.
! Idea 
roduction shou d be a constant eve
(exact number of workers required materia s
to be used and the number & t
e of
machiner wi be known in advance)
! ›roduction in rea it wi var due to changes
in consumer demand staff shortages and
machine breakdowns and maintenance.

  

! àature of the fina
roduct
! Market size
! Resources avai ab e
! Stage of deve o
ment of the business
! Labour-intensive v Ca
ita -intensive

roduction
! Avai abi it of techno og - automation

  
 
 
! àature of the fina
roduct ± different
roducts

roduced in different was e.g. agricu tura

roducts com
ared to aircraft

! Market size ± mass markets can use standardised

roduction sstems ike Reebok ( eft and right
shoes made in different factories); whereas sma er
or uxur markets ma be customised

! Resources avai ab e ± finance number of workers &

their ski s machiner factor ca
acit

  
 
 
! Stage of deve o
ment of the business ± sma
or new firms norma 
roduce sma amounts
but as the grow their ca
acit variet and
out
ut does too

! Labour-intensive v Ca
ita -intensive

roduction ± cost of workers v cost of
machinerequi
ment. Deve o
ing countries
sti abour-intensive due to
aing workers
ver ow wages
 
 

 
 
! ahere have been significant changes in
roduction techniques due to
the advancement of techno og. àew techno ogies used in

roduction inc ude:
CAD: Com
uter Aided Design; com
uters used to he

design a
roduct.
CAM: Com
uter Aided Manufacture; com
uters used to
contro machines.
CIM: Com
uter Integrated Manufacturing; com
uters
used to contro extensive
arts of the
roduction

rocess.
Robots: Machines which can be
rogrammed and re-
rogrammed
to
erform
hsica tasks.
! Automation has resu ted in a arge
ro
ortion of the
roduction

rocess being contro ed b machines. ahe demand for mu ti-ski ed
and ski ed workers is now greater resu ting in the decrease in the
need for unski ed workers.
  
 

  
! C.A.D is the use of com
uters in creating and editing design
drawings. ahe
roducts are designed on a com
uter a owing the
designer to change the design; make im
rovements; change detai s;
or change the s
ecification com
ete .
! C.A.D is used in man different areas:
Architecture: Com
uter gra
hics can be used
to create µvisionar architecture¶
to assess
ans and designs.
Enab es the c ient to view their
µvirtua ¶
ro
ert.
Animation: Recent fi ms
roduced using
com
uter animation inc ude: ao Stor; Ants &
Finding àemo
Artificia
Inte igence: ahe com
uter simu ation gives the im
ression of
being in a rea 3D environment. ahis is
used regu ar  b defence
organisations to train so diers.
  
 
  
! C.A.M means that robots now
erform the tasks once
conducted b humans.
! Com
uters now contro arge
arts of the
roduction

rocess to re
ace humans doing mundane re
etitive
tasks.
! Humans are now res
onsib e for su
ervising the running
of the machines ± it is their res
onsibi it to
rogram and
maintain the com
uters.
! A resu t of C.A.M has been an increase in the eve s of
accurac and qua it in
roduction.
! In order to kee
u
with the
ace of
techno ogica change there is an increase
in demand for high -ski ed em
oees.
 ?

  



! Com
anies are now ab e to increase their rate of

roductivit as com
uters and machines conduct the
re
etitive tasks required to
roduce the
roduct. As a
resu t manufacturing costs are significant  reduced.
! ahe use of com
uters and machines ensures a high
qua it standard as the are ab e to
roduce at the same
rate continuous . ahe on  wa in which qua it ma be
affected if there has been a fau t in the
techno og or wrong instructions have been
in
utted b the o
erator.
! Using new techno og enab es the com
an
to offer a wider range of
roducts to its
customers.
   



! araining: staff wi need to be trained so that the know
how to effective  and
roductive  manage
the machinescom
uters.
! Motivation: it ma be difficu t to motivate em
oees to be

roductive if the fee that the are no
onger active  invo ved in the

roduction
rocess.
! Maintenance: it is im
ortant that the equi
ment is
maintained to ensure that no fau ts occur
in the
roduction
rocess.
! Ca
ita : a arge amount of ca
ita is required in the
set-u
of the
roduction
rocess as the
machinercom
uters are
extreme  ex
ensive.
! Contro : it ma be difficu t to constant  monitor
whether or not the qua it standards
are being met.

  

 



! aHE ›URCHASIà MIX

! A ternative su

iers
! De iver time
! ›rice
! Qua it
! Quantit
! Storage Faci ities

 
! A ternative su

iers ± are su

iers
de
endab e? Loca or nationa su

iers?
Additiona costs?

! De iver time ± ead times ong or short?

Re iabi it and kee
ing
romises!

! ›rice ± discounts and bu k buing vs cost of

kee
ing stock? Credit terms v discounts

 
! Qua it ± su

ier guarantee of consistent
qua it materia s

! Quantit ± storage adds 15-30% on to cost of

urchasing.

! Storage Faci ities ± storage ca
acit? Safet

securit other conditions of storage?
 
! Stock is a resource which is he d in a s
ecific ocation
awaiting use.
! Ho ding stock can be ex
ensive to a business as there are a
variet of costs associated to it eg. maintaining warehouse;
em
oee wages etc.
! ahere are 3 basic categories which describe stock:
Raw Materia s: resources required to
roduce
a
roduct.
Work-In-›rogress: goods which are sti to be com
eted
(current  in the
rocess of being

roduced).
Finished oods: fina
roduct which is waiting to be
distributed to the end-user
(customer).
   Ê Ê Ê   

! It is im
ortant for businesses to have an effective stock contro
sstem to ensure that there is minima wastage and ex
ense.
! Furthermore businesses must ensure that the stock he d matches
the resources required.
! An effective contro sstem wou d have the fo owing factors:
Regu ar stock checks to ensure that records are accurate
and u
-to-date. If an order were to be
aced it is
im
erative that the business is aware if the can fu fi
the demand.
Securit of storage must be of a high standard to
revent
stock being damaged or sto en.
Ensure that costs are minimised whi st a so ensuring
that the correct eve of stock is he d.
 


  
! A business which ho ds stock wi im
ement the fo owing stock
eve s in order to meet customer demand at a times.
Minimum Leve : this is the minimum amount of stock needed
in case the required su

 were to be de ivered ate. ahe
business wi never a ow the stock eve to dro
be ow a
certain
oint in order to
revent a resource shortage.

Maximum Leve : this is the maximum amount of stock which

can be he d in the warehouse at an given time. ahis eve is
restricted b factors such as s
ace; cost; and de iver time.

Re-Order Leve : this is when the stock eve dro
s to a certain

oint and the
rocess wi automatica  re-order the required
stock. In order to decide at what
oint to re-order businesses
must consider the fo owing: how ong is the de iver time?
how re iab e is the su

ier?
 

 ?

 
  
 
?


    

  

! Su

ies are avai ab e when ! Mone cou d be used more

ou need them.
! An increase in demand can
be met.
! Discounts avai ab e for bu k
buing.
! Customers¶ orders can be
met immediate .
efficient .
! Financia costs associated
with warehousing and
insurance.
! Labour costs invo ved in
stock contro .
! Va ue of stock ma decrease
if fashions change or
asses
se b date.
? 


! Bar codes have now become the g oba
anguage of business and are standardised
so no two com
anies wi
ick the same bar
code for different
roducts. ahe make it
eas to describe the raw materia s and

roducts being bought and so d.

! ³Without bar codes our o
erations wou d not

work´ ± àest e UK su

 chain manager
  

  
 ë Ê 

  ëÊ
! ëIa
roduction is a ëa
anese a

roach to
roduction that
invo ves kee
ing the stock eve s to a minimum.

! Stocks arrive just in time to be used in
roduction.

! As a resu t costs are cut b reducing the amount of

stocks he d b the business.

! oods are not
roduced un ess the business has an

order from the customer.

ëIa strives to e iminate waste b
roducing

the right
art in the right
ace at the right time!
 u


! In order to be effective and efficient ëIa requires the
fo owing factors to be in
ace:
High  ski ed and f exib e workforce which are ab e to
res
ond to the cha enges of ëIa.
Abso ute certaint regarding de iver times to ensure
that
roduction runs to schedu e (if the de iver was ate
this wou d ha t
roduction).
If su

iers
rovide sub-standard items the who e
sstem fai s as there isn¶t an a ternative resource waiting
in stock.
  
   
  ëÊ
½
  

! Less s
ace required for
! ›roduction ma be sto

ed
stock.
if su

ies are de aed.
! Ab e to res
ond quick  to
! Sa es ma be ost if not
changes in demand.
meeting customer
! C oser re ationshi
with demands.
su

iers.
! Increased ordering and
! Ca
ita can be used for admin costs.
other
riorities as o

osed
! De
ending on the efficienc
to being
of the su

ier.
tied u
in stocks.


 

! F at Rate
! Overtime
! ›iecework
! ›R›
! ›rofit sharing
! Share saveshare o
tions

 

! ahis
ament method invo ves the em
oee
receiving a basic rate of
a
er time
eriod
that he works (e.g. £5
er hour £50
er da
£400
er week).
! ahe
a is not re ated to out
ut or

roductivit.
m


! An time that the em
oee works above the
agreed number of hours
er week ma make
him e igib e for overtime
aments often at
µtime and a ha f¶ (e.g. £7.50
er hour instead
of £5
er hour).
! Doub e time is
aid after a certain number of
hours of overtime and wou d be £10
er hour
in our exam
e.




! ahis
ament method invo ves the em
oee
receiving an amount of mone
er unit (or

er µ
iece¶) that he
roduces.
! aherefore his
a is direct  inked to his

roductivit eve .
! However it is
ossib e that in order to boost
his earnings an em
oee ma reduce the
qua it and craftsmanshi

er unit so that he
can
roduce more out
ut in a given
eriod of
time.








! ahis is a method of giving
a rises on an
individua basis re ated to the em
oee
achieving a number of targets over the
ast
ear.
! ahis is common with manageria and

rofessiona workers.
! A

raisa s ma be inked to ›R›.

 
! ahis invo ves each em
oee receiving a share of
the
rofit of the business each ear effective 
re
resenting an annua
a rise.
! It aims to increase the eve s of effort motivation
and
roductivit of each em
oee since their
annua
a-award wi be re ated to the
rofitabi it
of the business.
! However if the business makes ow
rofits (or even
a oss) then this is ike  to have a detrimenta effect
on the eve of motivation of the em
oees.


 
! A common form of
ament in man ›LCs is what
is termed µshare o
tions¶. ahis basica  invo ves
each em
oee receiving a
art of each month¶s
sa ar in the form of shares (usua  at a discounted

rice).
! ahis forms a
rofitab e savings-
an for the
em
oee and he can se them after a given
eriod
of time.
! ahis shou d motivate the em
oees to work harder
and increase their efforts since the share
rice wi
rise as the com
an becomes more
rofitab e
therefore increasing the ca
ita gain on their shares.
  



! Design and aout
! Mechanica hand ing
! arans
ortation
! Schedu ing
 
 


! warehouses shou d be on ground eve to reduce hand ing times

from de iver to storage. Stock rotation shou d be in o
eration.




! some warehouses have
s
ecia ist stock-hand ing
equi
ment bui t into their
warehouse.
! aesco has a conveor be t
which can ink u
with their
trucks to take the cages
inside the factor.
! Other methods wou d be
using
a ets and fork ifts to
trans
ort them inside the
warehouse
 
! businesses can use their own
trans
ort which gives them
com
ete contro over de iver
but has high investment and
running costs;
! or it can hire trans
ort which is
chea
er and can dea with
changes in vo ume but gives
ess contro ;
! and fina 
ub ic trans
ort
which a though ver chea
is
high  unre iab e and no
contro



! this makes sure a
factors of
roduction
are taken into account
and working in
harmon.
! ao ensure smooth
de iver from su

ier
to manufacturer to end
user
m


 







 

ü
 

ë
 
! ëob ›roduction concentrates on
roducing
one
roduct from start to finish. Once one

roduct is com
ete another can begin.
! It is extreme  abour intensive

! Some exam
es:

! Wedding dress
! ›ainting
! House extension
ë

 
! Eas to organise ! ›roduction costs ike 

roduction to be high
! Can customise orders ! ›roduction time ma
! µone-off¶ orders can be be onger
accommodated ! Investment in
! Workers invo ved in machiner ma be
entire
roduction higher as s
ecia ist

rocess from start to equi
ment ma be
finish needed
?


! Batch
roduction enab es items to be created
in bu k (µa batch¶)
! enera
ur
ose equi
ment and methods are
used to
roduce sma quantities of items
that wi be made and so d for a imited time
on 
! Common  used in food
roduction
! Big Macs
! regg¶s Ro s
?

 
! A ows f exib e

roduction
! Stocks of
art-finished
goods can be he d and
com
eted ater
! Workers can s
ecia ise
! ›roduction runs of
sma batches can be
ex
ensive to
roduce
! If
roduction runs are
different there ma be
extra costs and time
de as in setting u

different equi
ment
! Re
etitive work for
em
oees




! Aka continuous
roduction f ow
roduction
enab es
roducts to be created in a series of
ste
s.
! Large amounts of goods
roduced and is
high  ca
ita intensive (machiner
automation)

! Cars are massed
roduced for a

arge market using f ow
roduction


  
! Economies of sca e ! Standard
roduct
! Automated
roduction
roduced (o

osite of
ines save time and customised)
mone ! High set-u
costs of
! Qua it sstems can be automated ines
bui t into the ! Re
etitive and boring

roduction work
! Long
roduction runs
ma
roduce more
than is needed
 Ê 
 

! Qua it is ensuring that the end-to-end
customer requirements are met to the highest
ossib e
standard.
! It is im
erative to businesses that their
roduction

rocess meets qua it standards throughout so that the
end resu t de ivers customer satisfaction.
! Qua it focuses on reducing errors fau ts and cutting out
f aws.
! It is im
ortant that a em
oees are informed of the
qua it eve s and standards ex
ected of the com
an.
Eg. IBM
roduces week  qua it re
orts indicating
current
erformance eve s.

   
! British Standards Institute Kite Mark

! ISO 9000

! ABaA

! Investors in ›eo
e
 
 

! ahere are 3 stages in attem
ting to im
rove on

qua it:

1. Qua it Contro

. Qua it Assurance

3. aota Qua it Management

 
 

! ahis
rocess was a traditiona method of qua it contro 

whereb ins
ectors were required to s
ot check the fina

roducts.
! Whenever sub-standard
roducts were found it was the
dut of the ins
ector to remove the items and discard
them. ahis
roved to be an extreme  cost  exercise as
it resu ted in a high eve of wastage.
! At no
oint in the
rocess were the
roduction
workers invo ved in determining what was the
ex
ected eve of qua it.
 
 

! ahis
rocess of qua it contro made the
roduction
workers aware of the standard which was required b
the business.
! Qua it checks wou d be conducted at each stage of

roduction.
! ahe workers wou d o
erate as a
team to check and monitor the

rogress and accurac of the

roduction
rocess.
 

 


! ahe main
rinci
e of aQM is that ever em
oee is
motivated to think about their
ersona contribution to

roviding qua it to customers.
! Ever em
oee has a res
onsibi it to ensure that a
qua it
roduct eaves the work
ace.
! ao encourage this eve of
artici
ation in the qua it

rocess management give more inde
endence to the
workforce and constant  seek their o
inions and
comments on was in which qua it can be im
roved in
the business.
 

 


! As no errors are to erated tasks must be com
eted
correct  first time!
! In order for aQM to be effective the fo owing factors must
be im
emented:
C ear  defined
o ic on the required eve s of qua it.
Ever em
oee must be focused on customer
satisfaction.
Staff must be
rovided with a

ro
riate training to
ensure the know how to meet the set standard.
›eo
e shou d be a

ointed to constant  check and
monitor that the
rocess is working.
aeamwork at a eve s shou d be encouraged.
   

! ahe ëa
anese have
erfected the conce
t of tota
invo vement in the ife of the organisation.
! Workers are
art of a team; there are team songs
and team com
etitions.
! Everone is ex
ected to strive
towards continua im
rovement.
?

! Benchmarking is a form of qua it assurance
which takes the best
erformers in an
industr as the standard to be aimed for.
! Benchmarking invo ves using different
sources such as customers trade journa ists
and business ana sts.
 m
 
  
 

! Work Stud ± ana sis of work methods which
has two main t
es:
1. Method Stud ± ooks for the best wa to
erform a
task
. Work Measurement ± ooks at the time taken to do
s
ecific tasks
! Other methods inc ude: incentive
schemes and qua it circ es.
 ! A grou
of 6-1
eo
e who meet

 

 to identif qua it
rob ems
consider so utions &
recommend suitab e outcomes
to management.
! Members drawn from factor
f oor but inc ude engineers
qua it ins
ectors & sa esmen to
offer different view
oints.
(Managers ma or ma not be
inc uded)
Wh use Qua it Circ es?
! ào-one knows
roduction

rob ems better than the
workers
! Workers a

reciate the chance
  
 

  
! Characteristics
Vo unteers
Set Ru es and ›riorities
Decisions made b Consensus
Use of organized a

roaches to ›rob em-
So ving
  
 

  
! A members of a Circ e need to receive
training
! Members need to be em
owered
! Members need to have the su

ort of Senior
Management
  
 

 
m
! Increase ›roductivit
! Im
rove Qua it
! Boost Em
oee Mora e