Flexibility and innovation

Question 1

What is operational flexibility?

Answer 1

the ability of a business to vary both the level of production and the range of products following changes in customer demand

Question 2

What is process innovation?

Answer 2

the use of a new or much improved

production method or service delivery method.

Question 3

How can op flexibility be achieved?

Answer 3

increase capacity by extending buildings and buying more
equipment – this is an expensive option
hold high stocks – but these can be damaged and there is an opportunity cost to the capital tied up
have a flexible and adaptable labour force – using
temporary, part-time contracts reduces fixed salary costs but may reduce worker motivation
have flexible flow-line production equipment – see mass customisation below.

Question 4

How can process innovation achieved?

Answer 4

Robots in manufacturing.
Faster machines to manufacture microchips for
computers.
Computer tracking of inventories, e.g. by using bar codes
and scanners, to reduce the chances of customers finding
businesses out of stock.
Using the Internet to track the exact location of parcels
being delivered worldwide and improve the speed of
delivery