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OPERATIONS MANAGEMENT
CHECK POINT 62: CLASSIFICATION OF OPERATIONAL ACTIVITIES

Please Select Any Topic In Check Point 62 Below And Click.

1. classification of operational activities
2. where do you belong?
3. traditional manufacturing operations
4. comparative evaluation of traditional manufacturing methods
5. job shop production
6. batch production
7. flow production
8. what manufacturing method should you use?
9. non-manufacturing operations
10. service operations
11. custom service
12. standard service
13. comparative evaluation of service methods
14. merchandising operations
15. wholesale operation
16. retail operation
17. comparative evaluation of merchandising methods
18. project and contract management
19. for serious business owners only
20. the latest information online
 

DO I NEED TO KNOW THIS CHECK POINT?

 

WELCOME TO CHECK POINT 62

TUTORIAL 1 General Management TUTORIAL 2 Human
Resources Management
TUTORIAL 3 Financial Management TUTORIAL 4 Operations Management TUTORIAL 5 Marketing
And Sales Management
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96
2 7 12 17 22 27 32 37 42 47 52 57 62 67 72 77 82 87 92 97
3 8 13 18 23 28 33 38 43 48 53 58 63 68 73 78 83 88 93 98
4 9 14 19 24 29 34 39 44 49 54 59 64 69 74 79 84 89 94 99
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
 

HOW CAN YOU BENEFIT FROM CHECK POINT 62?

 
The main purpose of this check point is to provide you and your management team with detailed information about Classification Of Operational Activities and how to apply this information to maximize your company's performance.
 
In this check point you will learn:
 
• About five different types of operational activities.
• About three traditional manufacturing methods.
• About comparative evaluation of traditional manufacturing methods.
• About characteristics of a job shop.
• About characteristics of a batch production method.
• About characteristics of a flow production method.
• About various types of non-manufacturing methods.
• About characteristics of custom and standard service operations.
• About characteristics of wholesale and retail merchandising operations.
• About project and contract management operations... and much more.
 

LEAN MANAGEMENT GUIDELINES FOR CHECK POINT 62

 
You and your management team should become familiar with the basic Lean Management principles, guidelines, and tools provided in this program and apply them appropriately to the content of this check point.
 
You and your team should adhere to basic lean management guidelines on a continuous basis:
 
Treat your customers as the most important part of your business.
Provide your customers with the best possible value of products and services.
Meet your customers' requirements with a positive energy on a timely basis.
Provide your customers with consistent and reliable after-sales service.
Treat your customers, employees, suppliers, and business associates with genuine respect.
Identify your company's operational weaknesses, non-value-added activities, and waste.
•. Implement the process of continuous improvements on organization-wide basis.
Eliminate or minimize your company's non-value-added activities and waste.
Streamline your company's operational processes and maximize overall flow efficiency.
Reduce your company's operational costs in all areas of business activities.
Maximize the quality at the source of all operational processes and activities.
Ensure regular evaluation of your employees' performance and required level of knowledge.
Implement fair compensation of your employees based on their overall performance.
Motivate your partners and employees to adhere to high ethical standards of behavior.
Maximize safety for your customers, employees, suppliers, and business associates.
Provide opportunities for a continuous professional growth of partners and employees.
Pay attention to "how" positive results are achieved and constantly try to improve them.
Cultivate long-term relationships with your customers, suppliers, employees, and business associates.

1. CLASSIFICATION OF OPERATIONAL ACTIVITIES

ARE YOU FAMILIAR WITH VARIOUS OPERATIONAL ACTIVITIES?

Business owners and operations managers must have a strong understanding of various types of cost-effective operational activities, which represent the cornerstone of successful operations management in every business organization.


All Operational Activities can be classified into several types as illustrated below. These activities represent the core of any organization, irrespective of its size, volume of business, type of operations, or location. For this reason, business owners and managers must develop an excellent understanding regarding the nature of their specific operational activities to succeed in a competitive business environment.

In fact, one of the main reasons of business failure is ineffective operational management and poor operational performance. So, now you have an opportunity to get a better understanding of what Operations Management really is, and how you can improve your company’s operational performance and succeed in the challenging business environment.

CLASSIFICATION OF OPERATIONAL ACTIVITIES

Manufacturing
Operations
Service
Operations
Merchandising
Operations
Project
Management
O
perations
Contract
Management
Operations
 

ADDITIONAL INFORMATION ONLINE

Manufacturing Operations Management By Bob Honor, Rockwell Automation.
Service Operations Management By Jerry Larson.
Merchandising Techniques - Part 1 By PGD Laser.
Project Management PMP Project Characteristics By Hasan Mir.
What Is Contract Management By NCMAHQ.

2. WHERE DO YOU BELONG?

WHERE DO YOU BELONG?

Are you aware of the type of operation to which your company belongs?

It is essential that you and your management team become familiar with various types of operational activities and identify which are most suited to your type of operation.

WHAT TYPE OF BUSINESS ARE YOU IN?

1.

If you are a Manufacturer, please refer to all manufacturing parts in this program and ignore the rest. This includes traditional manufacturing methods and new world class operational guidelines and methods, which provide the foundation for Lean Operations, namely, Lean/Just-In-Time (JIT) Manufacturing, Kaizen, Total Quality Management (TQM), and Supply Chain Management (SCM).

2.

If you are a Service Provider, please refer to all service management parts, which you will find throughout this program. Some elements of Lean Operations, including Lean/Just-In-Time (JIT), Kaizen, Total Quality Management (TQM) and Supply Chain Management (SCM) also apply to service providers.

3.

If you are a Wholesaler or a Retailer, please refer to all merchandising management parts which you will find throughout this program. Some elements of Lean Operations, including Lean/Just-In-Time (JIT), Kaizen, Total Quality Management (TQM) and Supply Chain Management (SCM) also apply to merchandising companies.

4.

If you are involved in Project Management, please refer to all project management parts, which you will find throughout this program. Some elements of Lean Operations, including Lean/Just-In-Time (JIT), Kaizen, Total Quality Management (TQM) and Supply Chain Management (SCM) also apply to project management companies.

5.

If you are a Contractor, please refer to all contract management parts, which you will find throughout this program. Some elements of Lean Operations, including Lean/Just-In-Time (JIT), Kaizen, Total Quality Management (TQM) and Supply Chain Management (SCM) also apply to contractors.

6.

If you are a Student, please read everything, since you never know which type of business activities you will be involved in the future.

Note:

Try to find time to familiarize yourself with the entire contents of this Tutorial, irrespective of your type of business activities. This may prove to be very beneficial in the future.

3. TRADITIONAL MANUFACTURING OPERATIONS

WHAT IS A MANUFACTURING PROCESS?

Manufacturing Operation entails the process of converting raw materials into semi-finished or finished products through the utilization of plant and equipment, tools, labor, and various production facilities. This process is known as the Manufacturing Process

There are three traditional Manufacturing Methods frequently used by various manufacturing companies, as outlined below.

Note:

Operations Planning and Operations Control for each manufacturing method are discussed in detail in Tutorial 4.

THREE TRADITIONAL MANUFACTURING METHODS

Job Shop 
Production
Batch 
Production *
Flow (Mass)
Production
Custom-designed products.
Special purpose machinery.
Tool making manufacturing.
General engineering shop.
Model manufacturing.
Handmade products.
  • Bakery.
  • Clothing.
  • Chemical products.
  • Electrical products.
  • Fasteners.
  • Footwear.
  • Furniture.
  • Jewelry.
  • Machinery.
  • Metal products.
  • Plastic products.
  • Printing.
  • Sheet metal products.


* Note:

Large quantities of these products can be manufactured in a flow production environment.

  • Appliances.
  • Brewery.
  • Brick and tile.
  • Cable and wire.
  • Chemicals.
  • Cosmetics.
  • Food.
  • Glass.
  • Newspapers.
  • Paint.
  • Paper mill.
  • Pharmaceuticals.
  • Refinery.
  • Soft drinks.
  • Textile mill.
  • Tobacco products.
  • Vehicles.
 

WORLD CLASS OPERATIONAL GUIDELINES AND METHODS

Additional operational guidelines and methods took hold in the manufacturing world in the last few decades. These methods, also known as World Class Operational Guidelines And Methods, are influenced primarily by the following methodologies:

 
Material Requirements Planning (MRP).
Manufacturing Resource Planning (MRP II).
Enterprise Resource Planning (ERP).
Six Sigma.
Supply Chain Management (SCM).
Total Quality Management (TQM).
 
A growing number of manufacturing companies also turn their attention to Lean Management Values, Principles, And Guidelines. This includes several important elements of lean management outlined below.

MAIN ELEMENTS OF LEAN MANAGEMENT

Kaizen

Just-In-Time

Jidoka
(Autonomation)

Total Productive
Maintenance (TPM)

   

Lean Management is discussed in detail in Tutorial 1 to enable you to appreciate the differences and advantages of each methodology, and to successfully implement them within your company.

Note:

You should become familiar with all relevant methodologies and select the most cost-effective options in accordance with your specific manufacturing needs. This will help you to be successful in today’s highly competitive manufacturing environment.

4. COMPARATIVE EVALUATION OF TRADITIONAL MANUFACTURING METHODS

A comparative evaluation of three Traditional Manufacturing Methods is presented below.

COMPARATIVE EVALUATION OF TRADITIONAL MANUFACTURING METHODS

Description

Job Shop Production

Batch Production

Flow Production

Type Of Order

Manufacturing is done to meet customers' orders only. Most orders are unique and non-repetitive.

Manufacturing is done to meet customers' orders and also for stock. Most orders are not unique, but are repetitive.

Manufacturing is done primarily for stock and sometimes to meet customers’ orders. All orders are standard and repetitive.

Product Range

There is no standard range of products.

There is a broad range of standard and non-standard products.

There is a limited range of standard products.

Product Unit Cost

Very high.

Average.

Very low.

Production Volume

Very low, usually one or few items.

Average, in batches of tens, hundreds, or even thousands.

Very high.

Production Method

Very diversified and sometimes repetitive.

Diversified, but usually repetitive.

Standardized and repetitive, such as a conveyor line.

Equipment
Application

Very general application to various manufacturing processes.

General and semi-specialized application to various manufacturing processes.

Very specialized application to a limited number of manufacturing processes.

Operational Capacity Planning

Can be scheduled at short notice only.

Can be planned and scheduled approximately one week in advance.

Must be planned and scheduled well in advance.

Raw Material Inventory

Should be purchased for every order on an individual basis.

Should be purchased in advance in optimal quantities to meet manufacturing requirements.

Must be pre-purchased in optimal quantities well in advance to meet manufacturing requirements.

Work-In-Process And Components Inventory

No need.

Buffer stock should be kept in optimal quantities for selected products.

Buffer stocks should be kept in optimal quantities for all products.

Finished Goods Inventory

No need.

Optimal quantities should be kept for selected products.

Optimal quantities should be kept for all finished goods.

Sub-Contracting Services

Should be used on an individual order basis.

Should be pre-planned and used on and individual batch basis.

Must be planned well in advance for every production run.

Employee Skills Requirements

Very high level for a general application.

Average level for semi-standardized application.

Average level for a highly standardized application.

 

ADDITIONAL INFORMATION ONLINE

Types Of Production By Dgscdt.
Methods Of Production By TVChoiceFilms.
Production Methods Part 1 By Andrew Aldous.
Production Methods Part 2 By Andrew Aldous.
Production Methods By ManagementOfBusiness.

5. JOB SHOP PRODUCTION

JOB SHOP PRODUCTION

Job Shop Production, or an Open Job Shop, is the intermittent manufacturing process in which each assignment is performed in accordance with a specific customer's order. 

The Job Shop, in essence, offers manufacturing facilities and skilled labor to customers at short notice. A job shop operation, such as a general engineering shop or a custom-designed furniture manufacturer, maintains production capability but does not offer a particular product for sale. Several characteristics of a job shop production are outlined below.

JOB SHOP PRODUCTION CHARACTERISTICS

1.

Manufacturing a broad range of non-standard products in small quantities, often on a one-off basis, according to specific customer requirements.

2.

Job shop production requires substantial capital investment in general purpose plant and machinery and high plant set-up costs.

3.

Job shop production requires highly skilled and versatile labor and management supervision.

4.

Irregular flow of work necessitates effective implementation of operations planning and control procedures.

5.

Job shop production requires to carry only those raw materials inventory and supplies that are frequently used.

 

ADDITIONAL INFORMATION ONLINE

Job Shop Process By JMRFerrer.
Job Production By Sabrina Tsang.
Job Shop Overview By PlanitSoftware.
Methods Of Production By TVChoiceFilms.
Basic Concepts For Job Shop/Process Env. By Richard Cathers, MicroCraftTKC.

6. BATCH PRODUCTION

BATCH PRODUCTION

Batch Production, or a Closed Job Shop, is another intermittent manufacturing process whereby various customers' requirements are grouped into batches on a similar product basis. 

Batch production remains a popular method utilized by many small and medium-sized manufacturing companies. Several characteristics of a batch production are outlined below.

BATCH PRODUCTION CHARACTERISTICS

1.

A batch production operation is geared to produce small and average quantities, or batches, of products on repetitive and non-repetitive basis.

2.

Batch production method requires that specific raw materials are purchased in advance, and certain components and finished goods are kept in stock in optimal quantities.

3.

Batch production combines versatile manufacturing capabilities and offers operational capacity and skilled labor to customers at a reasonable notice period.

4.

Products may be manufactured in batches of tens, hundreds, thousands, or more depending upon the specific production requirements.

5.

The length of production runs may fluctuate in relation to the quantities manufactured and the cost per product unit may vary accordingly.

6.

Batch production may accommodate the manufacturing requirements of a broad range of standard and non-standard products.

7.

Batch production method requires a flexible approach and effective planning and control of the manufacturing operations.

8.

Batch production requires high capital investment in plant and equipment, and average plant set-up costs.

9.

Batch production requires general and special purpose machinery and skilled labor to operate them.

 

ADDITIONAL INFORMATION ONLINE

Batch Process By InglesArana.
Batch Production By LoveStar32000.
Batch Production By BlueButterfly169.
Batch Production Vs. One Piece Flow By Joana Gocalves.
Batch Production - Phantom Rolls Royce By Michael Benitez.

7. FLOW PRODUCTION

FLOW PRODUCTION

Flow Production, also known as Continuous Production or Mass Production, is the manufacturing process during which the work content of the product continually increases with time.

A typical example of flow production is a conveyor line or an assembly line. Large companies frequently utilize flow production methods to manufacture standard products in a make-to-stock operation. 

However, the arrival of Lean/Just-In-Time (JIT), Kaizen, Total Quality Management (TQM), and Supply Chain Management (SCM) methodologies and their influence in the manufacturing environment caused substantial changes in the flow production methodologies. Each methodology is discussed in detail in this Tutorial. 

Several characteristics of flow production are outlined below.

FLOW PRODUCTION CHARACTERISTICS

1.

In a flow production environment, as the work on each operation is completed, the work-in-process is passed to the next manufacturing stage without waiting for completion of the entire batch.

2.

Smooth performance of flow production necessitates that all manufacturing operations last the same period of time, known as the cycle time, and that no deviation from the standard manufacturing cycle is allowed.

3.

The flow production method is characterized by a large volume of identical products that undergo repetitive and highly mechanized manufacturing processes.

4.

Flow production is also characterized by specialized equipment, long production runs, and average labor skill requirements.

5.

The flow production method requires detailed planning of all operations well in advance.

6.

Operations control in a flow production environment remains relatively simple since all operational instructions are incorporated into the manufacturing process at the planning stage.

 

ADDITIONAL INFORMATION ONLINE

Flow Production By MJAMH.
Flow Production By Felinefreek.
Flow Production By Ally Bickham.
Biodiesel Production Continuous Flow By Joe Thompson, University Of Idaho.
One Piece Flow Vs. Mass Production By B. Miller, CT Bauer College Of Business.

8. WHAT MANUFACTURING METHOD SHOULD YOU USE?

MANUFACTURING METHOD

The job shop, batch production, and flow production methods are not necessarily associated with any particular manufacturing volume. Some companies often start the manufacturing process as a job shop, and proceed to batch production methods as volume increases. Finally, upon further increase of the production demand, they may introduce flow production techniques, if required.

The selection of the most suitable Manufacturing Method may entail a number of steps illustrated below.

SELECTION OF A SUITABLE MANUFACTURING METHOD

Step 1: Make Initial Selection Of A Suitable Manufacturing Method.

You and your management team must decide on a specific manufacturing or operational method which will be most appropriate and cost-effective for your types of products or services.

Step 2: Evaluate The Selected Method.

Once you select a particular method, it will need to be evaluated in light of your company's ability to compete in the existing marketplace.

Step 3: Select New Manufacturing Method If Necessary.

If you find that the selected method does not produce the desired results, you should identify, select, and implement more suitable methods without delay.

 
Finally, you and your management team should consider one of the most effective manufacturing methods called Lean Manufacturing. This method is briefly discussed below.
 

LEAN MANUFACTURING

The current trends in the manufacturing environment are based on introducing Lean Management Values, Principles, And Guidelines designed to maximize the advantages of all available resources within the production facility in order to achieve the following objectives:

  • To minimize waste in the operational processes and materials.
  • To minimize manufacturing costs.
  • To minimize the level of inventories.
  • To minimize the production cycle times.
  • To maximize the labor productivity.
  • To maximize the plant utilization efficiency.
  • To maximize quality of products.

MAIN ELEMENTS OF LEAN MANUFACTURING

Kaizen

Just-In-Time

Jidoka
(Autonomation)

Total Productive
Maintenance (TPM)

   

Adherence to the abovementioned methodologies will enable you and your management team to convert your manufacturing facility into a Lean Manufacturing Facility and achieve higher levels of productivity and profitability.

Note:

Lean Manufacturing is discussed in detail in Tutorial 1.
Just-In-Time Production is discussed in detail in Tutorial 1 and Tutorial 4.
 

ADDITIONAL INFORMATION ONLINE

Lean Manufacturing By LeadManuTools.
Lean Manufacturing By Canaldaindustria.
Lean Manufacturing By DEVU Rafael Landivar.
Lean Manufacturing By Ron Perera, Gemba Academy.
Lean Manufacturing Tour By Philip Beyer, Ebiz Products.

9. NON-MANUFACTURING OPERATIONS

NON-MANUFACTURING OPERATIONS

Non-Manufacturing Operations include four categories, as illustrated below. Some examples of these operations are described below to help you identify where you may belong.

TYPES OF NON-MANUFACTURING OPERATIONS

     
Service
 Operations
  Merchandising
Operations
  Project
Management

Operations

  Contract
Management

Operations

Note: 

If your type of business is not mentioned here, you may be able to find a fit with a similar type of business.

EXAMPLES OF NON-MANUFACTURING OPERATIONS

Service Operations

Merchandising Operations

Custom
Service
Standard
Service
Wholesale
Operation
Retail
Operation
  • Accounting.
  • Advertising.
  • Architectural.
  • Catering.
  • Cleaning.
  • Consulting.
  • Electrical.
  • Electroplating.
  • Engineering.
  • Financial Planning.
  • Health care.
  • Insurance.
  • Legal.
  • Limousine service.
  • Maintenance.
  • Musicians.
  • Plumbing.
  • Psychotherapy.
  • Repair shop.
  • Photography.
  • Secretarial.
  • Search Engine
      Optimization (SEO).
  • Transportation    service.
  • Banking.
  • Child day care.
  • Communication.
  • Education.
  • Entertainment.
  • Equipment rental.
  • Restaurant.
  • Export agency.
  • Import agency.
  • Product    wholesaler.
  • Gas station.
  • Food market.
  • Retail store.
  • Supermarket.
  • Travel agency.
 

PROJECT MANAGEMENT AND CONTRACTING

Special Projects Contractors
  • Advertising.
  • Actors and artists.
  • Architects and designers.
  • Film producers and writers.
  • Performing musicians.
  • Product and service designers.
  • Publishers.
  • Science researchers.
  • Software program developers.
  • Song writers.
  • Writers.
  • Air conditioning contractors.
  • Building contractors.
  • Flooring contractors.
  • Civil contractors.
  • Electrical contractors.
  • Framing contractors.
  • Masonry contractors.
  • Painting contractors.
  • Plumbing contractors.
  • Property developers.
  • Roofing contractors.
  • Swimming pool contractors.

Note: 

You should become familiar with all relevant methods and select the most cost-effective options in accordance with your specific operational needs. This will help you succeed in the existing highly competitive business environment.

10. SERVICE OPERATIONS

SERVICE OPERATIONS

A Service Operation is a non-manufacturing activity in which each assignment results in completing a specific type of work or, simply, satisfying a customer's need. All service operations, in turn, can be classified into two types illustrated below.

TWO TYPES OF SERVICE OPERATIONS

 

Custom
Services

 

Standard
Services

Service Operations Management is discussed in detail in Tutorial 4

 

ADDITIONAL INFORMATION ONLINE

Service Operations - Part 1 By Rick Lemieux.
Service Operations Webinar - Part 1 By RightStar.
Service Operations Webinar - Part 2 By RightStar.
Service Operations Management By The Jerry Larson.
Service Operations Management By Daniel Shimshak, UMASBoston.

11. CUSTOM SERVICE

CUSTOM SERVICE

Custom Service, also known as Specialized Service, similar to a job shop, is characterized by a specialized service-to-order operation.

This includes such services as secretarial, plumbing, electrical, repairs, maintenance, catering, medical, legal, insurance, consulting, accounting, and photographic services. Each of these services is provided in accordance with the particular customer's requirements and it differs from one customer to the next.

The majority of small and medium-sized companies provide custom service to their customers.

12. STANDARD SERVICE

STANDARD SERVICE

Standard Service entails rendition of services on a continuous process basis irrespective of a specific customer's order. Such services include education, banking, entertainment, communication, and transportation.

Standard services are generally provided by larger organizations, although many small organizations also provide such services, e.g. kindergarten, pre-school, small transportation company, limousine services.

13. COMPARATIVE EVALUATION OF SERVICE METHODS

Comparative evaluation of two types of Service Methods is presented below.

COMPARATIVE EVALUATION OF SERVICE METHODS

Description

Custom Service

Standard Service

Service Is Rendered

On an intermittent basis to customer's requirements only.

On a continuous flow basis.

Type Of Order

Most orders are unique and non-repetitive.

All orders are standard and repetitive.

Service Range

There is a broad but very specialized range of services.

There is a limited range of standard services.

Service Unit Cost

Very high.

Very low to medium.

Service Volume

Low to medium.

Medium to high.

Service Method

Very diversified and sometimes repetitive.

Standardized and always repetitive.

Equipment Application

Very general application to various types of service processes.

Very specialized application to a limited number of services.

Operational Capacity
Planning

Can be scheduled at a short notice only.

Must be planned and scheduled well in advance.

Inventory 
Requirements

No need except for consumable items.

No need except for consumable items.

Employee Skill Requirements

Very high level for a general application.

Average level for a highly standardized application.

14. MERCHANDISING OPERATIONS

MERCHANDISING OPERATIONS

Merchandising Operation represents another type of a non-manufacturing activity. Merchandising operation, in essence, is based on buying and selling of products or merchandise at a profit.

There are two basic types of merchandising operations illustrated below.

TWO TYPES OF MERCHANDISING OPERATIONS

 

Wholesale
Operation

 

Retail
Operation

 

ADDITIONAL INFORMATION ONLINE

Visual Merchandising Video 1 - By ManagenMarketRetail.
Visual Merchandising Video 2 - By ManagenMarketRetail.
Visual Merchandising Video 3 - By ManagenMarketRetail.
Visual Merchandising Video 4 - By ManagenMarketRetail.
Visual Merchandising Video 5 - By ManagenMarketRetail.

Note:

Additional Visual Merchandising Videos are available online.

15. WHOLESALE OPERATION

WHOLESALE OPERATION

A Wholesale Operation entails the purchase of large quantities of highly specialized materials and goods for resale to the retail trade. Wholesalers usually carry a limited number of product lines and sell a high volume of products at a reasonable profit markup.

Business owners and managers, who are involved in a wholesale operation, could derive substantial benefits by studying various aspects of business management, covered in this program, including:

  • Tutorial 1 - General management.
  • Tutorial 2 - Human resources management.
  • Tutorial 3 - Financial management.
  • Tutorial 4 - Operations management.
  • Tutorial 5 - Marketing and sales management.

Thus, if you own a wholesale business, you and your management team may benefit by improving your general knowledge in various areas of small business management, and this will subsequently improve your chances for success in your business.

16. RETAIL OPERATION

RETAIL OPERATION

A Retail Operation entails the purchase of small to average quantities of products for resale to the general public. Retailers often specialize in particular product lines such as food, appliances, clothing, or furniture and normally carry a large variety of products in that line. These products are sold to individual customers in small quantities at higher profit markups.

Business owners and managers, who are involved in a retail operation, could derive substantial benefits by studying various aspects of business management covered in this program, including:

  • Tutorial 1 - General management.
  • Tutorial 2 - Human resources management.
  • Tutorial 3 - Financial management.
  • Tutorial 4 - Operations management.
  • Tutorial 5 - Marketing and sales management.

Thus, if you own a retail business, you and your management team may benefit by improving your general knowledge in various areas of small business management, and this will subsequently improve your chances for success in your business.

17. COMPARATIVE EVALUATION OF MERCHANDISING METHODS

Comparative evaluation of two types of Merchandising Methods is presented below.

COMPARATIVE EVALUATION OF MERCHANDISING METHODS

Description

Wholesale Operation

Retail Operation

Selling

Usually to retail trade and sometimes also open to the public.

To general public only.

Type Of Order

Most clients are repetitive and new clients are acquired on continuous basis.

Most clients are not repetitive, but some clients are.

Type Of Order

Most orders are standard and repetitive.

Most orders are unique and non-repetitive.

Size Of Order

Most orders are usually medium-high in volume.

Most orders are usually low in volume, sometimes a one-off item.

Product Range

Usually standard and limited product range.

Usually broad and specialized product range.

Product Volume

Large quantity per product type or product line is required to be kept in stock.

Small to medium quantity per product type or product line is required to be kept in stock.

Product Cost Markup

Usually low to medium mark-up.

Usually high mark-up.

Inventory Requirements

Large quantity per product type.

Small or medium quantity per product type.

Employee Skill
Requirements

Average level of employee skill requirements for a standardized application.

High level of employee skill requirements for a specialized application.

Location OF The Facility

Location is usually not important and most wholesalers prefer the least expensive location, based on $ per square foot area.

Location is usually very important, and sometimes even represents a critical factor in determining the success or failure of the retail operation.

Layout Of The Facility

The main objective of an effective warehouse layout is to find an optimal trade-off between the total cost associated with the warehouse space and the total material handling cost.

The main objective of an effective retail layout is to maximize the sales volume and profitability, based on effective exposure of products to customers according to their buying behavior.

18. PROJECT AND CONTRACT MANAGEMENT

PROJECT AND CONTRACT MANAGEMENT

Project And Contract Management represents another important category of non-manufacturing operational activities. These activities include developing and managing a specific project or completing a particular contract for a client or for investment purposes.

Many companies specialize in project and contract management and provide a wide range of products and services to their clients such as preparation of architectural blueprints for a new house, writing a script for a new movie, developing an advertising campaign, composing a new song for an advertising campaign, developing land, and building new homes.

CHARACTERISTICS OF PROJECT MANAGEMENT AND CONTRACTING

1.

These activities are performed in accordance with particular contractual obligations undertaken by certain companies or individuals. Architects, for example, are engaged in designing commercial and residential buildings and single family homes. Building and civil engineers, and contractors, on the other hand, are engaged in erecting buildings and homes, building roads, and constructing bridges.

2.

Each project entails a large number of operations and requires heavy planning and equipment, substantial volume of material, and a large number of employees.

3.

Special projects may involve such activities as writing a book, designing new product, conducting scientific research, or making a new film.

4.

These projects usually require special types of skills, may involve a substantial budget, and may last for long periods of time.

In order to be successful, business owners and managers, who are involved in project and contract management, must have an excellent understanding about the basic management principles related to project and contract execution.

Project And Contract Management is discussed in detail in Tutorial 4.
 

ADDITIONAL INFORMATION ONLINE

Project Management In Under 8 Minutes By Chris Croft.
Idiot's Guide To Project Management By Jenifer Witt, Projectmanagervideos.
Your First Step As A Project Manager By Jenifer Witt, Projectmanagervideos.
The Role Of The Project Manager By Jenifer Witt, Projectmanagervideos.
Deliverables In Project Management By Jenifer Witt, Projectmanagervideos.

19. FOR SERIOUS BUSINESS OWNERS ONLY

ARE YOU SERIOUS ABOUT YOUR BUSINESS TODAY?

Reprinted with permission.

20. THE LATEST INFORMATION ONLINE

WOULD YOU LIKE TO LEARN MORE?

Would you like to learn how to improve your personal business management knowledge and maximize your business performance through Lean Business Club?

When you are ready:

1.

Learn about the Membership Benefits, join Lean Business Club, and never feel lonely at the top again.

2.

Complete the Membership Form, or the Student Membership Form, and receive your free first-year membership.

3.

Save up to 75% off the regular subscription rate for complete access to the Lean Business 2100 Management Program online.

If you are U.S. Veteran, your membership in Lean Business Club and complete access to the Lean Business 2100 Management Program online will be available to you free of charge for an unlimited period.

 

LESSON FOR TODAY:
Ultimately, All Operational Activities Can Be Classified 
As Profitable Or Not Profitable - That's Really Up To You!