Finance function and operations Flashcards
What are the 4 V’s of operations?
- Volume- volume of units produced
- Variety - whether operations can handle different inputs and produce range of different outputs.
- Variation in demand- demand for same operations may be seasonal or regular peaks and dips in demand.
- Visibility - degree to which business operations are visible to customer.
What are the 5 steps to create a product/service?
- Consider customer needs
- Concept screening
- Design process
- Time to market
- Product testing
What is a Material Requirements Planning (MRPI)?
A technique for deciding the volume and timing of materials in manufacturing conditions where there is dependant demand. Is not appropriate of sales cannot be forecasted. Calculate the quantity of materials required for each type of material. Determine when they will be required.
What is Material Resource Planning (MRPII)?
Evolved out of MRPI. It is a plan for planning and monitoring all resources of a manufacturing company: manufacturing, marketing, finance and engineering.
What is Enterprise Resource Planning (ERP)?
Developed out of MRPII. ERP performs a similar function but on wider basis. Integrates and uses databases all over organisations.
What is Six Sigma Process?
Process designed to help organisations focus on developing and delivering near-perfect products and services. Aim to reduce number of faults in product below an accepted tolerance limit.
How does Six Sigma go about eliminating defects?
- identifying the root cause of error
- Confirming the critical root causes
- Implementing corrective action
What is Total Quality Management (TQM)?
The continuous improvement in quality, productivity and effectiveness obtained by establishing management responsibility for processes as well as output.
What are the 7 principles of TQM?
- Prevention - take measures to prevent poor quality occuring
- Right first time - culture to encourage workers to get their work right the first time.
- Eliminate waste - organisation should seek most efficient and effective use of all resources.
- Continuous improvement - seek to improve their processes continually.
- Everyone’s concern - everyone is responsible for improving processes and systems under their control.
- Participation - encourage workers to share their views and organisation should value them.
- Teamwork and empowerment - form team bonds so that eventually organisation becomes one.
What is the Kaizen principle?
Based on the principle that quality management is not a one-off process but is the continuous examination and improvement of processes.
What are the 6 principles of Kaizen ?
- People are the most important organisational asset.
- Processes should evolve by gradual improvement rather than radical change
- Resources, measurements, rewards and incentives all need to be aligned
- Continuous improvement enables changing customer needs to be taken into account
- Continuous improvement enables new technologies to be introduced.
What is Lean thinking?
Philosophy of production that aims to minimise the amount of resources used in all activities. Eliminating non-value activities.
What is a JUST-IN-TIME (JIT)?
System where organisation produces and purchases goods and materials as they are required by the customer or by a production process. Objective is to minimize number of products or materials held in inventory.
What are the 5 requirements needed for a JIT system to be successful?
- Quality and reliability- getting work done correctly first time. Skilled staff.
- Focus on value-adding activities
- Throughput speed - role of production should be synchronised with customer demand.
- Flexibility - system should quickly and easily switch between products being produced to respond to customer orders.
- Focus on reducing cost - increasing quality, reducing waste, increasing throughput speed and minimising inventory levels help to reduce costs.
How can the finance team supporting the purchasing (procurement) team?
1.) Credit terms - finance team can negotiate terms with suppliers
2.) Price - finance team can support profit margins by advising on maximum prices that should be paid
3.) Payment - Actually payments is approved by finance
4.) Data capture -
5.) Inventory- Finance and purchasing teams will liaise over inventory levels. Finance will let purchasing know how many units are in stock so that purchasing can order the right amount to fulfil an order
6.) Budgets - Finance will discuss costs when preparing budgets
