Kelp (or seaweed) farming is the practice of cultivating and harvesting seaweed. Farmers gather the kelp from natural beds in the sea. This farming has a low environmental impact. KK has a licence to harvest and exploit an area of the seabed in country W. The harvested kelp is dried and packaged at KK's premises before being sold to food manufacturers. KK is a labour intensive social enterprise with a mission to 'benefit the planet by the most efficient use of natural resources'. In 2020 KK decided to build a kelp refinery (see Appendix 1). The cost was estimated to be $5 million, and KK would need to borrow most of this. The refinery would use kelp as a raw material to create a pulp that can be used to produce biodegradable plastics. Timeline of KK 2021 Operations Director implements Just in Time (JIT) inventory management to reduce costs and cut wastage (see Appendix 2). Worker representatives meet with management to discuss poor employee motivation. Construction of the exterior walls (exterior construction) of the new kelp refinery is completed after only 15 months. 2022 Training of employees for new kelp refinery begins six months behind schedule because of skills shortage in country W. KK's Managing Director is interviewed by local newspaper (see Appendix 3). KK's sales of kelp increase by 200%. The average lead time for customer orders increases from one week to one month. 2023 The new kelp refinery is opened. 50% of KK's kelp production is now processed in the refinery. The refinery operates at 40% capacity. 2024 KK starts to import kelp from lower-income countries to be processed in the refinery. Future business strategies In 2025 a new government was elected in country W with policies aimed at improving the economy (see Appendix 4). The directors of KK are considering the likely impact of the government's policies on KK's business strategies. Appendix 1: Network diagram of kelp refinery project in 2020 [Figure Appendix 1] Three teams to use simultaneous engineering to complete the project: • purchasing team • construction team • human resource team. Appendix 2: JIT implemented at KK in 2021 Before implementation of JIT • Kelp is harvested each week. • Harvested kelp is placed in a large drying facility for five days. • Dried kelp is packed in bags ready to be stored. • Bags are stored in secure warehouse. After implementation of JIT • Kelp is harvested each day. • Harvested kelp is sent directly to manufacturers with no processing or packaging. • Costs are much lower, as kelp is unprocessed. Appendix 3: Interview with Managing Director about the new kelp refinery in 2022 Kelp farming is a new and exciting industry in country W. KK is one of its champions and is developing a new kelp refinery. The innovative business has sustainability at its core and is trying to be as efficient as possible. Elis Nik, the Managing Director of KK, said 'we believe that the key to success is to keep getting better. Our new refinery will be state-of-the-art, but we will not be complacent. Our employees will always have new ideas to increase efficiency, which we collect through an employee suggestion scheme.' The refinery aims to have zero waste, with recycling of key components and renewable energy powering the entire facility. Appendix 4: New government's policies in 2025 • use of monetary policy to stabilise inflation • government grants to support carbon-efficient businesses • minimum wage to be increased by 40% by 2028 • reform of country W's education system, including government-funded university tuition • elimination of trade barriers for businesses in the primary sector. Evaluate the effectiveness of KK's operations strategy between 2020 and 2024.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2025). The mark or mark type is shown in brackets.

1. [max 1] Knowledge about operations strategy
2. [up to 2] Understanding of the operations strategy up to two marks including: Operational decisions; Influence of other functional areas (HRM, marketing and finance) on operations strategy; The changing role of IT and Al use in planning and delivering operational strategy.
3. Flexibility and innovation: Need for flexibility in terms of volume, delivery and lead times and specification of products; Process innovation in terms of changing current processes or adopting new ways of producing products.
4. ERP: Main features of an ERP programme, including: integration in current and new processes, automation and the use of IT and Al, analysis of data to support ERP, reporting of data, tracking of data and inventory, embedding accounting processes and financial management of ERP; Improvements from ERP; efficiency, inventory control, costing and pricing, capacity utilisation, change management, workforce planning and flexibility and data control.
5. Lean production: Kaizen - a concept referring to continuous improvement of a business and involves all employees. Kaizen can be applied to all aspects of a business and looks to make incremental changes; Quality circles- groups/teams of workers who do the same or similar work, who meet regularly to identify, analyse and solve work-related problems; (Simultaneous engineering) - a work process where tasks can be run in parallel to one another; Cell production – making a team or ‘cell' of workers responsible for the production of a product; (JIT manufacturing – just in time production,) is the opposite of producing goods and supplying customers from stock, JIT processes focus on producing exactly the amount you need at exactly the time your customer needs it; Waste management – reducing any unnecessary steps in a manufacturing process that does not benefit the customer, therefore, the customer does not want to pay for it. The elimination of waste from a manufacturing process; Lean production - a production method aimed primarily at reducing waste within the production system as well as response times from suppliers and to customers.
6. Operations planning: The need for planning operations within the business – quantitative and qualitative; (Network diagrams) and critical path analysis interpreting and understanding network diagrams, identifying the critical path, minimum project time, total and free float, change within a network diagram; The benefits of CPA, including; improved project management, identification of critical tasks in project management, communication inside and external to a business, determination of project length to allow better planning and functional decision making, scheduling, control of costs, improved allocation of human resources, minimised downtime.
7. Application (max 2 marks) can be awarded for applying knowledge, analysis or evaluation of operations strategy to KK, including: Primary sector business; Kelp farming has a low environmental impact; KK has been trading for five years prior to 2020; KK is labour intensive; KK is a social enterprise; Kelp refinery creating a pulp used in biodegradable plastic – starts in 2020; 2020 – use of Appendix 1 – critical path analysis; 2021 – use of Appendix 2 – just in time; 2021 – worker representatives meet with management – poor motivation at farm; 2021 - Exterior construction is one month early; 2022 - refinery training starts six months late; 2022 - skills shortages in country W; 2022 – use of Appendix 3 – interview with MD; 2022 - sales of kelp increase by 200%; 2022 - lead time for customer orders increases from one week to one month; 2023 – new refinery opened; 2023 - kelp farm production now processed in refinery; 2023 - refinery operating at 40% capacity; 2024 – KK imports kelp for use in refinery.
8. Analysis is likely to be based on how effective elements of KK's operations strategy has been, including: Operational decisions – improve decision making within the business reducing the time needed for decision making and avoiding poor decision making, reducing costs – increasing profitability; Flexibility and innovation – dynamic environment so the business can adapt to changes and is more likely to retain and increase customer base – increasing sales and profit; ERP – improving efficiency and reducing costs – increased profitability; Kaizen - the ability to make continuous changes and improvement to efficiency could lead to lower costs for KK – leading to improved profitability; Quality circles- by working in teams, workers will become more experienced and proficient at their given tasks, which may increase productivity – decreasing costs; Simultaneous engineering – the ability to reduce the time needed to complete a project may allow the business to complete the project quicker – able to operate sooner and make sales; Cell production – workers can support each other and reduce the time needed to produce – increase profitability; JIT manufacturing – reduce stock holding costs – however may increase lead times; Waste management – reduce costs from excess time and wasted inventory – increase profitability; Operations planning – better resource control allowing for reduced costs – increased profitability.
9. Evaluation will largely depend on the points raised in the analysis. Candidates MUST answer the question – how effective was KK's operations strategy between 2020 and 2024. The development and support of this judgement will help them to move through L2 and L3. To award L3 the answer must be in context and draw upon the previous analysis. A judgement over the effectiveness of each element of the operations strategy; A judgement over the most/least effective element of KK's operations strategy between 2020 and 2024; A judgement over the other elements KK could have used in its operations strategy between 2020 and 2024; What the judgement(s) may depend upon; the actions of competitors, the external environment (social, legal, economic, political, technological), the objectives of stakeholders, etc.; Weighing up of the overall effectiveness of the operations strategy used by KK between 2020 and 2024.
10. L1 (limited supporting evidence): JIT has helped KK's operation's strategy as costs are lower. / KK's operations have not improved as they are not working at full capacity.
11. L2 (developed supporting evidence): JIT has helped KK's operation's strategy as costs are lower because of the need for less processing. / KK's operations have not improved as they are not working at full capacity. And customers are now waiting longer for their orders.
12. L3 (developed supporting evidence with context): JIT has helped KK's operation's strategy as costs are lower because of the need for less processing. This will help with the overall aim of having zero waste. / KK's operations have not improved as they are not working at full capacity. Only 40% of the capacity is being used. And customers are now waiting longer for their orders, increasing from a week to a month.