9. How the Finance Function Interacts With Operations Flashcards
What are the five main functions in a business?
- Operations
- Sales and marketing
- HR
- IT
- Finance
What is the definition of operations?
What the company does
Acquisition of raw materials, conversion into a product, and supply to the customer
What are the 4 V’s of operations processes?
- Volume
- Variety
- Variation
- Visibility
Draw porter’s value chain
page 227
What is the definition of process design?
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
What is a process map?
A visual representation of the steps and decisions by which a product or transaction is processed
What are the five advantages of process maps?
- Management understanding
- Role understanding
- Standardisation
- Highlights inefficiencies
- Supports corporate initiatives
What are the five stages of product/service development?
- Consider customers’ needs - must satisfy customer
- Concept screening - Each concept must be vetted
- Design process - Prototyping
- Time-to-market - Want to be short
- Product testing - Does it work?
What are the four main characteristics of services?
Intangibility
Inseparability - created at the time they are consumed
Perishability - cannot be stored for late
Variability - each service is unique
What is a supply chain?
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
What is supply chain management?
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
Draw Cousins’ strategic supply wheel
page 240
In Cousins’ strategic supply wheel what is meant by organisation structure?
Centralised or decentralised
In Cousins’ strategic supply wheel what is meant by relationships with suppliers?
Competitive (contractual) vs collaborative (relational)
In Cousins’ strategic supply wheel what is meant by cost/benefit?
Decisions based on benefits as well as costs
In Cousins’ strategic supply wheel what is meant by competences?
Does the organisation have the required skills?
In Cousins’ strategic supply wheel what is meant by performance measures?
For monitoring and controlling chosen strategy
What does MRP stand for?
Material requirement planning
Make sure materials are ready when needed
What are the benefits of material requirement planning?
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
What is MRPII?
Manufacturing resource planning
Goes further than material resource planning
Covers
Production planning
Machine capacity scheduling
Demand forecasting
Quality tracking
Employee attendance
Productivity tracking
What is ERP?
Enterprise resource planning
Integrates operations and support functions such as HR and marketing into one system
What are the benefits of an ERP system?
- 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
What are the four main types of quality cost?
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
What are the main techniques for improving supply chain management?
Total quality mangement
Kaizen
Six sigma
Lean thinking
Just in time
Reverse logistics
What are the requirements for a successful JIT system?
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
What is reverse logistics?
The return of unwanted goods back to the organisation
What is a critical success factor?
These are the vital areas where ‘things must go right’ for the organisation to meet its strategic objectives.
What are key performance indicators?
These are measures which indicate whether the organisation is achieving its CSF’s
