OPERATIONS

Evaluating the triple bottom line

● Production methods
○ job/customized production
○ Batch production
○ mass/flow/process production
○ Cellular manufacturing

Job production
● When a company produces a specific product to meet the wants of a particular
consumers
○ E.g to measure suits, customized wedding ring
● At any given time only one product is being made, it has to be made from start to finish.
● Advantages
○ Quality
○ Motivation
○ Flexibility/choice
○ Uniqueness
● Disadvantages
○ Time consuming
○ Labor intensive
○ Long working capital cycle
○ Few economies of scale
○ Irregularity of orders

Batch production
● Producer makes a set number of identical goods that move through the process at the
same time
● E.g baking
● Advantages
○ economies of scale (technical)
○ Specialization
○ Variety reduces risk (more than one product)
● Disadvantages:
○ Storage
○ Boredom
○ Inflexibility
○ Capital intensive (can be more expensive)

Mass and flow production

● Mass production is manufacturing large amounts of identical products
● Flow production focuses on continuous production process
● Advantages
 ○ Large scale
○ economies of scale
○ Standardized
○ Low labor costs
● Disadvantages
○ Monotonous
○ Inflexibility
○ Capital intensive (high startup costs)
○ Storage

Cell production
● A modern interpretation of assembly production whereby set tasks are completed by
teams (cells)
● Each cell has specialized machine, people and materials
● Advantages
○ Some autonomy
○ Targets
○ Motivation
○ Specialization
● Disadvantages
○ Lower output
○ Capital intensive
○ Conflict between teams
○ Capacity utilization is lower

APPROPRIATE METHOD
● Capital intensive v labor intensive
● Increasing capital investment
● Standardization v USP
● Personalization
● Aims and objectives of a business
● Sometimes businesses can use a mix

LOCATION
● The reason for a specific location of production (AO2)
● The following ways of re-organizing production, both nationally and internationally: (AO3)
○ outsourcing/subcontracting
○ Offshoring
○ Insourcing
Reasons for a specific locating of production
● Where should a business choose to produce its products?
● Quantitative reasons
○ Availability, suitability and cost of land
○ Availability, quality and cost of labor
○ Proximity to customers
○ Proximity to resources
○ Government incentives and limitation
○ Feasibility of E-commerce
● Qualitative reasons
○ Management preferences
○ Local knowledge
○ Infrastructure
○ Political stability
○ Ethical issues
○ Comparative shopping

Methods of re-organizing production

1) Outsourcing/Subcontracting
The practice of transferring internal business activities to an external organization to reduce
costs and increase productivity.
Advantages:
- functions that are not core to the business function.
- Can cut production costs
Disadvantages:
- Any conflict can slow down production
- The quality of production is out of your control
- Can cause uncertainty amongst staff

2) Offshoring
The practice of transferring internal business activities of an external organization to reduce
costs and increase productivity.
Advantages:
- Be closer to the market
- Can cut production costs
- Avoid tariffs
Disadvantages:
- Associated with unethical practices
- Quality assurance is more difficult
- Vulnerable to external influences (STEEPLE)

3) Incourcing
The use of a business own people and resources to accomplish a certain function or task which
would otherwise have been outsourced.