9. How the Finance Function Interacts With Operations

Question 1

What are the five main functions in a business?

Answer 1

• Operations
• Sales and marketing
• HR
• IT
• Finance

Question 2

What is the definition of operations?

Answer 2

What the company does
Acquisition of raw materials, conversion into a product, and supply to the customer

Question 3

What are the 4 V’s of operations processes?

Answer 3

• Volume
• Variety
• Variation
• Visibility

Question 4

Draw porter’s value chain

Answer 4

page 227

Question 5

What is the definition of process design?

Answer 5

Process design is the method by which individual specialists seek to understand business processes,
and ensure that these processes are designed to as efficient and effective as possible.

Understand current processes, and ensure efficient and effective

Question 6

What is a process map?

Answer 6

A visual representation of the steps and decisions by which a product or transaction is processed

Question 7

What are the five advantages of process maps?

Answer 7

• Management understanding
• Role understanding
• Standardisation
• Highlights inefficiencies
• Supports corporate initiatives

Question 8

What are the five stages of product/service development?

Answer 8

1. Consider customers’ needs - must satisfy customer
2. Concept screening - Each concept must be vetted
3. Design process - Prototyping
4. Time-to-market - Want to be short
5. Product testing - Does it work?

Question 9

What are the four main characteristics of services?

Answer 9

Intangibility
Inseparability - created at the time they are consumed
Perishability - cannot be stored for late
Variability - each service is unique

Question 10

What is a supply chain?

Answer 10

A network of organisations providing and processing raw materials firstly into work in progress and then into finished goods for distribution and sale to the end customer

Question 11

What is supply chain management?

Answer 11

The co-ordination of activities from the supplier of raw materials at the beginning to the customer at the end.
Managing this well can reduce costs and add value

Question 12

Draw Cousins’ strategic supply wheel

Answer 12

page 240

Question 13

In Cousins’ strategic supply wheel what is meant by organisation structure?

Answer 13

Centralised or decentralised

Question 14

In Cousins’ strategic supply wheel what is meant by relationships with suppliers?

Answer 14

Competitive (contractual) vs collaborative (relational)

Question 15

In Cousins’ strategic supply wheel what is meant by cost/benefit?

Answer 15

Decisions based on benefits as well as costs

Question 16

In Cousins’ strategic supply wheel what is meant by competences?

Answer 16

Does the organisation have the required skills?

Question 17

In Cousins’ strategic supply wheel what is meant by performance measures?

Answer 17

For monitoring and controlling chosen strategy

Question 18

What does MRP stand for?

Answer 18

Material requirement planning

Make sure materials are ready when needed

Question 19

What are the benefits of material requirement planning?

Answer 19

Improved forecasting
Improve customer satisfaction because orders met
Reduced stock holding
System is computerised so can be changed quickly if demand changes
Can warn of problems
Leads to a close relationship with suppliers

Question 20

What is MRPII?

Answer 20

Manufacturing resource planning

Goes further than material resource planning

Covers
Production planning
Machine capacity scheduling
Demand forecasting
Quality tracking
Employee attendance
Productivity tracking

Question 21

What is ERP?

Answer 21

Enterprise resource planning

Integrates operations and support functions such as HR and marketing into one system

Question 22

What are the benefits of an ERP system?

Answer 22

• Planning is extended across the whole company to ensure the customers’ needs are met
• Free flow of information across all functions leads to improved communication
• Aids management decision making
• Can be extended to include supply chain management and customer relationship management

Question 23

What are the four main types of quality cost?

Answer 23

Costs of conformance
- Prevention costs - prevent defects before they occur
- Appraisal costs - inspection and testing costs
Costs of non-conformance
- Internal failure costs - before product reaches customer
- External failure costs - after product reaches customer

Question 24

What are the main techniques for improving supply chain management?

Answer 24

Total quality mangement
Kaizen
Six sigma
Lean thinking
Just in time
Reverse logistics

Question 25

What are the requirements for a successful JIT system?

Answer 25

High quality and reliability - avoid disruptions
Eliminate non-value added activities
Speed of throughput - Speed of production should match rate of demand
Flexibility - Have to respond quickly to demand
Lower costs - Raise quality, less waste

Question 26

What is reverse logistics?

Answer 26

The return of unwanted goods back to the organisation

Question 27

What is a critical success factor?

Answer 27

These are the vital areas where ‘things must go right’ for the organisation to meet its strategic objectives.

Question 28

What are key performance indicators?

Answer 28

These are measures which indicate whether the organisation is achieving its CSF’s