Chapter 2 - Modern Business Environment Flashcards

1
Q

Characteristics of modern business environment

A

Global
Flexibility
Empowered Employees

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2
Q

World Class Manufacturing

A

under TQM - emphasis on the resolution of problems

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3
Q

JIT

A

just in time: produce as required or for use and not for inventory. A pull-system, which requires a versatile labour force - grouped product lines (not by functions) - infallible information system (flow) - get it right the first time - strong supplier relationship

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4
Q

TQM

A

total quality management: get it right, first time. continuous improvement.

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5
Q

Cost of quality

A
CONFORMANCE
preventative costs:
maintenance
training
quality design
asses quality of designs

appraisal costs:
incoming inspections
setup inspections
process control costs

NON-CONFORMANCE
Internal failure:
costs of scrap
rework
cost of corrective actions (mfg or engineering)

external failure:
marketing costs for failed products and lost goodwill
mfg and processing costs related to failed products
compensation and replacement costs
repair costs
travel costs for remediation
liability costs

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6
Q

Guideline to good quality programs

A
  • only the customer matters
  • customer and supplier are interlinked and only together achieve success
  • prevent defects in the first place and do not sort out product that failed inspections
  • move from acceptable quality levels to defects per million
  • enforce zero defect programs
  • gain quality certification
  • total cost of quality: does create savings.
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7
Q

Commitment to quality

A

improved business efficiency and effectiveness

adopted by all parts of the business

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8
Q

Quality chains

A

sequence of quality focused team members:
A. customers
B. Suppliers

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9
Q

Quality circles

A

team of 4-12, meet periodically, voluntarily

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10
Q

Management Accounting for Quality

A

normal: input material cost reduction or minimized losses

non-financial: defects, rework, recalls, complaints, time per request

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11
Q

ToC: formula

Goldratt and Cox

A

theory of constraints

throughput = sales revenues - direct materials

  1. bottleneck
  2. exploit bottleneck
  3. subordinate everything to step 2
  4. elevate the bottleneck
  5. if still constraint, go to step #1
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12
Q

Constraints examples

A

inadequately trained sales force
poor reputation for meeting delivery dates
unreliable suppliers, delivery or quality
inadequate production resources
inappropriate mgmt accounting systems

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13
Q

Kaizen costing

A

cost REDUCTION concepts
assumes improvement in manufacturing
achieves cost reduction targets
Kaizen costing techniques
cost reduction targets are set and applied monthly
continuous improvement
target Kaizen costing vs actual cost reduction

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14
Q

Business Process Re-engineering

A
develop vision and process objectives
identify processes to redesign
understand and measure existing processes as baseline
identify IT levers
design and build prototype
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15
Q

Supply chain management

Porter value chain, value systems

A

Purchasing
Inventories
Customer ordering
Delivery and logistics

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16
Q

Insourcing and Outsourcing

A

Pro INsourcing:
higher degree of control
visibility of process
economies of scale if used internally

Con INsourcing:
high volume
investment
dedicated equipment is limiting
no core competency
Pro OUTsourcing
flexibility
lower risk
improved cash flow
focus on core competencies
more advanced technologies

Con OUTsourcing
risk of choosing right supplier
loss of visibility and control
increased lead time

17
Q

Gain sharing agreement

A

ie MoD

  1. mutual interdependence or trust among parties
  2. identification of common goals for success
  3. agreed decision making and problem solving procedures
  4. commitment to continuous improvement
  5. team working down the entire product and supply chain
  6. gain sharing and pain sharing established in advance
  7. open book accounting
  8. target continuous, measurable improvements
18
Q

Throughput (formula)

A

Sales Revenue - Direct Material Cost

19
Q

Return per factory hour (formula)

A

Throughput per unit / Product Time on Bottleneck

20
Q

Cost per factory hour (formula)

A

Total Factory Costs / Total Time on Bottleneck Resource

21
Q

Throughput Accounting Ratio (formula)

A

Return per factory hour / Cost per factory hour

22
Q

Value Added Analysis (linked to BPR customer perspective, when is a process/activity value adding?)

A

customer willing to pay for it
activity physically changes output
activity is performed first time right

23
Q

Non value add activities

A

preparation and set up
control and inspection
moving a > b with change
delays/failures resolution activities