Operations #1 Flashcards
transformation process
conversion of inputs into outputs
value adding
the creation of extra or adding value as inputs are transformed into outputs
minimising waste
detecting where inefficiencies are and correcting them
ethical sourcing
refers to business practices of sourcing from suppliers that engage in ethical conduct such as the payment of fair wages and the use of environmentally friendly practices
profit centres
aspects of a business that directly derives revenue and profits
cost centres
particular areas, departments or sections of a business to which costs can be directly attributed
cost leadership
aiming to have the lowest costs or to be the most price-competitive in the market. A key aspect to cost leadership is that although trading with the lowest cost, the overall business should still be profitable
economies of scale
the cost advantages that can be created as a result of an increase in scale of business operations. Typically the cost savings come from being able to purchase lower cost per unit of input and from efficiencies created through improved use of technology and machinery.
standardisation
refers to the marketing of products that are homogenous or identical
product differentiation
means distinguishing products in some way from those of competitors
cross branding - adds value to products by offering consumers added benefits from a cross-branding arrangement
standardised goods
those mass produced, usually on an assembly line
customised goods
those that varied according to the needs of customer. these goods are produced with a market focus rather than a production focus
intermediate goods
goods that may be processed more than once
produce milk - can also produce cheese later
drip pricing
means that a business advertises one price but in the process of a customer purchasing the service numerous additional charges and costs are added. The effect is that the final price can be much higher than the price advertised. Drip pricing has been an issue in relation to airline ticketing and travel products sold online
interdependence
the mutual dependence that the key business functions have on one another
globalisation
refers to the removal of barriers of trade between nations. Globalisation is characterised by an increasing integration between national economies and a high degree of transfer to capital, labour, intellectual capital and ideas, financial resources and technology
supply chain
refers to the range of suppliers a business has and the nature of its relationship with those suppliers
businesses require a very predictable and reliable supply chain that is highly responsive to changes in demand as experienced by the business
global web
refers to the network of suppliers a business has chosen on the basis of lowest overall cost, lowest risk and maximum certainty in quality and timing of supplies
technology
the design, construction and/or application of innovative devices, methods and machinery upon operations processes
cost-based competition
derived from determining breakeven point and applying strategies to create cost advantages over competitives
break even point
the level at which the firm’s total revenue is exactly equal to its total costs
fixed costs
those that are not dependent on the level of operating activity in a business. They do not change when the level of activity changes – they must be paid regardless of what happens in the business
variable costs
those that vary in direct relationship to the levels of operating activity or production. This includes labour costs and costs of energy
compliance costs
the expenses associated with meeting the requirements of legal reputations
environmental sustainability
means that business operations would be shaped around practices that consume resources today without compromising access to those resources for future generations
precautionary principle
requires that, where environmental impacts are uncertain, a business undertake actions that are most likely to cause least environmental impact
CSR (corporate social responsibility)
refers to open and accountable business actions based on respect for people, community/society and the broader environment. It involves businesses doing more than just complying with the laws and regulations
triple bottom line
refers to the financial profitability, social impact and the environmental impact of a business
intermediate goods
goods that may be processed more than once. if a product has gone through one set of operation processes, then the output can then be processed through another set
