WALT Understand the 5 P’s of Production Know & understand economies of scale in Relation to BSB Know and understand the need for Quality Control at BSB

There are 5 P’s of production decision making that you may also find useful to recall They are: Product – will it sell? Will the design allow it to be made quickly and easily? What materials will be used? What will they cost? Plant – what buildings/equipment will be needed? How will they be laid out? Processes – will the product be made as a one off? In batches? Continuously on a production line? Or some other way? Programmes – how will different strategies and functions be programmed to achieve an organised timetable of production? People – what does the firm need to consider about the people involved in the production of a good or service?

Internal Economies of Scale Types This is when a firms unit of cost of production falls as the output and scale of operation increases Technical economies Larger firms can afford research & development costs and buy sophisticated equipment Managerial economies Employ specialist managers to improve efficiency Financial - economies Larger firms are more stable financially – easier to negotiate lower interest on loans Risk –bearing economies As firms grow – more product range – diversification spreads risk over more markets Purchasing economies Larger firms can have discounts from buying in bulk Marketing economies Larger firms are able to buy services for specialist advertising agencies – more types of promotion.

Economies of scale This refers to the factors that cause cost per spices pouches to decrease as BSB increase the scale of its production. For example- Technical economies- BSB depends heavily on technology as it expands. Productivity increases, spreading the costs and making the individual cost per spice pouch less. Is there something that needs improving here?????

Managerial economies –BSB Specialist HR Highly skilled blenders These will improve efficiency. - DIVISION OF LABOUR – small very specialised tasks – repetitive – people become excellent at jobs (has disadvantages) Can BSB improve? Bulk buying (Purchasing)economies- BSB will be purchasing bigger quantities of stock from suppliers, so can negotiate higher discount rates.

Financial economies- banks would give BSB a lower interest rates on future loans because BSB is considered to be reliable as it is successfully expanding. Risk bearing economies- BSB sells a variety of spice pouches, and don’t depend on one flavour as its main source of revenue- this spreads the risk of failure.

Look at the following label used by BSB for their spice pouches. On the post it note provided, write down 3 recommendations to improve it.

Use of technology in the BSB case study Recap on types of production. Explain the pro and cons of using a JIT stock system. Discuss the benefits and drawbacks of BSB using technology. Analyse the importance of quality management to BSB. Exploration of the new build factory extension to various stakeholders.

Room 1 of the BSB factory uses JIT stock ordering system. ACTIVITY- discuss the pro and con of BSB relying on a JIT system.

Note down what you think is the most important and most important disadvantage BSB must consider when using JIT. Explain why.

BSB’s use of technology. Automation- the full use of machinery during the manufacturing process. Mechanisation- the use of machinery and labour during the manufacturing process. Annotate which rooms use which of the two technological processes mentioned above. Annotate which rooms use skilled and unskilled workers.

Skilled workers unskilled workers The importance of labour to BSB… why has the Human resource manager hired two very different workers? Advantages and disadvantages? Skilled workers unskilled workers Hint- think in regards to specialisation, division of labour, costs, training, motivation etc.

Past exam question

Ade and spices… Ade had experience as a production Manager in a factory which made caravans. In your writing books, note down the pros and cons of Ade’s skills in the new business Pros Ade has experience of being a production manager Ade has experience of working in a factory Ade has been a manger Ade has been a manger in a factory so he will have people handling skills Cons Caravan’s and spices could not be more different Caravans have different segments of the population and are a niche market product Spices are an everyday food item and therefore mass market Small low value to large high value Production of food and production of a caravan are very different

“BSB now produces a range of spice blends “BSB now produces a range of spice blends. It is noted particularly for its distinctive blends which are sold under the BSB brand. The spices are roasted, blended and packaged in the factory. The spices are packaged either in heat-sealed foil pouches or in glass bottles. The pouches and bottles are bought in bulk by BSB and labels are attached to them to identify the brand and the spice blend.” What type of production method (s) do you think BSB use?

Practice writing skills exercise For each of the following production methods, describe how it is relevant or not relevant to BSB. (2 marks per method explained). Explain answers with ‘this is because’… Job. Batch. Flow. Process. http://www.youtube.com/watch?v=CLPFG5QCx0g

Past exam question adapted E.g. Human resource manager, spice blender workers etc. BSB

Past exam question adapted BSB

Past exam question adapted BSB

Practice writing skills exercise Discuss the benefits and drawbacks of BSB using technology. State 2 benefits. Analyse each benefit through chain writing- “this is good because..” (4 marks) State 2 drawbacks. Analyse each drawback through chain writing- “this is bad because..” ( 4 marks) Conclusion- give your opinion- do you think it is a good business decision for BSB to rely on technology. How does it link to other concepts like cash flow, sources of finance and quality management? (3 marks).

Example of past exam question

The key issue with using technology is the high costs involved… Chloe and Ade need to consider various sources of finance for such expensive machinery. Explain how they could use the following sources of finance: Leasing. Find a new partner. Share issue.

BSB produces spices in either heat sealed foil pouches or in glass bottles. Give 3 examples of how each type of packaging could be manufactured as poor quality.

Why should BSB be concerned about producing high quality goods Why should BSB be concerned about producing high quality goods? Complete the following chain analysis diagrams? Develops competitive advantage Increases customer satisfaction Ability to charge high prices (skimming) http://www.youtube.com/watch?v=Cs0egDUI3AU&list=PLF97E21F2311FFF0F

Use business terminology! Let’s imagine a fault develops in the BSB factory and produces poor quality spice pouches (glass fragments in the pouches). These are sold on in the supermarkets to the public. Mind map the issues BSB will face from this. EXTENSION- write down a solution on how BSB can deal/ counter that issue. The problems of BSB selling on poor quality spice pouches to the public? Marketi Use business terminology!

BSB could introduce TQM to manage quality more effectively. TQM is best described as being an “attitude” in a business where everyone in the business is committed to achieving quality – not just the people in the Quality Control or production departments. It means that quality is being checked at every stage of the production process, as all employees are trained to check their own work (self-checking). The main aims of TQM are “zero defects” and “total customer satisfaction”.

Note down what you think is the most important and most important disadvantage for BSB implementing TQM in the spice factory. Explain why.

Past exam question adapted BSB

Past exam question

Local Bowton community. Environmental pressure groups. Discuss in pairs how could the following stakeholders be affected by the expansion of a new spice factory on the outskirts of Bowton: Farmer. Local Bowton community. Environmental pressure groups. Bowtown council. BSB’s employees. BSB’s customers. http://www.youtube.com/watch?v=GGkqQ0l7BmY

Past exam question adapted BSB new factory new factory

Past exam question adapted of BSB from the factory expansion