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A-level Business > 4 - Decision making to improve operating performance 🚛 > Flashcards

4 - Decision making to improve operating performance 🚛 Flashcards

1
Q

What is operations management?

A

An area of management concerned with designing and controlling the process of production and redesigning business operations to maximise efficiency

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2
Q

What are some key operational objectives?

A
  • costs
  • quality
  • speed of response and flexibility
  • dependability
  • environmental
  • added value
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3
Q

How can we add value?

A
  • convenience
  • USP
  • branding
  • design
  • quality
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4
Q

What are some internal influences on operationa objectives?

A
  • corporate objectives
  • HR
  • finance
  • the nature of the product
  • marketing issues
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5
Q

What are some external influences on operational objectives?

A
  • technological change
  • competitor efficiency/flexibility
  • economic environment
  • legal and environmental changes
  • demand
  • availability of resources
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6
Q

Operational Objectives

Why is costs important for business?

A

improves efficiency of the business to minimise costs and increase profits

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7
Q

Operational Objectives

Why is quality important for business?

A
  • to limit customer returns = costs
  • ensures sales remain high
  • build a good customer reputation
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8
Q

Operational Objectives

Why is speed of response and flexibility important for business?

A
  • improves the productivity and utilisation to gain a competitive advabtage
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9
Q

Operational Objectives

Why is dependability important for business?

A
  • more loyal customers as won’t let them down
  • attracts new customers
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10
Q

Operational Objectives

Why is environmental objectives important for business?

A
  • shows morals and ethically aware
  • creates a good reputation
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11
Q

Operational Objectives

Why is added value important for business?

A

Allows a business to profit from their goods/services

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12
Q

What can be used to measure efficiency?

A
  • labour productivity
  • output
  • capacity
  • capacity utilisation
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13
Q

Define labour productivity

A

The amount of output obtained from each employee

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14
Q

Formula of labour productivity

A

Output per period / no of employees in that period

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15
Q

What factors can help a business achieve high labour productivity?

A
  • quality of machinery
  • skills / ability/ motivation
  • methods of production
  • reliability of suppliers
  • training
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16
Q

What is the unit cost?

A

The cost of producing one unit of output

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17
Q

What is the unit cost formula?

A

Total costs / unit of outputs

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18
Q

As output increases, what happens to unit costs?

A

Decreases as each unit costs less to make

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19
Q

What factors can influence unit cost?

A
  • how many units are made
  • how efficient the workforce is
  • how efficient machinery is
  • how controlled VC are
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20
Q

What is capacity utilisation?

A

The maximum total level of output a business can produce in a given time as a %

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21
Q

What is the formula for capacity utilisation?

A

Capacity output per annum / max possible output

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22
Q

What is labour intensive production?

A

When labour costs outweigh capital costs of a business

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23
Q

Pros of spare capacity

A
  • time for maintenance
  • less pressure on staff
  • improvements can be planned in
  • cope with sudden increase in demand
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24
Q

Cons to spare capacity

A
  • higher fixed cost per unit
  • negative image of being unsuccessful
  • higher unit costs = lower profits = lower sales volume
  • less work so staff boded
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25
Q

What is the optimum capacity utilisation?

A

93%

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26
Q

How could a business increase capacity?

A
  • employ more staff
  • provide training = increases productivity
  • increase factory soace
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27
Q

What can a business do if they are under capacity?

A
  • increase demand
  • downsize
  • lease off spare capacity
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28
Q

What can a business do if they are over capacity?

A
  • reduce demand
  • outsource parts of operations
  • increase capacity by investment
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29
Q

Define lean production

A

Focuses on cutting waste while maintaining or improving quality

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30
Q

How can Lean production be enforced?

A
  • JIT production
  • Kaizen
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31
Q

What is JIT?

A

A technique used to minimise inventory holdings at each stage of production

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32
Q

What is Kaizen?

A

Technique that concentrates on small but necessary and frequent improvements in every aspect of the production process

33
Q

How can inventory be held?

A
  • raw materials
  • work in progress
  • finished goods
34
Q

Pros of JIT

A
  • less warehouse costs
  • less working capital required
  • less obsolete inventory
  • avoids unsold stock
  • lower extras eg. Insurance
35
Q

Cons of JIT

A
  • little room for error
  • very reliant on suppliers
  • unexpected orders hard to meet
  • delays cause production to stop
  • high initial costs
  • complex system
36
Q

What features are of Kaizen?

A
  • all members of staff involved
  • improvements take place at any level of hierarchy
  • requires highly motivated workforce
  • vital component of Total Quality Management
37
Q

What are the factors of production that firms try to minimise the cost of?

A
  • land
  • labour
  • capital
  • enterprise
38
Q

Pros of Kaizen

A
  • increased productivity
  • improved quality and speed
  • lower labour costs
  • greater opportunities for economies of scale
39
Q

Cons to Kaizen

A
  • High investment
  • lack of human initiative
  • greater resistance to change by workforce
40
Q

What is the best way to combine factors of production?

A

With financial restraints

41
Q

How can technology be used to improve efficiency?

A
  • robotics
  • automation
  • communication
  • design technology
42
Q

Pros of robotics

A
  • reliable
  • 24/7 workforce
  • less human error
  • fewer labour costs
  • accurate and consistent
  • speedy
43
Q

Cons of robotics

A
  • lack of initiative
  • maintenance time
  • high initial costs
  • need trained staff to use them
44
Q

What is automation?

A

The use of machines to control a process eg. stock control

45
Q

Internal use of technology for communication

A
  • Interdepartmental eg. emails, managing relationships
  • Order processing eg. transferring orders
  • Quality data eg. telling staff about number of defects
46
Q

External use of technology for communication

A
  • Working with Suppliers eg.processing and automatic reordering of stock
  • Sourcing supplies eg. finding new suppliers
  • Tracking supply chain eg. informs customer of progress
47
Q

What is design technology?

A

The use of computers in the design stage of developing a product

48
Q

What objectives may technology help to achieve?

A
  • reduce COST
  • improve QUALITY
  • quicker SPEED and FLEXIBILITY
  • reliable DEPENDABILITY
  • efficiency ADD VALUE
49
Q

What objectives may technology hinder in achieving?

A
  • high initial COSTS
  • ENVIRONMENTAL uses more energy
  • loss of hand made products ADDED VALUE
50
Q

Quality

Tangible Factors

A
  • features of the product
  • colour
  • style
  • durability
  • comfort
  • reliability
51
Q

Quality

Intangible Factors

A
  • brand loyalty
  • reputation
  • customer service
  • trendiness
  • price
  • personal experience
  • after sales service
52
Q

What are the benefits of selling a product that is perceived as high quality?

A
  • brand loyalty
  • high profit margins
  • repeat custom
  • good reputation
  • demand increass
53
Q

What is a quality control system?

A

A system that uses inspections to check the quality of work at stages of the manufacturing process

54
Q

Advantages of quality control

A

👍 stops faulty goods reaching the customer
👍 inspectors can spot common problems

55
Q

Disadvantages of quality control

A

❌ expensive to operate
❌ doesn’t encourage team responsibility
❌ decreases motivation due to no responsibility

56
Q

What is quality assurance?

A

A system that improves quality by arranging every process to get products right first time

57
Q

Advantages of quality assurance

A

👍 motivating
👍 workers take responsibility
👍 reduced costs
👍 greater consistency

58
Q

Disadvantages of quality assurance

A

❌ could increase short term costs
❌ can take time to embed system
❌ need to change company culture

59
Q

What is total quality management?

A

An approach to quality in which everyone is focused on preventing errors occurring, and ensuring quality at each stage of the production process

60
Q

What may influence a customer’s interpretation of quality?

A
  • price
  • brand
  • nature of product
  • customer experience
61
Q

What is inventory?

A

The number of goods help in stock, including raw materials, work-in-progress and finished goods

62
Q

How can flexibility be improved?

A
  • JIT
  • technology
  • good relationships with suppliers
63
Q

What is mass customisation?

A

The ability to tailor foods made in bulk to meet the requirements of individuals

64
Q

What is outsourcing?

A

The practise of using the services of other organisations to complete all of part of the manufacturing process

65
Q

What is the value of outsourcing?

A
  • provides flexibility in supply
  • can increase capacity without high costs
  • can buy in expertise
66
Q

Factors affecting the amount of stock held

A
  • nature of the product - perishable
  • demand - trends
  • costs - working capital
67
Q

What do low stock levels mean?

A
  • less cash tied up in working capital
  • lower stock holding costs
  • lower risk of obsolete stock
  • in line with lean productikn
68
Q

What do high stock levels mean?

A
  • better able to handle unexpected demand
  • production fully supplied
  • less likelihood of running out
  • ordering in bulk lowers xosts
69
Q

Stock Control Chart

What is maximum stock level?

A

The highest amount of stock that a company is able to hold

70
Q

Stock Control Chart

What is the re-order level?

A

Acts as a trigger point so that when stock falls, the next order is placed

71
Q

Stock Control Chart

What is the minimum stock level?

A

Minimum amount a business holds

72
Q

Stock Control Chart

What is the lead time?

A

The amount of time before packing an order and receiving it

73
Q

Stock Control Chart

What is the buffer level?

A

The amount of stick held as a contingency in case of unexpected orders or delays from suppliers

74
Q

What factors affect supply selection?

A
  • price
  • payment terms
  • quality
  • control
  • reliability
  • flexibility
75
Q

What must be included in a policy when dealing with suppliers?

A
  • terms and conditions
  • responsibility and decision making
  • degree of involvement
  • code of conduct
  • ethical requirements
76
Q

What factors should be considered when outsourcing?

A
  • tariffs
  • ethics
  • legislation
  • costs
  • sustainability
  • logistics
  • transport
77
Q

Advantages of outsourcing

A

👍 business can react to demand changes
👍 cheaper oh our costs
👍 may be closer to resources
👍 better relationships abroad

78
Q

Disadvantages of outsourcing

A

❌ need to research legislation
❌ no direct control over quality
❌ can damage reputation
❌ longer lead time

79
Q

What is procurement?

A

Selecting suppliers, establishing the terms of payment and negotiating the contract

A-level Business (10 decks)

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