Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CIMA E1 - Managing Finance in a Digital World > Chapter 9 - How finance function interacts with operations > Flashcards

Chapter 9 - How finance function interacts with operations Flashcards

You may prefer our related Brainscape-certified flashcards:
Series 66 flashcards SIE Exam flashcards Series 63 flashcards Series 79 Top-Off Exam flashcards Series 7 Top-off Exam flashcards CFA flashcards Series 65 flashcards
1
Q

What does the finance function do?

A
  • Assemble and extract data to provide info to other functions
  • Work with other functions and stakeholders to influence and shape how value is created and preserved
  • CFO works with other heads of functions to have desired impact
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is operations management?

A

Activities involved in designing, producing and delivering products and services that satisfy customer’s requirements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

How to operations processes differ from one another?

A
  • Volume of inputs/outputs
  • Variety of inputs/outputs
  • Variation in demand
  • Visibility to customers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is porter’s value chain based on?

A

Activities that create value and drive costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are primary activities?

A

Directly concerned with creation/delivery of a product/service

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the primary activities in Porter’s value chain?

A
  • Inbound logistics
  • Operations
  • Outbound logistics
  • Marketing and sales
  • After sales service
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Is marketing and sales included in operations management?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are support activities?

A

Help improve the efficiency and effectiveness of primary activities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the support activities in Porter’s value chain?

A
  • Infrastructure
  • HR management
  • Tech
  • Procurement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What connects the interdependent elements of the value chain together?

A

Linkages

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is a process map?

A

Visual representation of the steps and decisions by which a product/ transaction is processed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is process design?

A

Method where individual specialists seek to understand process to see if they’re as efficient and effective as possible

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the advantages of process maps?

A
  • Management understanding
  • Role understanding
  • Standardisation
  • Highlights inefficiencies
  • Supports corporate initiatives
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what are the stages of product/service development?

A
  1. Consider customer needs
  2. Concept screening
  3. Design process
  4. Time to market
  5. Product testing
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How does procurement co-ordinate with the finance function?

A
  • Establishes credit terms
  • Prices
  • Payment
  • Data capture
  • Inventory
  • Budgeting
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

How does production co-ordinate with the finance function?

A
  • Cost measurement/allocation/absorption
  • Budgeting
  • Cost vs quality
  • Inventory
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are the 4 main characteristics of services?

A
  • Intangibility
  • Inseparability
  • Perishability
  • Variability
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

How are services related to the finance function?

A
  • Charge out rate
  • Estimating costs
  • Problems measuring benefits
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the steps of the supply chain?

A
  1. Raw materials supplier
  2. Manufacturer
  3. Wholesaler and retailer
  4. Customer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Is supply viewed as an operational or strategic issue?

A

Strategic

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What are the spokes of the Cousins’ strategic supply wheel?

A
  • Organisation structure
  • Supplier relationships
  • Cost/benefit
  • Competences
  • Performance measures
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What are the 2 broad approaches to supplier relationships mentioned by Cousins’?

A
  • Competitive aka contractual
  • Collaborative aka relational
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Why was the supply chain typically defined by competitive relationships?

A
  • Purchasing functions sought out cheapest suppliers
  • Penalty clauses
  • Info withheld to prevent supplier competitive advantage
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Why is the supply chain moving more towards a collaborative approach?

A
  • Partnerships with key customers/suppliers
  • Discussions between customers/suppliers
  • Suppliers rewarded with long term exclusive agreements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What is MRP?

A

Computerised system for planning the requirements for raw materials, WIP and finished items

26
Q

What are the functions of MRP?

A
  • Identifying firm orders and forecasting future orders
  • Using orders to determine quantity of materials required
  • Calc purchase orders based on stock levels
  • Automatically placing POs
  • Scheduling materials for future production
27
Q

What are the benefits of MRP?

A
  • Improved forecasting
  • Improved ability to meet orders
  • Reduced stock holding
  • Close relationships with suppliers
28
Q

What does MRPII include?

A
  • Production planning
  • Machine capacity scheduling
  • Demand forecasting and analysis
  • Quality tracking tools
  • Employee attendance and productivity tracking
29
Q

What is enterprise resource planning (ERP)?

A

Next evolution of an MRP system

30
Q

What are the benefit of ERP?

A
  • Identification and planning of resources fulfilled
  • Free flow of info across all functions
  • Aids management decision making
  • Can be extended to include SCM and CRM
31
Q

What are the 4 main types of quality related costs?

A
  • Prevention
  • Appraisal
  • Internal failure
  • External failure
32
Q

What are the 2 costs of conformance?

A
  • Prevention costs
  • Appraisal costs
33
Q

What are the 2 costs of non-conformance?

A
  • External failure costs
  • Internal failure costs
34
Q

What are prevention costs?

A

Cost of implementing a quality improvement programme to prevent defects

e.g. training costs

35
Q

What are appraisal costs?

A

Cost of quality inspection and testing

36
Q

What are external failure costs?

A

Cost arising from a failure to meet quality standards AFTER g/s reaches customer

e.g. cost of recall

37
Q

What are internal failure costs?

A

Cost arising from a failure to meet quality standards BEFORE g/s reaches customer

e.g. cost of scrapped material

38
Q

What is statistical process control (SPC)?

A

Method for measuring and controlling quality during a process

39
Q

How does SPC work?

A
  • Data that falls within control limits indicates everything operated fine
  • Data outside means variations should be investigated
40
Q

What is total quality management (TQM)?

A

Continuous improvement in quality, productivity and effectiveness obtained by establishing management responsibility for processes and output

41
Q

What are the fundamental features of TQM?

A
  • Prevention of errors
  • Continual improvement
  • Real participation by all
  • Commitment of senior management
42
Q

What are the steps of TQM?

A
  1. Senior management consultancy
  2. Establish a quality steering
  3. Presentations and training
  4. Establish quality circles
  5. Documentation
  6. Monitor progress
43
Q

What does kaizen mean?

A

Japanese term for philosophy of continuous improvement in performance via small incremental steps

44
Q

What are the characteristics of kaizen?

A
  • Involves setting and continuously improved on standards
  • Focus on eliminating waste
  • Involves all areas of the business
  • Employees work in teams
  • Respond quickly to changes
45
Q

What is six sigma?

A

Quality management programme pioneered by Motorola in 1980’s

46
Q

What is the aim of the six sigma approach?

A

Achieve reduction in number of faults that go beyond an accepted tolerance limit through stats

47
Q

How does the six sigma work?

A

If error rate lies beyond sixth sigma of probability, fewer than 3.4 defects in every 1 million

48
Q

What are the key requirements for successful six sigma implementation?

A
  • Focused on customer
  • Based on level of performance acceptable to customer
  • Targets should be related to main performance drivers
  • To max savings, six sigma part of a wider performance management programme
  • Senior management key role
  • Tight target set
  • Training and education
49
Q

What are some criticisms of six sigma?

A
  • Focus on current processes
  • Time consuming
  • Expensive
  • Heavily data driven
50
Q

What does lean thinking aim to do?

A

Systematically eliminate waste through identification and elimination of all non-value adding activities

51
Q

What wastes need to be eliminated?

A
  • Inventory
  • Waiting
  • Defective units
  • Effort/motion
  • Transformation
  • Over-processing
  • Over-production
52
Q

What are the characteristics of lean thinking?

A
  • Improved production scheduling
  • Small/continuous batch production
  • Economies of scope
  • Continuous improvement
  • 0 inventory
  • 0 waiting time
53
Q

What is the main objective of the lean supply chain?

A

Completely remove waste in order to achieve competitive advantage through lower costs

54
Q

What are the limitations of lean manufacturing?

A
  • High initial outlay
  • Requires culture change
  • Part adoption
  • Cost may exceed benefit
55
Q

What are the requirements for successful JIT?

A
  • High quality and reliability
  • Elimination of non-value added activities
  • Speed of throughput
  • Flexibility
  • Lower costs
56
Q

What is reverse logistics?

A

Return of unwanted/surplus goods/materials/equipment to be reused

57
Q

What are the main reasons for returns?

A
  • Unsatisfied customer
  • Installation/usage issues
  • Warranty claims
  • Recall
58
Q

What can be done to attack returns issue?

A
  • Minimise returns
  • Ensure returns can be reused
59
Q

What techniques can be used to attack returns issue?

A
  • Root cause analysis
  • Outsourcing returns process
60
Q

Why is a collaborative relationship between CFO and leader of supply chain beneficial?

A

Work together to understand, analyse and address supply chain issues

61
Q

What are the characteristics of good KPI’s?

A
  • Cascade from strategy to tactics and to operational level
  • Should cover all aspects of supply chain management
  • Challenging but achievable
  • SMART
  • Extended to include supply chain partners

CIMA E1 - Managing Finance in a Digital World (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions