Business operations, production and supply
The transformation model
Operations convert inputs into outputs that customers value. Inputs include materials, labour, equipment, information and energy; the process adds value through production or service delivery; outputs are goods and services, plus waste and customer feedback. Candidates should understand capacity, productivity, quality control and quality assurance, inventory management, procurement, lead time, scheduling, layout and health and safety. Productivity compares output with input, such as units per labour hour. Quality control inspects finished work; quality assurance builds quality into every stage. Inventory includes raw materials, work in progress and finished goods. Just-in-time reduces stock holding but raises supply disruption risk; safety stock protects against uncertainty.
Traps
Do not confuse production with productivity: producing more does not always mean producing efficiently. Quality control and quality assurance are not synonyms. JIT is not simply 'keep no stock'; it requires reliable suppliers. Stock-outs lose sales, while overstock ties up cash and risks damage. Another trap is ignoring lead time when promising delivery dates.
Worked example
A workshop has 4 workers who produce 480 chairs in a 40-hour week. Labour input is 160 hours, so productivity is 3 chairs per labour hour. If output rises to 600 chairs with 5 workers, productivity becomes 3 chairs per hour, so output grew but productivity did not. Rule of thumb: measure output per input before declaring improvement.