Business operations — section overview

Section 3.3 covers how businesses actually produce their goods and services: production methods, supply chain management, quality assurance and customer service.

What 3.3 covers

Sub-topic	Key ideas
3.3.1	Production processes: job, batch, flow
3.3.2	Procurement: stock management, JIT vs JIC, supply chains
3.3.3	Quality: quality control vs quality assurance
3.3.4	Customer service: meeting needs, after-sales, feedback

Production methods

Method	Description	Suitable for	Example
Job production	One-off, made to order	Bespoke, high-value items	Wedding cake, architect's plan
Batch production	Groups of identical items made together	Medium-volume, some customisation	Bakery, paint colours
Flow (mass) production	Continuous, automated production line	High-volume, standardised products	Cars, cans of soup

Trade-offs: Job = highest flexibility, highest cost; Flow = lowest unit cost, lowest flexibility.

Supply chain and procurement

Supply chain: route from raw materials → finished product → customer (suppliers → manufacturer → distributor → retailer → customer).

Just-in-time (JIT): stock arrives exactly when needed — no storage costs; risk if supplier fails.

Just-in-case (JIC): hold buffer stock — higher storage costs; protects against supply disruption.

Factors when choosing suppliers:

• Price and payment terms
• Quality and reliability
• Lead time (delivery speed)
• Ethical and environmental standards
• Location (local vs global)

Quality management

Quality control (QC): checking finished products against standards — catches defects AFTER production (wasteful).

Quality assurance (QA): building quality into the production process at every stage — prevents defects.

TQM (Total Quality Management): culture of continuous improvement — every employee responsible for quality.

Consequences of poor quality: returns and refunds, damaged reputation, loss of repeat customers, legal claims.

Customer service

Good customer service:

• Increases customer loyalty and repeat purchases
• Generates positive word of mouth and reviews
• Differentiates the business from competitors
• Reduces returns and complaints

After-sales service (warranties, helplines, returns policies) is part of the customer experience and affects long-term brand value.

Common exam mistakes in 3.3

1. JIT eliminates all stock costs — yes, but it creates vulnerability to supply disruptions (see COVID-19 supply chain crises)
2. Quality control = quality assurance — QC checks at the end; QA builds quality in throughout
3. Flow production requires automation — not always, but it usually does for efficiency