Operations Flashcards
1
Q
Role Of Operations Management
A
monitoring of business’s practices to create the highest level of efficiency possible
2
Q
Strategic Role Of Operations
A
long-term plans and decisions that aim to achieve cost-leadership & product differentiation
3
Q
Cost Leadership
A
when a business aims to achieve the lowest production costs in the industry.
4
Q
Ways to achieve Cost Leadership
A
- Economies of scale
- New & innovative products
- Cheaper & exclusive raw material
- Outsourcing (focus on core functions)
5
Q
Product Differentiation (goods & services)
A
when a business distinguishes it’s products or services from it’s competitors, to make it more attractive to a particular target market
6
Q
Ways to achieve Product Differentiation
A
- Increased quality (good)
- Faster delivery (good)
- Custom design products (good)
- Innovative design (good)
- New technology (good/service)
- More features/services (good/service)
7
Q
Discuss the balance between cost and quality in operations strategy
A
↓ costs = ↓ quality
↑ costs = ↑ quality
∴ Businesses must balance between costs & quality to maximise profits
8
Q
Describe the features of operations management for businesses in a tertiary industry
A
➢ Tertiary industries produce services rather than tangible goods
➢ Key considerations when producing services are:
- Quality of customer service
- Whether to standardise or customise the service
- The level of visibility (customer contact) with the operation processes
9
Q
Influences On Operations
A
factors that impact the operation process of a business, causing it to undergo change
10
Q
Globalisation
A
removal of trade barriers to integrate different economies into a single market where goods & services can be traded easily
11
Q
Advantages & Disadvantages Of Globalisation
A
Advantages:
- Sourcing cheaper inputs from overseas
- Expanding to sell into foreign markets
- Access to funds, technology, and skills
Disadvantages:
- Foreign competition
- Ethical & logistical issues with foreign suppliers
- Potential expenses (eg. tariffs, shipping, etc)
12
Q
Cost-based Competition
A
derived from determining break-even point (revenue = costs) and applying cost leadership strategies to create cost advantages over competitors
13
Q
Technology
A
use of machinery throughout the production processes to accomplish objectives
14
Q
Advantages & Disadvantages Of Technology
A
Advantages:
- Continuous productivity
- Less errors
- Greater efficiency & precision
Disadvantages:
- Expensive & costly maintenance
- Employees require new skills
- employees are made redundant
15
Q
Quality Expectations
A
process of producing high quality products to meet customer standards (consumers will expect certain level of quality based on the brand & price)
16
Q
Advantage & Disadvantage Of Quality Expectations
A
Advantage:
- Establishes customer loyalty ➭ repeat sales
Disadvantage:
- Increased costs, time, and effort in production process
17
Q
Government Policies
A
broad goals of the government that encourage safe & competitive behaviour by businesses to guarantee economic performance & growth
18
Q
Examples Of Government Policies
A
- Tax Policy ➭ encourages business to conduct tax deductible practices (e.g. R & D)
- Health Policy ➭ maintain hygiene standards (e.g. correct food storage)
- Environmental Policy ➭ may incur higher costs for environmentally friendly inputs
- Labour Policy ➭ conducting business activities based on respecting the ‘Human & Labour Rights’
19
Q
Legal Regulations
A
specific laws that businesses have to follow to promote safe & fair practices by the businesses
↳ breaking the rules can result in penalties (e.g. fines)
↳ However, following the rules can result in compliance costs (expenses associated with meeting the requirements of legal regulations)
20
Q
Examples Of Legal Regulations
A
- Zoning ➭ affects the location of every type of business , especially critical to home businesses
- Fair Work & Anti-Discrimination ➭ requires that employees be treated with dignity & respect
- Work Health & Safety ➭ ensures that employees receive safety training, protective equipment, and appropriate machinery
- Environmental Protection (e.g. dumping) ➭ minimising pollution, elimination and safety disposing of any toxic residue
21
Q
Corporate Social Responsibility
A
refers to businesses going above the law in consideration of the community and the environment
22
Q
Corporate Social Responsibility:
Environmental Sustainability
A
when business operations do not compromise access to those resources for future generations
- Reducing greenhouse gas emissions
- Reducing water wastage
- Using sustainable & recycled inputs
23
Q
Corporate Social Responsibility:
Ethical Responsibility
A
when a business’s operations improve the quality of life of it’s internal & external stakeholders
- Fair treatment of employees ( includes those overseas)
- Workplace diversity
- Requirements on the ethics of suppliers
24
Q
Advantages & Disadvantages Of CSR
A
Advantages:
- Differentiates products
- Builds customer loyalty
- Attracts staff
Disadvantages:
- More costly to conduct responsible operations practices
- Time consuming
25
Legal Compliance vs. Corporate Social Responsibility
Legal Compliance involves making sure that the laws and regulations relating to the operations of a business are strictly observed. However, CSR are open & accountable business actions based on respect for people, the community, and the broader environment, thus going beyond what is legally required of the business.
26
Explain why CSR is a key concern in operations management
↑ CSR = ↑ reputation = ↑ sales
↓ CSR = ↓ reputation = ↓ sales (if not necessity)
27
Operations Process
involves integrating and managing the flow of supplies throughout the production process in order to best meet the needs of customers
28
Inputs:
Transformed Resources
inputs which change or are converted into something else
↳ Materials ➭ raw materials (unchanged) and intermediate goods (contribute to the finished product)
↳ Info ➭ when it's used to inform how inputs are used, where they're drawn from, etc
↳ Customers ➭ their needs drive the business's operations
29
Inputs:
Transforming Resources
inputs that remain in the business, being applied to the inputs to add to its value
↳ H.R. ➭ are the people with skills & knowledge required for operational function
↳ Facilities ➭ includes buildings, land, equipment, and technology
30
Transformation Process:
Influences (4 Vs)
Volume: the quantity of goods & services provided by operations.
Variety: the number of different models or versions offered.
Variation: the change in the demand for the product over time.
Visibility: the level of customer contact or feedback during the production processes.
31
Transformation Process:
Sequencing & Scheduling
Sequencing: refers to the order in which activities in the operations process occurs.
Scheduling: refers to the length of time activities take within the operations process.
- Assists in time management
- Sets out clear operations goals
- Allows for monitoring of tasks
- Avoids delays & increases efficiency
32
Transformation Process:
Sequencing & Scheduling (Gantt Chart)
a bar chart that records tasks required for each project and the estimated time required for each
Advantage:
- Monitors actual progress against planned activities
Disadvantage:
- Doesn't indicate which tasks are dependent on each other
33
Transformation Process:
Sequencing & Scheduling (Critical Path Diagram)
a diagram that shows the shortest time to complete all tasks
Advantage:
- Shows which tasks can be performed simultaneously
- Can become crowded for complex tasks
34
Transformation Process:
Teachnology
use of machinery throughout the production processes to accomplish objectives
↳ Computer Aided Design (CAD) ➭ the use of computers to aid in the creation, modification, analysis, or optimisation of a design
↳ Computer Aided Manufacturing (CAM) ➭ the use of computer software & automatable machinery to create products with a high degree of accuracy & precision
35
Transformation Process:
Task Design
involves the categorization & clarification of jobs in a way which makes it easy for an employee to complete them productively
↳ Steps ➭ task design → job description → person specification → recruitment → selection
↳ Skills Audit ➭ used to determine the present level of skills and any skill shortfalls that are made up through recruitment & training
36
Transformation Process:
Workplace Layout
refers to the different ways to organise the physical layout of the workplace
↳ Product Layout ➭ the arrangement of utilities according to their contributions throughout the operations processes
↳ Process Layout ➭ the arrangement of utilities according to their functions
↳ Fixed Position Layout ➭ an operational arrangement, in which utilities & employees come to the product (bulky products)
↳ Office Layout: systematic arrangement of office utilities to maximise the benefit of the space available
37
Transformation Process:
Monitoring
the process of measuring actual performance against planned performance
↳ Key Performance Indicators ➭ are predetermined variables that are measured so that appropriate controls to operations processes can be made (e.g. lead times, defects)
38
Transformation Process:
Control
occurs when KPIs are assessed against predetermined targets and corrective action is taken (e.g. redesign layout, new technology)
39
Transformation Process:
Improvement
refers to systematic reduction of inefficiencies/wastage and the elimination of any bottlenecks, by setting higher and higher standards in the continual pursuit of improvement
↳ Bottlenecks ➭ an aspect of the transformation process that slows down the overall processing speed of the dependant production processes
40
Output:
Customer Service
refers to how well a business meets and exceeds the expectations of customers in all aspects of its operations
↳ Explicit Service ➭ delivering a product and telling the customer about the product
↳ Implicit Service ➭ level of care and help offered to the customer as well
41
Output:
Warranty
a promise made by a business that they will correct any defects in the goods they produce or services they deliver
42
Operations Strategies
strategies implemented by the business to improve the production process, thus achieving the strategic role of operations
43
Technology
Leading Edge ➭ the most advanced technology available at a given point in time (e.g. 3D printing, nanotechnology, etc)
Established ➭ technology that has been proven to be effective, and thus reliable & widely adopted (e.g. computer, phone, etc)
44
Advantages of Leading Edge & Established Technology
Advantages of Leading Edge:
- Increases efficiency
- Less waste
Advantages of Established technology:
- Safe & reliable
- Competitive = ↓ product differentiation
45
Quality Management
Quality Control ➭ involves conducting various inspections during the production processes to reduce problems & defects in the product.
Quality Assurance ➭ involves processes to prevent products from having any defects.
Quality Improvement ➭ involves consistent improvement of operations processes through innovation or gradually over time.
46
Overcoming Resistance To Change
1. Cost of Equipment
2. Redundancy Payments
3. Retraining
4. Re-organisation Layout
5. Inertia
Change Agents ➭ the business should identify an individual/group who are influential in the business to act as a catalyst to help manage the change process.
'Unfreeze → Change → Refreeze' ➭ is Kurt Lewin's method of preparing employees for change, making changes , and finally integrating & normalising those changes within the organisation.
47
New Product Design & Development
```
Market research and product concept development
↓
Product design and prototype development
↓
Prototype testing and assessment
↓
Product refinement and production processes refined
↓
Production and product launch
```
48
Advantages & Disadvantages of NPDD
Advantages:
- Differentiation
- Adapt to changing preferences
Disadvantages:
- Expensive
- May be Unsuccessful
49
Outsourcing
involves contracting out another business to carry out it's activities
50
Advantages & Disadvantages of Outsourcing
Advantages:
- More efficient production → cost saving
- Access to better technologies & skills
- Focus on core activities
- Accountability → set standards
Disadvantages:
- Reliant on other businesses → loss of control
- Slower response to change → longer production process
- Redundant employees
- Ethical issues (e.g. treatment of staff)
51
Supply Chain Management:
Global Sourcing
involves sourcing lower cost inputs from other global regions
52
Supply Chain Management:
Global Sourcing (Adv. & Dis.)
Advantages (↑cost advantages):
- Access to new technology & skills
- More efficient production
Disadvantages (↑ cost of logistics):
- Different regulations between nations
- Complex organisation
53
Supply Chain Management:
E-commerce
involves the buying/selling of goods & services through the internet
↳ E-procurement ➭ the use of online systems that automatically notifies suppliers to deliver goods, when stock falls to a predetermined point.
↳ B2B ➭ business to business
↳ B2C ➭ business to consumer
54
Supply Chain Management:
Logistics
the overall process of managing how resources are acquired, stored, and transported to their final destination
```
↳ Distribution
↳ Transportation
↳ Storage
↳ Warehousing
↳ Distribution Centres
↳ Material Handling & Packaging
```
55
Inventory Management
↳ Holding Stock ➭ refers to the partially/fully processed products that a business has at a particular point in time.
↳ Just In Time (JIT) ➭ holding the minimal stock possible, and only producing the exact quantities to be delivered.
↳ First In First Out (FIFO) ➭ stock purchased first is sold first (e.g. perishable goods).
↳ Last In First Out (LIFO) ➭ stock purchased most recently is sold first (non-perishable goods)
56
Advantages of Holding Stock & JIT
Advantages of Holding Stock:
- Able to better meet customer demand
- Reduces lead times
- Avoids 'loss sale' (offers alternative options during shortage)
- Bulk buying/producing → economies of scale
Advantages of JIT:
- Reduces storage costs
- Avoids spoilage/damage
- Ensures product is not obsolete (outdated)
- Improves cash flow → efficient allocation of resources
57
Effects of FIFO & LIFO
Effects of FIFO:
- FIFO Understates COGS, Overstates Profits, and Overvalues Stock (FOCOPOS)
- High profits are shown, attracting investors
Effects of LIFO:
- LIFO Understates COGS, Underestimates profits, and Understates Stock (LOCUSUP)
- Less profits are shown, allowing for lower tax
58
Global Factors:
Global Sourcing
involves sourcing lower cost inputs from other global regions
59
Global Sourcing:
Economies Of Scale
the increase in the scale of production to reduce the cost per unit
60
Global Factors:
Scanning & Learning
business can benefit from scanning the global environment and learning from the best practices of businesses around the world
↳ This allows for businesses to explore the perspective of their competitors, as well as accumulate learning of the brand new business opportunities, operation models, and technologies.
61
Global Factors:
Research & Development
involves implementing innovative strategies to create new products or improve existing ones
↳ The government encourages R&D by offering taxation incentives and grants.
↳ Investing into R&D aims to extend product life cycles, open new markets, and improve quality, while reducing costs
62
Performance Objectives:
Quality
relates to the physical good/service provided to the customers, and how it meets their expectations
63
Performance Objectives:
Speed
relates to the efficiency of production, and the time taken for the production & operation processes to respond to changes in the market demand
64
Performance Objectives:
Dependability
relates to the reliability & consistency of the good/service, and how well it fulfills it's purpose
65
Performance Objectives:
Flexibility
relates to how easily/quickly operations can switch to a new model/design to meet market changes
66
Performance Objectives
Customisation
refers to the creation of individualised products to meet the specific needs of the customers
67
Performance Objectives:
Cost
refers to the minimisation of expenses so that the operation processes are conducted as cheaply as possible
68
Performance Objectives:
Quality vs. Dependability
quality is how well a product is able to perform its functions properly, whilst dependability is how well the product is able to perform its functions consistently over time and through various conditions
