Operations management Flashcards
What is cost leadership
Aiming to have the lowest costs or to be the most price competitive in the market
-achieved through low operating costs
-innovation of a process allowing it to be cheaper
With extra profit, business may grow internally/externally helping competitive advantage
link to kmart
What is product differentiation
Distinguishing products in a way that is different from competitors e.g. (goods) -
varying quality (toyota vs lexus),
-augmented features - warranties etc
-(services) varying level of qualifications,
-varying amount of time spent on the service like delivery (express/normal)
What is economies of scale
Cost advantages generated as a result of an increase in business operations scale, by lower cost per unit when buying in bulk e.g. Kmart producing millions of a product at very cheap prices as more people buy the product it is still profitable
Other savings from reduced reliance on warehouses etc
What is lean production
Aiming to reduce/stop waste at every stage of production, through analysing the process and correcting inefficiencies
Two examples of operational decisions
Purchasing - buying goods for the transformation process or goods ready for sale e.g buying in bulk reduces costs and generates economies of scale
purchase from suppliers with similar philosophies (waste, economies of scale)
purchasing inputs from low cost nations minimises cost
Inventory control - a system maintaining quantities and varieties of product appropriate for a target market (JIT), focusing on minimising cost and maintaining quantities + varieties for target market.
Dispatching - selling and sending goods
What is quality management?
Processes ensuring consistency, reliability, safety and fitness of purpose
- quality control > inspections, intervention
- quality assurance > applications of quality standards e.g. iso 9001
- quality improvement > total quality management and continuous improvement
3 measures of business performance
- efficiency
- costs
- net profit
