3.4 Operations Flashcards
6 operational objectives
Quality, cost, added value, volume, dependability, environment
4 operational measures
labour productivity, capacity, capacity utilisation, unit costs
factors influencing labour productivity
skills, fixed assets, organisation + external factors (suppliers etc..)
labour productivity formula
output per period divided by no. of employees
labour productivity formula 2
Revenue divided by no. of employees.
labour productivity formula 3
labour hours divided by no. of units produced
5 types of lean production methods
Time based management, simultaneous engineering, cell production, just in time, kaizen
Importance of efficiency
Minimise unit costs = possibly give a competitive advantage, max profit margins
Define capacity utilisation
% of the maximum capacity the business is operating at in a given period with their set of resources
How to increase capacity utilisation
New tech, introduce ‘slack’, seasonal staff overtime, outsourcing
How to decrease capacity utilisation
breakdown in machinery, poor maintenance, employee disruption
Capacity utilisation formula
(Actual level of output divided by max. level of output) x100
Why produce at <100% capacity?
Lower/seasonal demand, avoid rushed production, demotivating, loss of sales if repairs required or sudden changes in demand
Define productivity
Efficiency of output over a given period of time.
Ways to improve productivity
Training, motivation, capital investments, improve quality/organisation
What is lean production
efficiency method = minimise waste, staff + unit costs
Define Kaizen
continuous improvement and small changes to improve quality and efficiency (create a culture in the bus)
Just in time benefits
lower storage costs, less working capital tied up, less likely for stock to perish
Just in time drawbacks
Delayed supplied = possibility of no stock if delayed, high initial investment in stock control tech
5 points of waste hierarchy
Avoidance/minimisation, reuse, recycling, recovery, disposal
Types of waste
Over produce, defects, motion waste, excessive stock holding, waiting, poor ergonomics
Define Economies of Scale
Unit costs fall as output rises
5 internal economies of scale
buying, tech (specialist equip), marketing, network, finacing
Explain external economies of scale
Reductions in unit costs benefit external companies when their industry expands
Who benefits from External EoS
Suppliers
Define diseconomies of scale
Unit costs rise as output rises
Why can diseconomies of scale happen?
Too high capactiy utilisation, poor communication, breakdown of staff
What is the resource mix
Capital intensive and labour intensive
symptoms of labour intensive
Higher labour than capital costs, high variable costs = low BEP, benefits when access to low cost labour
symprtoms of capital intensive
Capital costs higher than labour, mainly fixed costs = higher bep, access to LT + low cost financing
Why is it important to meet customer expectation of quality
Customers are more: demanding, knowledgable (web), prepared to complain, able to share info of poor quality
4 costs of poor quality
depleted customer base, ££££ to replace customers, wasted materals, competitive disadvantage
3 quality methods
Quality control, quality assurance, total quality management
Quality control is:
checking and reviewing production, detects defects not prevent
Qualty assurance is:
focused on design/development stage = quality ‘built in’
Total quality management means:
Everyone responsible for ensuring quality = business attitude
5 drawbacks of tqm
requires strong leadership, £ in training, bureaucratic potentiality, cost vs benefits, must trust staff
TQM is concerned with?
what is causing waste, where is quality dropping?
3 Benefits ot TQM
Motivational, reduce waste, no inspection costs
Define outsourcing
Delegating a process to an external provider
5 influences on outsourcing
Cheaper, quality (specialist supplier?), flexibility, help op objective, speed
Influences on stock levels
unpredictability, perishability, rent, eos, supplier reliability, competetion
