12 ENTREPRENEURSHIP: Starting and Operating a Small Business, 3/e Steve Mariotti and Caroline...
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12 ENTREPRENEURSHIP: Starting and Operating a Small Business, 3/e Steve Mariotti and Caroline Glackin OPERATING FOR SUCCESS UNIT 4 OPERATING A SMALL BUSINESS
12 ENTREPRENEURSHIP: Starting and Operating a Small Business,
3/e Steve Mariotti and Caroline Glackin OPERATING FOR SUCCESS UNIT
4 OPERATING A SMALL BUSINESS EFFECTIVELY Class Name Instructor Name
Date, Semester
Slide 2
1. Understand the significance of operations in a business. 2.
Develop a production-distribution chain for your business. 3.
Manage suppliers and inventory. 4. Know the key factors to consider
in the location decision. Performance Objectives After this
lecture, you should be able to complete the following Performance
Objectives
Slide 3
12 Operations Permit Business to Deliver on Their Promises
Operations - a set of actions that produce goods & services
Operating efficiency is critical to business success.
Slide 4
12 The Production-Distribution Chain Manufacturer Makes the
products Rarely sells direct to consumers Wholesaler Buys products
from manufacturers in bulk Sells smaller quantities to retailers
Retailer Buys products from wholesalers Sells individual items to
consumers Consumer Buys from the retailer The final customer
Slide 5
12 Figure 12 2 Production-Distribution Chain Variations
Traditional Direct to Retailer Factory Direct
ManufacturerWholesalerRetailerConsumer ManufacturerRetailerConsumer
Manufacturer/Re tailer Consumer
Slide 6
12 Supply Chain Management The supervision of sourcing,
procuring, production, & logistics to go from raw materials to
end consumers across multiple intermediate steps. Addresses models
& relations Partners work together to use tools &
techniques for increased efficiency
Slide 7
12 Finding Suppliers Trade shows or conferences Trade catalogs
or journals The Yellow Pages Internet search engines Wholesale
supply houses & brokers Newspapers & magazines Competitors
Firms like yours that are outside of your trading area Sales
representatives Customers
Slide 8
12 Managing Inventory Visual Control Inventory-management
method in which an individual assesses the stock level on hand by
visual inspection and reorders when the supply appears low. Safety
stock the amount of inventory or raw materials or work-in- progress
that are kept to guarantee service levels. Reorder points (ROP) the
level of which materials need to be ordered again. ROP = (Average
demand per unit of lead time x lead time) + safety stock Economic
Order Quantity (EOQ) - the amount of inventory to request that will
equal the minimum total ordering and holding costs. EOQ = the
square root of ((2 x the annual demand in units x the ordering cost
per order)/carrying cost per unit)
Slide 9
12 Facilities Location & Design The choice of location for
your business can make the difference between success and failure.
The choice of site is a critical strategic decision for
manufacturing, wholesale, and Web-based businesses as well, albeit
for different reasons.
Slide 10
12 Key Factors in Deciding upon a Location Access for
customers. Access to suppliers. Climate and geography. Convenience
Cost of facilities (rent, construction, and the like).
Demographics. Economic conditions and business incentives.
Governmental regulations and laws, including environmental impact.
Labor pool. Proximity to competitors. Visibility.
Slide 11
12 Factor-Rating Method Location-decision criteria that are
prioritized and weighted to eliminate subjective considerations.
Rate in six basic steps. 1.Develop a list of critical success
factors. 2.Determine the weight of each factor according to its
relative importance. 3.Create a measurement scale for the factors.
4.Give each proposed location a score for each factor (best if done
by a team) according to the scale. 5.Multiply the factor weight
times the factor score for each factor in each location. 6.Use the
sum of these weighted factors for the locations, to compare them
and make a location recommendation/decision.
Slide 12
12 Facilities Design & Layout Leasehold Improvements
changes made to adapt a rented property for a particular business.
For manufacturing, warehousing, and distribution firms, key
considerations will include: -Capacity for efficient movement of
materials, equipment and people (floor space and ceiling height
will matter). -Flexibility to adapt to changing business
requirements. -Loading docks and vehicle access for deliveries and
outbound shipments. -Environment conducive to work requirements
(natural light, appearance, and the like). -Ability to include
requisite controls, such as regulation of temperature and humidity,
and cleaning rooms. -Parking for commercial and employee vehicles,
as well as spaces for visitors, including the handicapped,
-Adequate utility services to the building, including power, water,
and telecommunications. -Security and safety.
Slide 13
12 Retail Facilities They must meet such business requirements
as: -Appropriate selling area and configuration of that space.
-Permission to complete necessary leasehold improvements or
improvements to be made by landlord. -Space for offices, storage,
restrooms, deliveries, and other special needs. -Signage for
rules/regulations. -Parking that is adequate for the anticipated
customer volume. -Lighting and security.
Slide 14
12 Special Considerations for Home-Based Businesses Starting a
business at home reduces the overhead associated with leasing or
purchasing a separate site and with technological advances in
communication and computing many businesses are now home-based.
Thoroughly investigate zoning ordinances, deed restrictions and
civic association rules that may apply. Clearly delineate your
business/work area from your familys living area.
Slide 15
12 Special Considerations for Web-based Businesses Face many of
the same location, facilities, and layout decisions as other types
of enterprises. Because they conduct business on the internet, such
companies can literally be located anyplace in the world, with
staff that may work remotely from anywhere.
Slide 16
12 Defining Quality: It Is a Matter of Market Positioning
Quality level or standard of excellence, especially as measured
against similar things, or against itself over time. Profits Follow
Quality -For many years, American companies had focused less on
quality than on short-term profits. -As you develop your business,
it will be consistent quality of your product or service that will
lead to profits.
Slide 17
12 Organization-Wide Quality Initiatives Benchmarking the
comparison of a companys performance against that of businesses in
the same industry, or against best practices, standards, or
certification criteria. ISO9000 -Process Management: the
measurement, monitoring, and optimization of tasks. -There are
eight quality management principles for organizational improvement:
1.Customer focus. 2.Leadership. 3.Involvement of people 4.Process
approach. 5.System approach to management. 6.Continual improvement.
7.Factual approach to decision making 8.Mutually beneficial
supplier relationships. Process Management- the measuring,
monitoring, and optimization of tasks.
Slide 18
12 Six Sigma Is the measurement of quality that was originated
in the 1980s by Motorola engineers. Is the use of statistical
methods to eliminate defects to failure rate of 3.4 defects per 1
million opportunities, or a 99.9997 percent success rate. For most
enterprises, this a very intense program, and maybe more so than is
practical in the early stages of a business.
Slide 19
12 Total Quality Management Total Quality Management (TQM) the
quality assurance methodology of striving for strategic advantage
through quality. -TQM success is dependent upon the commitment of
all employees toward treating one another as customers, and working
together to ensure that standards are met at all stages. Continuous
Improvement always identifying and implementing changes throughout
an organization to focus on the requirements of internal and
external customers.
Slide 20
12 Malcolm Baldrige Award This award is given to businesses,
educational, and non-profit organizations by the president of the
United States and is administered by the National Institute of
Standard and Technology (NIST). Organizations apply for the award
and are judged in the following areas: -Leadership -Strategic
Planning -Customer & Market Focus -Measurement, Analysis,
Knowledge Management -Human Resources Focus -Process Management
-Business Results
Slide 21
12 Using Technology to Your Advantage Computer Access Is
Essential -Every entrepreneur should have access to a computer
-Every business should have a Website and electronic mail access.
-Every business should hire employees who are conversant and
comfortable with technology -Every entrepreneur should be aware of
the specialized computer software and equipment that is designed
for his or her industry. -Web Technology Terms: a.Hyperlink word(s)
that, when clicked on, transfer the computer user to a new Webpage.
b.Uniform Resource Locator a webpage address. c.Hypertext Web-based
documents that combine text and graphic.
Slide 22
12 Capture the Potential of the Telephone Whether you use voice
mail or an answering service, make sure the message that callers
hear represents your desired business image and is clear and
professional. With text messaging and email sent over mobile
phones, the versatility and importance of telephones to todays
businesses cannot be overstated.
Slide 23
12 Identify Market-Specific Software & Technology In order
to increase efficiency and effectiveness in operations, businesses
use software and technology designed for their industry or type of
business. The investment in industry-specific technology is often
many times greater than in generic business equipment and
software.
Slide 24
12 Electronic Storefront (Web Site) Electronic Storefront an
online site that customers can visit to view a companys catalog,
price lists, and documentation. No matter what type of business you
have, opening an electronic storefront will make it more accessible
to local customers and can introduce it to potential customers all
over the world. One of the most cost-efficient ways to set-up an
electronic storefront is to hire a competent consultant to help you
design it and choose which server to use.
Slide 25
KEY TERMS benchmarking clustering continuous improvement
economic order quantity (EOQ) electronic storefront factor-rating
method hyperlink hypertext leasehold improvements operations
process management quality reorder point (ROP) safety stock supply
chain management (SCM) total quality management (TQM) traffic
generators uniform resource locator (URL) visual control