Operations Management: Production, Quality and Inventory
Production methods
Operations management is about producing goods and services efficiently and to the required quality. Candidates must compare job, batch and flow (mass) production, plus cell production and lean production. Consider capital intensity versus labour intensity, and how method choice depends on volume, variety and cost. Productivity is output per unit of input and is improved by training, technology and better layout.
Quality
Understand quality control (inspection at the end) versus quality assurance (built into the process), plus Total Quality Management (TQM), quality circles and benchmarking. Quality failures raise costs through rework, waste and lost reputation.
Inventory and stock control
Learn the costs of holding stock (storage, insurance, obsolescence) versus stock-out costs (lost sales, idle production). Techniques include buffer stock, reorder level, lead time, economic order quantity, JIT (just-in-time) and kanban. JIT reduces holding costs but is vulnerable to supply disruption.
Traps to watch
- Describing flow production as suitable for one-off bespoke items.
- Confusing quality control with quality assurance.
- Saying JIT means 'no stock at all' - it means minimal stock timed to arrive as needed.
- Forgetting that stock-outs also damage customer goodwill.
Worked example / rule of thumb
A furniture maker producing one custom table per order uses job production; a soft-drink bottler uses flow production. Rule of thumb: if each unit is unique, think job; if identical units move continuously, think flow; if identical units are made in groups, think batch.