Operations #2

Question 1

outsourcing

Answer 1

use of third party specialist businesses to take advantage of their skills, reduce labour costs and save time for employees

onshore and offshore: domestic and international

Question 2

inputs

Answer 2

resources used in the transformation process

Question 3

Key Performance Indicators (KPI’s)

Answer 3

specific criteria used to measure the efficiency and effectiveness of the business’s performance done by the business
- lead times
- inventory turnover rates
- production data

Question 4

transformed resources

Answer 4

inputs changed or converted in the process
- materials
- raw materials are the natural substances in their unprocessed state
- intermediate goods are manufactured and used in further processing
- information
- customers
- their choices shape input

Question 5

transforming resources

Answer 5

inputs that carry out the transformation process
- human resources
- facilities
- plant and machinery used in process (consider location, design, legal restrictions)

Question 6

transformation process

• 4V’s

Answer 6

the conversion of inputs into outputs

4v’s Volume, Variety, Variation in Demand, Visibility

Volume - how much is made, responsiveness to what needs to change is essential to effectively managing lead times

Variety - mix of products made, services delivered through the transformations process

Variation in Demand - decrease or increase in demand, affecting suppliers, labour flexibility and plant/equipment needs

Visibility - customer contact and feedback, direct or indirectly

Question 7

sequencing and scheduling

Answer 7

sequencing - the order in which activities in the process occur
scheduling - length of time activities take

Use Gantt Chart

Critical Path Analysis (CPA) - shortest length of time it takes to complete all tasks necessary to complete the process

Question 8

technology, task design, process layout

Answer 8

Technology
- CAD - computer-aided design
- manufacturing process through robotics
- office technology

Task Design
- classifying job in ways that make it easy for an employee to successfully perform and complete the task
- skills audit : formal process used to determine the present level of skilling and any skill shortfalls that need to be made up either through recruitment or training
- workplace layout : way in which machinery and technology are orientated and arranged

Process Layout
- the arrangement of machines so that the machines and equipment are grouped together by the process they perform
- product layout : where equipment arrangements relates to the sequence of tasks performed in manufacturing a product
- fixed position layout : arrangement in which employees and equipment come to product
- office layout : workstations - desk areas

Question 9

technology, task design, process layout

Question 10

monitoring, control and improvement

Answer 10

monitoring - measuring actual performance against planned performance

control - KPI’s are assessed against predetermined targets and corrective action is taken if required

improvement - systematic reduction of inefficiencies and wastage, poor work processes and the elimination of bottlenecks

bottlenecks - aspect of the transformation process that slows down the overall processing speed or creates an impediment leading to a backlog of incompletely processed products

Question 11

outputs
- customer service
- warranties

Answer 11

outputs - the end result of the business efforts – the good or service that is provided or delivered to the customer

customer service - how well a business meets and exceeds the expectations of customers in all aspects of its operations

warranties - promise made by a business that they will correct any defects in the goods they produce or service they deliver

Question 12

performance objectives

Answer 12

quality, speed, flexibility, customisation, dependability, cost

Question 13

quality objective

Answer 13

quality of design - understanding consumer preferences, prior to production

quality of conformance - the focus on how well the product meets the standard of a prescribed design with certain specifications

quality of service - how well the service meets the specific needs, how quick

Question 14

speed objective

Answer 14

the time it takes the production and the operations process to respond to changes in market demand

Question 15

dependability objective

Answer 15

refers to how consistent and reliable a business’s products are

Question 16

flexibility objective

Answer 16

how quickly processes can adjust to changes in the market

Question 17

customisation objective

Answer 17

creation of individualised products to meet the specific needs of the customers

mass customisation - mass-produced standard product

Question 18

cost objective

Answer 18

refers to the minimisation of expenses so that processes are conducted are conducted as cheaply as possible

Question 19

product or service design and development

Answer 19

approached through the preferences and desires of consumers, as identified by market research, to determine which products are designed and developed.

approached from changes and innovations in technology that enable new, appealing products to be made because they use advanced technologies, which give products greater functionality.

explicit service - tangible aspect of service, application of time, expertise, skill and effort

implicit service - based on feeling, psychological wellbeing

Question 20

Supply chain management

Answer 20

integrating and managing the flow of supplies throughout the inputs, transformation processes and outputs in order to best meet the needs of customers

includes production processes, suppliers of raw materials, energy, labour, distribution and domestic and global sources

global sourcing - business purchasing supplies or services without being constrained by location. Means buying or sourcing from wherever the suppliers are that best meet the sourcing requirements

e-commerce - the buying and selling of goods and services via the internet

• B2B (business to business [supplier to buyer]) - direct access from one business to another allowing the supplier to assess the needs of the buyer and meet them in a timely manner

B2C (business to consumer) - selling of goods and services to consumers over the internet

logistics - broadly referring to distribution, storage, warehousing, materials handling and packaging,

physical distribution

Question 21

outsourcing strat

Answer 21

advantages -
- simplification: reducing number of activities
- efficiency and cost savings: access to cheaper labour, skilled labour in offshore locations
- increased process capability: products are produced and delivered to the market with improved levels of service
- access to skills/resources lacking within the business: higher skill or disciplined labour at lower cost

disadvantages -
- payback periods and cost: reducing internal inefficiencies then businesses may become more efficient and productive without using outsourcing
- communication and language: when negotiating outsourcing, the business might focus too much on the decision to outsource rather than consider the ongoing relationship with the vendor
- loss of control of standards and information security: outsourcing may feel a loss of control over standards and also over how information is used

Question 22

Technology

Answer 22

leading edge technology - the most advanced or innovative at any point in time

helps business create products quicker and to higher standards, with less waste, and also help a business to operate more effectively. Innovative, can be beneficial but also may not be reliable with the amount of time it is introduced into the operations

established technology - developed and widely used and is simply accepted without question

Question 23

inventory management

Answer 23

advantages -
- consumer demand can be met when stock is available, may prevent the consumer from seeking to buy from an alternative business
- stocks give the opportunity for a business to generate immediate revenue, hard to generate revenue from partially transformed inputs
- older stock can be sold at reduced prices and thereby encourage cash flow and also attract sales of other products
- are an asset and are of value to the business, reflecting well on the balance sheet
- making products in bulk may reduce costs as there are economies of scale in purchasing inputs, cheaper than holding stock once it is made

disadvantages -
- the costs associated with holding stock, including storage charges, spoilage, insurance, theft and handling expenses
- the invested capital, labour and energy cannot be used elsewhere as it has been used to create the stock
- cost of stock not selling

Question 24

inventory management (LIFO and FIFO and JIT)

Answer 24

LIFO (last in first out) - last goods purchased are also the first goods sold and therefore the cost of each unit sold is the last cost recorded

FIFO (first in first out) - first goods purchased are also the first goods sold and therefore the cost of each unit sold is the first cost recorded

JIT - ensures that the exact amount of material inputs will arrive only as they are needed in the operations process

Question 25

quality management

Answer 25

processes that a business undertakes to ensure consistency, reliability, safety and fitness of purpose of
product

quality control (QC) - use of inspections at various points in the process to check for problems and defects

quality assurance (QA) -
use of system to ensure that set standards are achieved in production

quality improvement (QI) -
continuous improvement and TQM (total quality management)

TQM - focuses on managing the total business to deliver quality to customers

Question 26

overcoming resistance to change

Answer 26

financial
psychological/emotional

learning to adapt
- purchasing new equipment:
- redundancy payout
- retraining
- reorganising plant layout
- inertia (psychological resistance to change)

Question 27

global factors

Answer 27

global sourcing - business purchasing suppliers or services without being constrained by location

economies of scale - cost advantages that can be gained by increasing the size, or scale, of production. Meaning business can lower their per unit input costs. When businesses respond to increases in demand and volume that necessitate making higher product volumes

scanning and learning - looking at global environment, taking input from employees working in other associations etc

R&D - helps create leading edge technologies and to create innovative products and solutions