Business · Topic 2: Building a business

Making operational decisions

How businesses make their products, manage stock and suppliers, keep quality high and look after customers before, during and after a sale.

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Key terms in this chapter

All 25, gathered from every lesson.

Operations
The activities that turn inputs into goods and services.
Job production
Making one unique product at a time, usually to order.
Batch production
Making a group of identical products together before switching to another batch.
Flow production
Making identical products continuously on a production line.
Productivity
Output per worker or per machine in a period of time.
Automation
Using machines and computers to carry out tasks with little human input.
Stock
Raw materials, components and finished goods held by a business.
Bar gate stock graph
A graph showing how stock levels rise and fall over time.
Reorder level
The stock level at which a new order is placed.
Buffer stock
The minimum stock kept for emergencies.
Lead time
The time between ordering stock and it arriving.
Just-in-time (JIT)
Ordering stock to arrive exactly when it is needed, holding little or none.
Procurement
Finding and buying the materials and services a business needs.
Logistics
Managing the movement of materials and products into and out of a business.
Quality
Meeting or exceeding customers' expectations, consistently.
Quality control
Checking finished products for faults.
Quality assurance
Checking quality at every stage of production to prevent faults.
Product recall
When a business asks customers to return a product because it is faulty or dangerous.
Competitive advantage
Anything that makes a business more attractive to customers than its rivals.
Sales process
All the stages of selling, from the first enquiry to after-sales help.
Customer service
How a business looks after its customers before, during and after a sale.
Product knowledge
Staff understanding of the products they sell.
Customer engagement
How a business interacts with and builds relationships with customers.
Post-sales service
Help given to customers after they have bought, such as repairs and warranties.
Customer loyalty
When customers keep buying from the same business.