Operations Flashcards
Explain added value
The difference between what a business spends to produce its goods or service, and the price customers are willing to pay
How do you calculate added value
The selling price - the cost of bought in materials and components
Explain what’s meant by innovation
Altering an already existing product
Explain what’s meant by research
Work done to see how you could improve a product
Explain what’s meant by development
Physically improving the product from the research you have conducted
Explain the reasons for innovation, research and development within a business and industry
Improve productivity
Increase competitiveness
Improve brand recognition
Increase turnover
Improve profitability
Changing external factors
Explain product innovation
Developing existing products to differentiate it from their competitors
Explain process innovation
Finding a new or better method of production to increase: efficiency, productivity, reduce costs +waste and to improve quality
Evaluate the disadvantages of innovation
Time consuming
Initial costs
Staff motivation
Evaluate the advantages of innovation
Improved productivity
Reduced costs
Increased competitiveness
Improved brand recognition
Increased turnover and profitability
Explain job production
Production items that meet specific needs of customers
Explain batch production
May similar items are produced together
Explain flow production
Continuous movement of items through production processes (when one task finishes the next one starts immediately)
Explain cell production
Workers split into teams to work on a part of the production process
State advantages of job production
Meets customers needs
High quality
Higher job satisfaction
More flexibility
state disadvantages of job production
No economies of scale
Higher costs
Requires skilled labour
Difficult costing
State advantages of batch production
Reduces unit costs
Can still address customer needs
Faster than job production
Some economies of scale
Some flexibility
State disadvantages of batch production
Time can be lost switching batches
Need to keep stock of raw materials
Can be de-motivating
Money is tied up in storage
State advantages of flow production
Continuous
Economies of scale lowers the cost of production
Division of labour and specialisation
State disadvantages of flow production
Difficult to alter the production o=process
Employee boredom
High set up costs
Can’t address customer needs
State advantages of cell production
Workers become multi-skilled and adaptable
Greater workers motivation
Can lead to efficiency
Quality improvements
State disadvantages of cell production
May not allow firms to use their machinery as intensively, meaning output will be lower
Greater investments required in new management and control process
May be rivalry between different cells and conflict may arise
Explain specialisation
Where workers perform specific tasks
Explain division of labour
The allocation of workers into specific tasks, intended to increase productivity
Explain the reasons for the introduction of specialisation and division of labour into a business
It’s introduced for the intention that worker productivity and efficiency will increase therefore lowering business costs. This creates a larger profit for them
Explain the advantages of division of labour
Workers become more efficient
Output increases whilst lowering business costs
Improves the profit margin
Explain the disadvantages of division of labour
Tasks may become repetitive so workers become de-motivated and less efficient
If talks are small and repetitive, automation may take over resulting in redundancies
Explain project management
The act of planning, organising and managing a project in order to achieve a predefined outcome or goal
Explain why businesses use project management
It helps every part of the business run more efficiently and effectively
Explain what a Gantt chart is
Graphical representation of the order and duration of tasks within a project
Explain what CPA is
A project management technique which shows how to complete tasks in the shortest possible time
Explain what PERT analysis is
Used to calculate the amount of time it takes to realistically finish
Explain the advantages of PERT analysis
More realistic given pessimistic views
A simple formula to apply
A lot of data can be visually represented
Explain the disadvantage of PERT analysis
It can be difficult to judge
Explain the advantages of a Gantt chart
Allows a visual representation
Easy to monitor
Shows time and resource allocation
Explain the disadvantages of a Gantt chart
Doesn’t show the critical activities
Can’t see EST and LFT
Can’t calculate float times
Explain the advantages of CPA
Helps reduce the risk and cost of complex projects
Encourages careful assessment
Better allocation of resources
Provides managers with a useful overview of the project
Allows resources to be delivered just in time (JIT)
Explain the disadvantages of CPA
Reliability is largely based on accurate estimates
Doesn’t guarantee success of the project
Resources may not be as flexible as the management hope
Explain what’s meant by productivity
The volume of output by each employee
How to calculate measures of productivity
Output / number of machines
Output / input
Explain the advantages of high productivity
Helps a business become more competitive
Same output with less units of labour, reduces costs
Encourages investment as productivity’s a measure of performance
Explain the disadvantage of productivity
If units of labour are reduced, it may lead to job insecurity and make management harder
State ways to improve productivity
Setting targets
Motivation techniques
Investing in technology
Staff training
Division of labour
Explain what is meant by economies of scale
Unit costs falls as output rises
Explain what’s meant by diseconomies of scale
Unit costs rise as output falls
Explain what’s meant by internal economies of scale
Achieved as a result of a firm growing internally
Explain what’s meant by external economies of scale
Benefits the whole industry not just one firm
Types of internal economies of scale
Technical - gain the benefit of buying more effective capital equipment
Managerial - employ specialist managers
Marketing - use most effective marketing methods
Purchasing - buying raw materials in larger quantities
Financial - negotiate cheaper loans
Risk-bearing - spread risk by diversifying into different products
Explain capacity utilisation
The percentage of total capacity that’s actually being achieved in a given period
Explain capacity management
Managing the available capacity to ensure that resources are used optimally
Explain advantages of capacity utilisation
Average unit costs fall
Less wastage of resources
Employee motivation
Stakeholders view businesses as favourable
Explain disadvantages of capacity utilisation
Competition
Seasonality
Alternative products
Maintenance and breakdowns
Additional orders can’t be done
How to reach full capacity
Reduce stock room size
Increase demand for your products
Differentiate the product
Explain stock control
Processes and controls used by a business to ensure that it has sufficient stock for its purpose
Explain just in time
Allows stock to fall to zero as no need of time to replenish stock
Explain advantages of just in time
Lower stock holding means less costs for storage
Less likely of stock perishing
Less time spent on checking and re-working the product
Explain disadvantages just in time
Little room for mistake as minimal stocks kept for re-working faulty products
If not delivered on time, can cause the whole production to be delayed
No spare finished products to meet unexpected orders
Explain lean production
Focuses on cutting waste whilst ensuring quality and improving efficiency
Explain why lean production is used
Doing the simple things better
Doing things better
Involves employees in the continuous improvement
Explain ergonomics
Looks at the relationship between the employee and the capital equipment being used
Explain kaizen
Improvement in quality as an ongoing phenomenon and not something that takes place occasionally
Explain total quality management
The efficient usage of all resources used within the production process, on finding ways to prevent mistakes rather than inspecting for mistakes
Explain time based management
Attempt to reduce the time taken between the generation of the idea for a product and it going into production
Explain Kanban
Helps to organise the flow of components onto the production line at the right place and at the right time
Explain jidoka
A process for building into the production an ability to detect and reject faulty goods and components at the earliest time
Explain how technology can be applied in the operations of a business
Technology could be used in the production of their products through buying machines which can replace workers and they do the same job
Explain advantages of technology ina business
Cuts employment costs
More efficient than workers
Can be the most up to date software so would be efficient
Explain disadvantages of technology in a business
May break which adds costs for replacing it
May not be reliable
High costs to begin with when buying the machinery
Distinguish quality control
The process of checking the quality of products for any faults
Distinguish quality assurance
Processes that ensure production quality meets the requirements of customers
Explain reasons for quality control and quality assurance in a business
Make sure theirs no faults in products which reduces the chance of customers wanting refunds, maintains a good reputation
Explain why total quality management is used in a business
Helps organisations identify skill deficiencies in employees along with necessary training that’s required
Explain reasons for training employees in a business
They will be more efficient
Less likely to make mistakes, meaning that no resources are wasted
Explain BS 5750 kitemark
Rewarded to businesses that adopt certain quality procedures
Explain ISO9000 European standards
Member states are obliged to make them and remove ones that might conflict it
Explain quality benchmarking
The general approach to business improvement based on the the best practice in the industry and it allows them to see where they fall short against competitors
Explain the factors affecting the choice of location for a business
Labour costs - vary from location to location
Land costs - location can affect the price of warehouses etc
Proximity to raw materials - transport costs are reduced if you’re closer to them
Labour skills - where specialist skills are required
Site suitability - some may need particular characteristics to maximise customer satisfaction
Potential expansion - future production capacity has to be taken into account
Evaluate the impact and importance of location to a business and stakeholders
If they are far from materials it could increase the costs for the business or if they dont have the correct warehouse they could have to spend more money on getting the correct facilities
Explain what’s meant by logistics
The movement of good from one pace to another, meaning two functions transportation and warehousing
Explain supply chain management
The handling of the entire production flow of a good or service to maximise quality,delivery, customer experience and profitability
Explain distribution management
The process used to oversee the movement of goods from supplier to manufacture to wholesaler or retailer and end up at the consumer
Explain the role of warehousing
The process of storing physical inventory for sale or distribution
Explain the role of distribution centres
The handle receiving from manufacturers or wholesalers and organising them o be shipped to the customer
Evaluate factors affecting logistical decisions
Demand characteristics (eg seasonal)
Logistic costs (transport + warehousing)
Product characteristics
Explain offshoring logistics
Moving manufacturing or other business processes overseas
Explain advantages of offshoring logistics
Lower labour costs
Access skilled labour
Access to global marketplace
Explain disadvantages of offshoring logistics
Time zone differences
Quality control issues
Cultural and language barriers
Explain restoring logistics
Bringing back outsourced personnel and services back to the home location from where they were from
Explain advantages of resourcing logistics
Better control over supply chain
Improves product quality
Enhances innovation
Explain disadvantages of resourcing logistics
Can’t use cheap about so higher costs
Few skilled workers available
Expensive process to bring the production back
Explain outsourcing logistics
When a company uses an external provider to handle various supply chain functions
Explain advantages of it sourcing logistics
Controlled costs
Increased efficiency
Share the freight costs
Explain disadvantages of outsourcing logistics
Loss of control
Unavoidable costs
Strategic misalignment
Explain subcontracting logistics
Hiring an outside firm or individual to complete specialised tasks that can’t be done internally
Explain advantages of subcontracting logistics
Helps with large projects
Increased productivity
They have specialised knowledge
Explain disadvantages of subcontracting logistics
Lack of control
Increased costs
Lowering of standards
