Syllabus Point:

operations processes

• transformation processes
  • the influence of volume, variety, variation in demand and visibility (customer contact)

The Four Vs are attributes of the products (designed by marketing) that have to be created by operations, and market demand.

Volume

How amount of product that needs to be made Volume flexibility refers to how quickly the transformation process can adjust to increases or decreases in demand. Without volume flexibility, a business can over-produce, which may lead to wastage and increased inventory costs.

eg: Low volume = 5-star restaurant High volume = Fast-food restaurant

Variety

The level of customisation and complexity Variety refers to the product range or variety of choice.

eg: Low variety = car factory with small variations of a standard model High variety = financial advice

Variation in Demand

The level of demand, whether a product is a seasonal product Variation in demand may be hard to meet if:

• Suppliers cannot supply quickly enough
• Labour is not flexible enough, skilled or unavailable
• The machinery cannot adjust to increased capacity quickly
• Increased energy and power cannot be readily sourced

eg: Low V.I.D = staples such as bread and milk High V.I.D = ice-cream factory

Visibility

The amount of customer contact

• Customers can give direct feedback if there is high customer contact (especially service industries). Their preferences can shape what businesses produce.
• Indirect feedback comes through a review of sales data

eg: Low visibility: Facebook High visibility: Small cafe