GCSE Revision Exercise
MEETING CUSTOMER NEEDS
1. Define the following terms;
a) repeat purchase
b) just in time
c) stock
2. Explain the design mix.
FUNCTION
ECONOMY
OF
AESTHETICS
MANUFACTURE
The trade-offs involved in designing new products can be shown in the
triangle. As Craig tried to make his boot perform better, it became more
expensive to produce and looked uglier.
3. List the problems a firm may encounter with poor stock control;
Too much stock
• Costs will rise – warehouse costs
• Stock may go out of date
Too little stock
• May run out of stock – miss orders, poor reputation
What is the aim of stock control?
• To make sure that businesses always
have sufficient stocks to meet its own
needs and those of the consumer
• However, it needs to keep the minimum
amount of stock so as to avoid damage
and waste, and to minimise the cost of
holding stock
Stock Control Graph
Stock Level
Maximum Stock Level
Re-order
triggered
Re-order level
Minimum Stock Level
Lead Time
When
the stock
levellevels
reaches
the re-order
level,
it triggers
a
Maximum
stock
achieved
after
stock
delivery.
The
Traditional
Stock
Control
Model
new
order.
The
difference
between
the
time
of
re-order
and
Stock levels decline during production.
delivery is the ‘lead time’.
Time
Warehousing
Warehouse Costs
Re-Order Costs
•Rent / mortgage
•Purchasing more frequent smaller
amounts will result in higher
purchase cost
•Utilities – gas, electricity, water
bills
•Depreciation
•Store person's wages
•Money tied up in stock
•Security
•Insurance
•Higher transport costs
•Handling costs
•Risk of running out of stock
TQM
Total Quality Management is the commitment by all employees to providing
quality products. The concept relies on all employees following a written
procedure. Employees are encouraged to make suggestions feeding back their
ideas on how the process could be improved; this is known as continuous
improvement. The ultimate objective is to achieve zero defects, no faulty goods at
all. Good quality components and machines are used. Everyone should ensure
their work is done correctly before passing it on. TQM uses the idea of quality
assurance.
When staff are initially trained, procedures written and new machinery purchased,
costs are likely to rise. However, as wastage falls and hidden costs are reduced
such as a firm getting a poor reputation or customers not returning because they
have had poor quality products, then costs should start to fall in the long term.
Quality Control
• Checks are made on completed products.
• It takes place after the event.
• Inspects in Quality.
• X - could be a lot of waste
• X - not always possible to put fault right
Quality Assurance
• Quality components or raw materials are used in
the production process.
• Everyone follows a written procedure.
• Employees are responsible for their own work.
• Focuses on how the products are produced
• Prevents failure – Right First Time
•  - less wastage
JIT and TQM – True or False?
Just in Time
Just in time production keeps stock to a minimum.
True
Stock arrives just in time to before it is used.
Warehouse cost are very high.
JIT requires good communication.
True
False
True
True
Goods are made just in time to meet orders
Feedback from workers is encouraged.
True
Authoritarian management is preferable.
False
There must be no bottlenecks in the production.
True
A large numbers of suppliers are used to keep costs low.
A relationship is built up with one supplier.
True
False
TQM
TQM stands for total quality management.
True
TQM is a commitment by all staff to quality.
True
TQM requires democratic management
True
TQM firms have a quality inspection department.
A written procedure is followed by everyone.
False
True
TQM uses the concept of quality assurance.
True
There should be zero defects i.e. no faulty products.
True
Continuous improvement is feedback of ideas by staff.
True
Workers check each other’s work.
False
There should be less hidden costs such as poor
reputation.
True
Review
Objectives: To review and increase understanding of
JIT & TQM
Key Terms
•
•
•
•
•
•
Just In Time
TQM
Quality Control
Quality Assurance
Continuous Improvement
Zero Defects
To know what is meant by
customer service
• “Customer service is the ability of an
organisation to recognise and consistently
meet the needs of its customers”
• The role of everyone in the organisation is to
meet CUSTOMER NEEDS AND EXPECTATIONS
Customer Service
1) List as many ways as you can stating how BA First Class could offer good customer service;
Customer
Elderly Customers
Parents and Infants
Customers with
mobility problems
Deaf or heard of
hearing
Blind or partially
sighted
Meeting Needs
Customer
Meeting Needs
Elderly Customers
Provide Seating at checkouts, Packing bags, taking shopping to the
car,
Parents and Infants
Designated car park spaces, Different trolleys, Priority wide aisle
checkout, Baby Changing facilities,
Customers with
mobility problems
Disabled parking spaces, Wheelchairs available, Adapted trolleys,
electric scooters, Wide aisle checkout , Open doors
Deaf or heard of
hearing
Loop system, leaflets, Speak slowly, Write it down,
Blind or partially
sighted
Personal shoppers, guide dogs , lead gently, braille,
a)
Why do most firms attempt to create customer loyalty?
Answer Prompt
 Start with a killer first sentence – define repeat purchase
 How do firms attempt to gain repeat purchases?
 Why are existing customers so important for a new business?
 Give some examples
 Conclude – what are the advantages of having loyal customer and repeat purchases?
Example Answer
Most businesses attempt to build up customer loyalty in an attempt to encourage repeat
purchases of their products. New customers are both very difficult and very expensive to win.
Businesses spend large sums of money on advertising and with promotions such as penetration
pricing in order to win new customers. Once those customers have been won, then a business
will attempt to build up brand loyalty. For example, Tesco use Club Card Points and Sainsbury’s
Nectar Cards in an attempt to build customer loyalty. Firms will also offer a good quality product
or service and support this with good customer care in order to ensure customer satisfaction.
In conclusion, in order to be successful in the long run a business must retain its existing
customer base through a culture that creates customer satisfaction and hence customer loyalty,
which should result in repeat purchases. For example most consumers will become loyal to a
particular supermarket if they are satisfied with the service they receive and are likely
repeatedly use the same shop. Customer loyalty resulting in repeat purchases will be a key
element in a firm maximising its profits.
Positives in My Answer
Grade
Targets to Improve my
Review Test (10 minutes)
1) Explain the difference between quality culture (assurance) and quality control?
(8 marks)
2) Why is good customer service so important to a business? (5 marks)