1. Operations Activities
Po3: Consider Marketing and Operations Activities for Personal Enterprise
Operations Activities

2. Operations Activities
In this topic you will learn about
Activities:
acquiring and handling inputs
processing inputs to deliver outputs
Deciding on operations activities considering the customer value proposition and:
own skills and personality type
potential costs (start-up and operating)
support networks

3. Operations Activities
Operations activities are those aspects of the business which are directly linked to the fulfilment of customer orders
Operations takes inputs, processes them to form an output and distributes to the customer
Operational efficiency involves maximising the output achieved from given inputs including machinery, materials and people
Inputs include the factors of production or factor inputs:
Land
Labour
Capital
Enterprise

4. Acquiring inputs
Inputs include the raw materials and components that are used to provide a good or service
Suppliers are those people responsible for providing inputs to businesses
Farmer supplying wheat to Kellogg's or beef to Asda
Component manufacturer supplying bolts to a furniture manufacturer
Electricity company providing power to a theatre
Fashion designer providing their summer range to a boutique
Regardless of the nature of a business they will have goods and services provided to them from another business (B2B)
Most businesses will work with many suppliers
The supply chain is all of the resource providers throughout every stage of operations
Inventory is the number of goods held in stock including raw materials, work in progress and finished goods
Take any product that you have with you today. It might be an item of clothing, piece of equipment or personal object such as a phone.
Write a list of all the materials and components that would have contributed to producing that item.

5. Acquiring and handling inputs
Acquiring inputs involves working with suppliers
Key considerations include:
It is commonplace for suppliers to offer credit to its customers i.e. the option to receive the goods or service now but pay at an agreed point in the future
Payment terms will vary depending upon the relative sizes of the firms and also nature of the product or service
Payment terms can be in advance, upon delivery, pre agreed credit terms e.g. 30 days and payment plan i.e. payment in stages
A business may wish to choose a supplier with generous payment terms in order to help their own cash flow

6. How will the quality of inputs affect the customer value proposition?
Acquiring and handling inputs
Quality of inputs will have a direct effect on the quality of the finished product
One poor quality component will affect the whole product
A top chef working with a poor quality steak will not be able to achieve the quality of meal he/she could with a quality steak
A pair of jeans with a poor quality zip will devalue the quality of the jeans
The quality may also impact upon the operational efficiency
Need to rework manufactured goods
Cause breakages to machinery
Take longer to handle
In retail the quality of the stock will directly influence the reputation and image of the store
How will the quality of inputs affect the customer value proposition?

7. Acquiring and handling inputs
When handling inputs it is important to consider:
How much stock to hold
Sufficient to meet demand, but not too much to be left with obsolete stock
Cost of handling stock e.g. warehousing, maintaining quality, insurance
Frequency of purchase
Buy in bulk to achieve discounts or buy in smaller quantities as required
Flexibility and reliability of suppliers
Just in time or buffer stock
Hold some stock for in case there is a sudden increase in demand or a stoppage in supply v. a JIT system
Why might these decisions be particularly difficult for a new entrepreneur?

8. Processing inputs to deliver outputs
Processing inputs to turn them into an output can be:
Capital intensive which uses a relatively high proportion of capital such as machinery in the production of a good or service
This tends to occur in the secondary sector of the economy i.e. manufacturing
Labour intensive which uses a relatively high proportion of labour i.e. workers in the production of a good or service
This tends to occur in the tertiary sector of the economy i.e. services
Potter versus 3D printing.
Head to head: Potter versus 3D printer
An entrepreneur may not be able to afford capital equipment in the early years. In fact, they may be responsible for the majority of processing themselves or with a small workforce.

9. Processing inputs to deliver outputs
Other considerations include:
Labour productivity i.e. units of output per unit of labour. This can be increased with training and a motivated workforce
Matching supply to demand to avoid excess supply or excess demand
Logistics e.g. how to store and distribute finished goods
Quality which can either be monitored throughout the process i.e. quality assurance or checked at the end of the process i.e. quality control

10. Operations activities
Own skills and personality type
Personal preferences and nature of the business e.g. mass produced or tailor made
Value proposition e.g. low cost or highly differentiated e.g. hand made
Potential costs (start-up and operating)
Capital or labour intensive
Cost of inputs and choice of suppliers
Scale of operations
Support networks
Interest groups e.g. if a craft product
Government support e.g. if offering training and employment opportunities
Business groups e.g. meet the buyer events
Meeting the buyer. How important are these for entrepreneurs?

11. Operations Activities
In this topic you have learnt about
Activities:
acquiring and handling inputs
processing inputs to deliver outputs
Deciding on operations activities considering the customer value proposition and:
own skills and personality type
potential costs (start-up and operating)
support networks