Operations Flashcards
Operations is important because:
-it makes best use of limited resources available to maximise output.
-it helps reduce costs by identifying and minimising wastage in the production process.
-ensures a quality product which will satisfy customers and meet their needs.
Benefits of centralised purchasing
✅centralise purchasing department- more efficient purchasing procedures
✅specialist purchasing staff employed- ensure best deal is negotiated and agreed
✅cost effective- can gain discounts through economies of scale/bulk buying
✅approved supplier- supplies come from known quality and reliable sources
Features of effective inventory control
A trained inventory clerk employed and responsible for setting up procedures and monitoring, issuing and controlling.
-only issue inventory if correct documents filled in and approved.
-use inventory rotation so issue oldest items first to prevent deterioration and obsolescence.
Regularly monitor inventory levels for sure using a suitable method:
-each movement of stock recorded in the system using a bar code and reader.
-a spreadsheet with embedded formulae automatically does calculations.
Appropriate levels set prevent problems associated with over/under stocking:
-maximum/economic inventory levels set prevent is the balance that should not be exceeded to prevent funds/finance being tied up in inventory.
-reorder level is the balance when an order must be placed.
-reorder quantity is the physical amount ordered, difference between min and max.
-minimum inventory level is the balance inventory should not fall below to ensure inventory is always available.
-buffer inventory is the inventory below the minimum kept ‘just in case’ there is a late or cancelled delivery.
Purpose of inventory control
-anticipates when inventory is going to run out so action can be taken.
-production line in operation as there is inventory available for use at all times.
-fulfilling customer orders not delayed by a lack of inventory which will help improve customer satisfaction and public image.
-administration costs should be controlled as inventory is controlled and ordered at regular intervals.
-high costs of overstocking are avoided e.g. storage, insurance, specialist clerk and the issues of under stocking e.g. halted production and resources lying idle.
(Just in time) JIT involves:
-Frequent deliveries
-Of small quantities of inventory
-That are received just before it is needed
Successful JIT depends on having:
-close relationships with reliable suppliers who deliver what was ordered on time.
-consistently good quality supplies as it is not checked before it is used in production.
-staff who accept the responsibility for identifying when more inventory is needed.
Advantages and disadvantages of JIT
✅funds are not tied up in inventory- can be invested elsewhere
✅reduced inventory holding costs e.g. staff, warehouse space
✅less deterioration/wastage as smaller amounts held for shorter period
✅less vulnerable to changes in fashion/taste
❌if supplies are delayed then potential for production to be disrupted
❌sales will be lost if a customers rush order can not be met
❌increased admin and delivery costs with many small and frequent orders
Features of a good storage area
-the storage capacity of the area should be more than supplies held at any time.
-offer the correct environment e.g. freezers so if suitable for the products being stored.
-provide security and protection with lockable doors, screens and CCTV.
-must be covered by insurance to protect against unforeseen events.
Advantages and disadvantages of centralised storage
✅improved security and control
✅agreed procedures so inventory issued only with authorised requisition
✅lower storage costs as one larger area more efficient than many smaller areas
❌staff needed to travel to a centralised area resulting in time wastage
❌cost of specialist staff to operate stock room
❌difficult to meet individual needs of departments if they are highly specialised
Features of a good warehouse
-carefully designed to ensure smooth operation and efficient use of space.
-best located on the ground floor to make moving inventory easier.
-correct storage conditions for each item prevents deterioration on e.g. stackable wooden pallets keeps items off floor.
Logistics
Logistics manages how and when to move resources to the places they are needed. It is the process of dealing with the whole order from start to finish.
There are two basic forms of logistics:
-along the production line to coordinate the sequencing of resources.
-the transportation and storage network.
Benefits of good logistical management
-prevent shortages that could halt production or leave customers unsatisfied.
-minimise transportation costs to maximise efficiently and meet social responsibility.
-minimise time taken to obtain materials and inventory which will optimise workflow.
-reduces storage requirements, length of time an item is unused and finds tied up.
Scheduling
Scheduling is the part of logistics that coordinates the way resources work together into a whole process.
It involves raw materials, components, workers, machinery, transport and sales outlets being brought together so work flows smoothly and delays are avoided. The planned schedule keeps a focus on what needs to be done by as one task may rely on another being completed.
A Gantt chart helps coordinate task or batch completion.
Labour intensive production
Uses mainly human effort in production. Workforce completes tasks by hand so many workers can be employed to create a product.
There is no automation because:
-simple tasks so it isn’t necessary.
-creative or complex task so it is not possible.
-personal service so it is not suitable as might devalue service in the eyes of consumers.
Advantages and disadvantages of labour intensive production
✅easier improvements compared to CIP so greater satisfaction
✅alterations possible after production started is customer needs change
✅low skilled tasks use low-cost labour and generally lower running costs
❌employees absences and labour relations problems can halt production
❌closer monitoring of quality required to ensure consistently
❌shortages of skilled labour is possible
