10 - Operations Management - production process, efficiency and quality Flashcards
Factors effecting location choice?
Planning permission Land Competition Suppliers Market Labour Technology Transport Infrastructure
Logistics?
Management of the supply chain
If you’re managing the supply chain, what would you do?
Keep costs low
Make sure things are on time
Reduce damage
Greater efficiency
4 main aspects of logistics?
Warehousing : place to store stock
Transport : delivering items
ICT/systems : coordination between the business
Customer requirements : when do they need the products?
When are logistics kept in house?
If the business is large enough to do so, and benefit from economies of scale
What businesses will stay out house? and how will they do this?
Smaller businesses
By… Outsourcing
Subcontracting
Offshoring
Outsourcing?
A contract set with someone else ie. Deliveries
Subcontracting?
Setting up a contract for an amount of time ie. Regular deliveries
Offshoring?
The business relocates to make the logistical processes easier
Productivity
Output per worker
Benefits of increased productivity?
Greater efficiency Greater revenue Lower costs Benefits from EOS Improves cash flow Assumes that the quality is up to standards Gives a company a competition edge Increased investment
How would you increase productivity?
Investment in technology Greater motivation for workers Specialisation Communication plans Lean production Cell production Better training Target setting Teamwork Factory layout - ergonomics Changing business culture
Benefits of new technology?
Manufacturing becomes easier because of standardised products Quicker Lower average costs Better communication Competitive edge Lasts longer
Drawbacks of new technology?
Costs lots of money to invest (ST) High training costs Limited lifetime Redundancy Downtime between installing new technology reducing sales and thus revenue
Project management?
A process which involves planning and organising activities using resources to help achieve objectives
Project management can be split into several processes:
Planning
Executing
Monitoring
Completing
Which type of production involves staff working in teams?
cell production
‘when a job is broken down into separate tasks’ what does this refer to?
division of labour/specialism
Which type of production involves producing a single item?
job production
Which element of lean production aims to efficiently use all of the resources within the production process?
TQM
Which process is used to detect and reject faulty goods ?
Jidoka
Which methods keeps stock levels low to reduce the need for storage
JIT
Which type of production produces in large quantities whilst being able to make some variations
Batch production
Which type of production provides a continuous approach?
flow production
‘A philosophy which aims to produce more by using less ‘ which term does this refer to?
Lean production
Which philosophy regards improvements as a continuous approach?
Kaizen
Job production
involves producing a single item - bespoke, unique, one off etc
what are some benefits of job production?
- meets customer needs
- quality of products often high
- little stock is tied up
- flexibility in produce
what are some drawbacks of job production?
- no economies of scale benefits
- higher costs of production
- labour costs are higher, more labour intensive
- specialist workers which are harder to find and train
Batch production
when a batch is made - a set of procedures that the production process needs to go through in order to create a product. one finishing before the next can be started
what are some benefits of batch production?
- able to produce larger quantities
- faster than job
- some benefit from EoS
what are some drawbacks of batch production?
- may be a time delay between batches when nothing is being produced (downtime) this is costly for a business
- more stock needs to be held, adding to cash outflows
- variation in products will not be as good
Flow production
this production provides a continuous process, conveyer belt approach
what are some benefits of flow production?
- benefit from EoS
- benefit from division of labour
- can produce standardised products in very large numbers more quickly
- enables a business to remain strongly competitive, lower unit costs and more produce to meet demand
what are some drawbacks of flow production?
- high set up costs
- high levels of planning needed
- large amount of stock (work in progress)
- less motivated employees (repetition)
- less flexibility, all products standardised
Cell production
production system by which employees work in teams, who are responsible for the whole production process for a given product
benefits of cell production?
- improved working conditions, motivated staff, working in teams
- direct involvement means higher quality
- encourages a sense of responsibility, belonging etc
drawbacks of cell production?
- expensive to set up
- employees must be trusted (recruitment and training must support this)
- division of cells must be efficient but not overload workers
division of labour/specialism?
this is when a job is broken down into separate tasks. employees are involved in one of these tasks
benefits of division of labour?
- tasks are easier to perform and therefore quicker, increasing productivity rates
- increased productivity, increases output and adds to profit margins
- cheaper in the long run
limitations of division of labour?
- tasks can become repetitive and boring so staff are demotivated
- employees may loose out if tasks are relatively small in comparison to others
- if roles become automated this will lead to redundancies
division of labour impacts on stakeholders..?
customer: may be able to buy products at reduced rates
shareholder: benefit from increased efficiency and productivity as this leads to more profits and thus dividends
supplier: benefit from having to supply more
employee: may become demotivated because of the nature of work
HR: increased workload when trying to help employee needs
management: rewarded as the productivity increases
Lean production?
a process helping business to meet their demands whilst eliminating waste an the elimination of wasted time etc. Anything that helps to reduce the time it takes to introduce a new product etc is a lean approach.
Time based competition?
An attempt to reduce the time taken between the generation of an idea for a product and it going into production (lead time)
TQM? (3 main points)
- considers the efficient usage of all the resources used in the production process
- all employees are too involved in the wellbeing of that business as a whole and not just those who produce products
- emphasis on finding ways to prevent mistakes rather than looking for mistakes
Jidoka?
process of detecting and rejecting faulty goods at the earliest possible moment
and on light systems allow management to check the progress at each stage of production, enabling quick response
Kaizen?
a philosophy which regards improvements in quality as ongoing and not just occasional
“continuous improvement” is the key factor to this approach
also achieved more easily if all employees take part and not just management
Quality circles?
this complements the Kaizen approach - this is a voluntary scheme where employees meet and discuss problems relating to their workstations and pass these on to management
JIT?
stock levels are kept low, as stock is ordered when it is needed (just in time) in order to reduce amount of space needed for storing stock and reducing waste.
Kanban?
helps organise the flow of components onto the production line at the right place and the right time
Ergonomics?
the relationship between the employee and the equipment being used. an effective ergonomic design is when there is a minimum amount of time wasted when using these machines.
what are the 9 types of lean production?
- TQM
- JIT
- Kanban
- Kaizen
- Jidoka
- Quality circles
- Cell production
- Ergonomics
- Time based competition
In order to remain competitive it is essential that a business does what? (production)
finds ways to reduce costs and improve production efficiency
how can Time Based Competition be speeded up? How?
using computer aided design and virtual design techniques that can eliminate the need to build prototypes - saving time and money
if the production line stops, downtime occurs, why is this bad?
the cost of downtime is very expensive and so must be reduced
In order to JIT to work successfully which technique must be used?
Kanban
what are the main benefits of JIT?
- reduced costs due to less stock being held
- reduced waste
- less cash tied up in stock and work in progress
- less likelihood of damage when being stored
risks of operating JIT?
- less stock may delay production
- high set up costs (kanban technology)
- serious errors in production could stop the whole process as again there is little spare stock to use
reshoring?
the returning of the production operations back to the origin country
(can respond much more quickly to customer needs)
stock can be three things?
- raw materials
- work in progress
- finished goods
what are the benefits of holding stock?
- satisfy demand
- cope with fluctuations in demand
- have a buffer stock to meet late deliveries
- large purchases of stock mean you can benefit for EoS
what are the costs of holding stock?
- storage costs
- opportunity costs
- insurance costs
- ## security costs
stock is also known as?
inventory
how will the max and min stock levels be decided ?
-
how is the reorder level determined?
- amount of time taken from reorder to actual delivery, lead time
- how near the supplier is
- sales record to date (demand)
how is buffer stock determined?
- likelihood of delays
- speed of production
- pattern of demand
what is lead time?
length of time between ordering stock and its arrival at the business
how does a business calculate the average level of stock? (formula)
(min stock level + max stock level) / 2
what is LIFO ?
‘Last in, first out’ - related to the order in which stock is sold and how restocking takes place. ( better system)
what is FIFO ?
‘First in, first out’ - related to the order in which stock is sold and how restocking takes place.
what is EPOS ?
‘electronic point of sale’ each product has a unique bar code which is scanned at checkout, info is passed onto a computer that will automatically reorder stock at the required level.
what is capacity utilisation?
using the resources in a business in an effective and efficient manner, using them to their max
– the percentage of total capacity that is actually being achieved over a given period
what is capacity management?
how the capacity of a business is managed
including:
- analysis of performance
- planning
- monitoring etc
calculating capacity utilisation:
current level of output / max possible output x100
what are the problems with reaching full capacity?
- little room for maintenance, consequences of breakdowns will mean downtime
- additional orders will be impossible to meet
- puts pressure and stress on the employees
what are the benefits of working at full capacity?
- average unit costs fall (EoS)
- less wastage of resources
- profits increase
- more competitive due to reduced costs
what is over utilisation of capacity?
short term factor, when resources are pushed past their normal level
why is quality important?
customers expect it
affects business reputation
gives a competitive edge
Quality assurance?
concerned with the way in which business sets out its procedures to assure its products are of correct quality
Quality control?
a process in which a business reviews the quality of all the factors involved in the production process
wastage rates?
level of wastage or rejects produced. a business will seek to minimise this
calculating wastage rates?
= number of rejects / total number produced x100
what does TQM help a business to do?
- focus on the needs of customers
- improve quality of all departments
- encourages a team approach
- employees get to be involved
what is benchmarking?
involves setting standards for a business to meet, in terms of performance
often done by comparing with competitors - identifying the ‘best practice’
External benchmarking?
comparisons of performance are made between one business and another
Internal benchmarking?
comparisons made within a business, usually between departments
Competitive benchmarking?
comparisons are made with the best competitor
Functional benchmarking?
comparisons are made between businesses with similar functions/processes
Strategic benchmarking?
concerned with the overall strategies used by a business
considering different strategies is often a good way forward
limitations of benchmarking?
- limited access to sensitive materials
- difficult to determine ‘best practice’
- difficult to implement change (lacking workforce, lacking finance etc)
what are 2 quality standards?
- BS 5750 Kitemark
- European standards (EN)
Kitemark?
BS symbol which shows customers that products from this business are likely to be of high standards because quality was practiced.
IOS Eurpoean standards?
these look at standards of quality met within the business - the numbers i.e. 9000 break it down into different parts of the business
what is zero defects?
by implementing zero defects a business should be able to benefit from an improvement in quality and therefore a reduction in costs, as fewer defects means less waste.
philip crosby had 4 points about improving quality.. what are these?
- meeting requirements
- prevention not detection
- standard for performance is zero defects
- the cost of quality pays for itself (its free)
how many quality factors did Dr Deming state? outline 3?
14
- commitment to improve continuously
- encourage employees to not fear improvement
- training is vital
productivity =
output/ number of employees
organisations can grow in 2 main ways?
internally (organic) or externally
internal growth:
natural growth achieved by increasing sales
external growth:
growth achieved by a takeover/merger
economies of scale ..
a reduction in unit costs achieved by larger scale of production
diseconomies of scale ..
an increase in it costs as production gets bigger
what are the 6 internal economies of scale?
- purchasing
- financial
- managerial
- technical
- marketing
- risk bearing
what are the 2 external economies of scale?
- concentration
- information
what are the 3 diseconomies of scale?
- communication problems
- managing production problems
- reduction in morale
