3.2.2 Managing stock and quality Have you seen these labels or stickers in the shops? How does the customer feel? How does the business manager feel? What is the problem? 3.2.2 Managing stock and quality 3.2.2 Managing Stock and Quality

Stock Control What happens if a business holds too little stock? What happens if a business holds too much stock? Which is the lesser of two evils? There are two stock control methods: Buffer stock Just in Time 3.2.2 Managing Stock and Quality

Interpreting bar gate stock graphs 3.2.2 Managing Stock and Quality Interpreting bar gate stock graphs Maximum stock level Stock Level Stock levels fall as it is used New stock is delivered Re-order level Lead time – the time from placing the stock order to getting the delivery Buffer stock – held in case there is a problem with delivery of new stock or a sudden increase in demand When it reaches this level more stock is ordered either manually or automatically Minimum stock level 0 5 10 15 20 25 30 35 Number of Weeks

Buffer stock The buffer stock method of stock control is sometimes called “Just in Case”. Can you explain why? Advantages of holding buffer stock Can meet customer demand Quickly respond to increases in demand Continue with production even if a problem with stock deliveries Disadvantages of holding buffer stock Money tied up in holding stock Costs associated with stock holding e.g. storage, staff, insurance Risk of waste e.g. out of date, damaged or obsolete Should all businesses hold buffer stock or does it depend on the nature of the business? 3.2.2 Managing Stock and Quality

Work in pairs to identify the advantages and disadvantages of JIT. 3.2.2 Managing Stock and Quality Just in time (JIT) Just in time is a stock control method that involves holding zero or very limited stock. Raw materials are delivered as they are needed for production and finished goods completed ready to meet the demand of customers. Advantages Disadvantages Work in pairs to identify the advantages and disadvantages of JIT.

3.2.2 Managing Stock and Quality Question time SuperDenim is an online retailer of designer Japanese denim. It imports jeans directly from Japan and sells them over the internet. SuperDenim prides itself on a high level of customer service. What is meant by the term “stock”? (2) Using the diagram opposite, what is the: number held as buffer stock reorder quantity lead time (3) Explain one possible benefit of SuperDenim operating this method of stock control. (3) State one advantage and one disadvantage to SuperDenim of switching to a Just in Time (JIT) method of stock control. For each, explain one likely effect on the business. (8) Max. level Re-order level Stock levels Min. level No. of weeks

Identify Quality Problems Produce a spider diagram to show the costs associated with quality problems Italian fashion brand Gucci once used the slogan “Quality is remembered long after the price is forgotten.” Do you agree? http://www.youtube.com/watch?v=GuOy-nCAROY Jonathan talks to BBC World TV news about Toyota's brand faux pas Can quality problems effect the long term brand image of a company?

Does this Toyota plant use quality control or quality assurance? Quality control is the process of checking the quality of a product at the end of the manufacturing process A specialist is employed to check the end product Quality assurance is the process of checking the quality of a product at every step along the manufacturing process from the receipt of raw materials to the final output Each employee is responsible for self inspection Does this Toyota plant use quality control or quality assurance? http://www.youtube.com/watch?v=U0_ktNqbQyU&feature=related Lean Manufacturing Example Toyota Plant Kentucky 3.2.2 Managing Stock and Quality

Quality control v Quality assurance Advantages Disadvantages Which one is better? Justify your view. Work in pairs to complete the table opposite. 3.2.2 Managing Stock and Quality

Team Activity – Quality Assurance In teams prepare a poster to be displayed in your classroom that addresses the following points What is a quality exam answer? Who is responsible for achieving a quality answer? What steps can be taken to maintain quality? Individual activity: How could you improve the quality of your Exam answers? Class work? Home work?

Question time 3.2.2 Managing Stock and Quality Pret-a-Manger operates 295 sandwich shops worldwide. 210 of these have their own kitchens so sandwiches can be made on-site. Pret are proud of the freshness of their food, their website tells customers “We get vans to drop off good, natural ingredients every day. Our chefs get cracking early in the morning, making our stuff fresh so we can sell it fresh. This is absolutely, completely and utterly essential to the quality of our food.” “We get vans to drop off good, natural ingredients every day”. What is this an example of? Buffer stock Just in time Quality control Quality assurance (1) The first job of the chefs is to check the raw ingredients. What is this an example of? What is meant by the term “quality”? (2)

Question time 3.2.2 Managing Stock and Quality Pret-a-Manger operates 295 sandwich shops worldwide. 210 of these have their own kitchens so sandwiches can be made on-site. Pret are proud of the freshness of their food, their website tells customers “We get vans to drop off good, natural ingredients every day. Our chefs get cracking early in the morning, making our stuff fresh so we can sell it fresh. This is absolutely, completely and utterly essential to the quality of our food.” Explain one possible disadvantage to Pret of not holding a buffer stock. (3) Explain one possible benefit of a quality product to Pret. (3) Improving the quality of a product and improving productivity are two ways in which a business like Pret-a-Manger might become more competitive. Which of these two methods do you think would be most effective in improving the competitiveness of a business such as McDonald’s and why? (6)