Operations Management (steeds) ✔️ Flashcards
What are operations management objectives
-production targets
-quality/rejection
-productivity
Factors impacting operations objectives
-size and legal status of the business
-other objectives
-state of the economy
-competition
-government
-legislation
What is operations management
-administers the complete production timeline of a service/ product from the input stage to the finished stage, including planning, organizing, and supervising the operations, manufacturing and production processes, and service delivery to lead to the desired destination
Value analysis triangle
Is the process of adding value to a product. What determines its value
Top=usage: the amount it can do (function)
Left corner=economic: cost
Right corner=aesthetic: what it looks like
What does PESTELE stand for:
•Political
•economic
•social
•technology
•ethical
•legal
•environmental
What is innovation
-Putting a new idea or approach into action.
-comes in many forms;
Improving or replacing business processes to increase efficiency and productivity
Developing entirely new and improved products
Addicting value to existing products (new stuff on phones)
What is Research and Development (R and D)
The process that enables the creation of new and improved products to meet the needs of customers
-launch new or improved products
-improve the production process
-alternative materials
-waste reduction
Problems with R and D
-cost
-risk of failure
-copying
-limited protection of ideas
-changes in technology
-customer wants
Process of R and D
-market research v product orientated
-brainstorming
-morphological studies
Factors influencing R and D
-levels of competition
-product
-external environment
-state of economy
What is market orientated
-an approach to business that prioritises identifying the needs/desires of consumers and creating product/ service that satisfy them
What is product orientated
Companies sole focus on the products alone
What is product launch and its stages
The stages business go through before releasing new products;
-marketing research: find out what customers want, who they are
-product development and testing: experiment by allowing samples to be tested
-distribution of product to outlets: can only be sold if it is in a position for customers to buy it. (Shops)
-promotional launch: inform customers of features of new product
What is job production
Involved firms producing items that meet the specific requirements of the customers. Usually are made by skilled people (suits, wedding dresses)
What are the advantages of job production
-better quality
-more expensive so business gets more
-meets customer needs
-add values
-motivational
What are the disadvantages of job production
-slow process
-time consuming
-labour intensive
-expensive
-high costs
-limited customer range
What is batch production
When many similar items are produced together for each day. Usually perishable. Eg/ bakery
Batch production advantages
-not as wasteful
-allows flexible production
-lower costs
-less skilled
-producing more as it is a quicker process
-economies of scale
Batch production disadvantages
-time lost switching between batch’s (rest time)
-need to keep stocks of raw material
-storage costs
-may not make enough or too much
-not personalised
-demotivating for staff
What is Flow/mass production
Mass amounts of products made constantly and are all the same (use of machinery without down time)
Flow/mass production advantages
-continuous so is quick
-economies of scale
-division of labour and specialisation
-Less need for training
What is cell production
-workers are organised into multi-skilled teams. Each team is responsible for a particular part of the production process including quality control and health and safety.
Cell production advantages
-higher quality output
-better communication
-quality improvement
-greater efficiency
-multi skilled workers
-quick if all teams work constantly
Cell production disadvantages
-high costs
-more machinery and workers needed
-recruitment and training costs
-takes longer if one team is ready to continue the process
What is Division of labour and specialisation k
-division of labour:the allocation of labour into specific tasks intended to increase productivity
-specialisation:where workers performs specific tasks
Advantages and disadvantages of division of labour
+increase productivity, output increase and unit cost decrease, improved profit margin
-task may be boring and repetitive leading to errors or high labour turnover, automation replaces workers
What is productivity and how to calculate it
Relationship between outputs and inputs
Output/inputs = productivity
What is labour productivity and how is it calculated
The volume of output/value produced by each employee
Output/ number of employees
How to get labour costs per output calculation
Labour costs/output
How to increase productivity
-target setting
-investing in machinery
-training
-non/ financial motivation
-factory layout
-team worn
Benefits of productivity
-products produced quickly
-help the business to be competitive
-reducing costs as output is higher with same labour costs
-encourages investment
What is economies of scale
When demand/ output increases unit costs decrease
What is diseconomies of scale and why does this happen
When output increases so unit costs increase, why;
-large scale production can be difficult to manage so storage costs will increase
-productivity may fall due to dw motivation of increased output
Costs of Diseconomies of scale
-machines may have to stay on for longer periods of time and breakdowns can occur
-as business needs to stay open longer they may have to pay overtime
What are the 6 internal economies of scale
-purchasing economies
-financial economies: negotiating cheaper loans
-managerial economies: employment of more specialised managers
-technical economies: purchase of more efficient equipment
-marketing economy
-risk bearing economies: diversifying spreads risk
What are the 3 external economies of scale
-concentrated economies
-information economies
-infrastructural
What is capacity utilisation and how to calculate
the extent to which a firm or nation employs its installed productive capacity. It is the relationship between output that is produced with the installed equipment, and the potential output which could be produced with it, if capacity was fully used.
Actual level of output/ maximum possible output X100
How to increase capacity utilisation and what are the constraints
Increase:
-increase demand for existing products
-price cutting
-differentiate the product
Constraints:
-competition
-market dominance
-stage in the product life cycle
-seasonality
-causes high demand and may not be able to produce as much
Benefits and disadvantages of capacity utilisation
+fall of average costs, less wastage, increase profits, increased competitiveness
-maintenance and breakdowns
-pressure
-quality impacts
What is stock control
The process and controls used by a business to ensure taht it has sufficient stock for its purpose
-types of stock
-raw materials
-work in progress
-finished goods
Look at stock control graphs to understand what they show
What does the stock control chart show
-minimum stock: the bottom line on the growth (minimum which the business would want to hold)
-re order level is the second to bottom line above the minimum stock (shows when the business needs to restock in order to not run out)
-maximum level: top line, max stock a business can hold.
-stock: the stock they have at a current time usually zig zag line that goes up and down
What does the lead time show
-amount of time between placing the order and receiving the stock.
Find it by looking at the difference in re order level in the gap between the stock level.
How to calculate how many products are ordered for each delivery and how many products does the business sell per week
- Maximum stock - minimum stock
- buffer value - maximum value / lead time
What are the costs of holding stock
-storage
-opportunity costs
-depreciation
-security
-administration
-insurance
Benefits of holding stock and how to calculate average levels of stock
-meet demand
-fluctuations in demand
-economies of scale
-buffer stock
averages level of stock= maximum + minimum stock /2
Controls of stock management
-Last in first out
-first in first out
What is economic order quality
The order quality that minimises inventory holding costs and ordering costs. Usually applies when demand for a product is constant over a period of time and each new order is delivered in full when inventory reaches 0
What factors affect when/how much shock to re order
-how long it takes for the supplier to deliver the order-higher lead times may require a higher re order level
What is lean production and what methods are there:
lean production: focus on cutting out waste whilst insuring quality and improving efficiency.
-kaizen:introducing small changes in a business to improve efficiency and quality.
-ergonomics: arranging workplace that fit the person who is using it
-cell production
-total quality management: all parties involved in process held responsible for quality
-time based management: reduce time to reduce waste and improve production process
-jidoka:ability to detect and reject faulty goods and components at the earliest time.
-JIT / kanban: ordering stock when you need it and selling it straight away
Advantages and disadvantages of JiT/kanban
+less storage needed, reduced costs, less stock perishable, avoids build up of unsold products
-costs of buying products is higher as they need it straight away, very reliant on suppliers, little room for mistakes
Advantages and disadvantages of kaizen
+cheap, encourages team to take responsibility, motivation, remains competitive
-may be reluctant to make changes, may feel pressured and stressed which can cause mistakes
Advantages and disadvantages of ergonomics
+saves time, motivated as equipment is placed where they want it, cost saving
-employer has to pay for the costs of changing the workplace, potential breakdowns of machines, customisation of each employee is costly
Advantages and disadvantages of total quality management
+employees may feel empowered, improve quality of product, increase customer loyalty
-workers may feel resistant to change leading to demotivation
Advantages and disadvantages of time based management
+quicker response times to meet changing market and customer needs, faster new product development, reduction in waste
-employees feel pressured to complete projects on time, workers may not what to multitask, employees may resist change
Advantages and disadvantages of jidoka
+detecting faults early will save money, targets are likely to be met.
-could disrupt production in short term,
What is benchmarking
Measuring the performance of your business against a competitor in the same market to understand your business performance
Limitations of benchmarking
-limited access to sensitive material
-difficult to provide which business offers best performance
-difficult for a buissness to improve
Advantages of benchmarking
-set expectations
-drill down on performvace
-gain independent idea of how well your business is performing.
Why is the location of a business important
How quickly and available is the business to large amounts of people and is it in a good area for distribution.
What is considered when finding the right location of a business
-costs of business
-employees available
-land space
-distribution/ roads
-community
What does logistics mean
The integration of the procurement of supplies, production, warehousing and transportation
Key factors in logistics are:
-warehousing storage depots
-customer requirements
-information systems
-transportation
The factors affecting logistics: restoring and reasons why
-involves a business returning production or operations to the host country that had previously been moved to a different international location.
-reasons for it:
Shorter delivery times, easier to collaborate with home based suppliers.
The factors affecting logistics: offshoring and reasons why
-involved relocation if business activities from the home country to a different international location. (Manufacturing in cheaper countries like China)
-reasons for offshoring: Lower costs, better skilled and higher quality supply, more raw materials, cheaper resources
The factors affecting logistics: outsourcing
-an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally
The factors affecting logistics: subcontracting
-the production of a particular part of the product is undertaken by another firms
What is quality and what are the key aspects of it:
Quality is about meeting the needs and expectation of customers
Key aspects:
-good design
-functions
-consistency
-durable
-value for money
What is quality assurance
the maintenance of a desired level of quality in a service or product, especially by means of attention to every stage of the process of delivery or production.
Advantages and disadvantages of quality assurance
+reduced costs as less wastage, improve worker motivation as they have ownership of their work, consistent level of quality
-takes time, high initial costs
Methods of quality assurance
-total quality management
-quality benchmarking
What is quality control
Quality control means how a company measures product quality and improves it if need be. Quality control can be done in many ways, from testing products, reviewing manufacturing processes, and creating benchmarks. Checks are done at the end of the process.
Advantages and disadvantages of quality control
+prevent faulty products reaching customer, less time wasted, can find wider problems and solve them sooner, keeps good reputation.
- if defect levels are very high, the company’s profitability will suffer, individuals are necessarily influenced to take responsibility for their work.
Costs of poor quality
-product fails
-doesn’t function properly
-loose customers
-poor customer service
-wasted materials
-
What are the 2 quality standards used
-Kitemark: Uk product and service quality trade mark. Used to identify products where safety is paramount such as smoke alarms.
-ISO9000 -European standards: set of international standards on quality management and quality assurance developed to help companies effectively deoxygenated the quality system elements
Why is customer service important and what are the impacts of bad customer service
- adds value, retains customers, reduces labour turnover, loyal customers, good reputation
2.loss of customers, negative endorsement, loss of potential customers, bad reputation, high labour turnover
How to measure customer service quality and methods of measuring it:
- Speed, complaints, loyalty, problem solving, rentention.
- Customer satisfaction score, surveys, mystery shipper, interviews, benchmarking.
How to improve customer service
-training
-bonuses
-motivational techniques
-advise
-benchmarking
What is CPA
-critical path analysis is a project-management technique that lays out all of the activities needed to complete a task, the time it will take to complete each activity and the relationships between the activities.
-the sequence of project activities which add up to the longest overall duration
What does CPA calculate
-the longest path of activities to the end of the project
-earliest and latest each activity can start and finish
What does the 3 section in the circle mean and what does EST and LFT stand for in CPA
-the left hand of the circle is the activity number in order.
-EST: the top section of the circle which shows the earliest start time that a activity can commence based on completion of the previous activity.
-LFT: bottom right section shows the latest finish time by which the previous activity must be completed.
What does total float, free float mean
-total float: amount of time that an activity can be delayed from its start date without delaying the finish time of the project.
-free float: the amount of time the network can be delayed without causing delay to the next task
Calculations of EST, LFT, total float, free float.
EST: EST plus the time a task takes to complete
LST: latest finishing time total (end number) mines the time the previous activity took (start from back to front)
Total float: LFT-EST
Free float: EST-LFT
Advantages and disadvantages of CPA
+reduces the risk and cost of complex projects, help stop which activity have slack time, useful overview for estimated time of project to be finished.
-based on estimations so not reliable, doesn’t take into account external issues, resources may not be as flexible as management thought
What is a Gantt chart
A geographical representation of the order and duration of tasks within a project. It is a simple and useful tool for planning and monitoring the progress of a project.
Gantt chart advantages and disadvantages
+visual representation, easy to monitor, shows time and resource allocation
-doesn’t show critical activities, can’t see EST and LFT, can’t calculate floats
What is PERT
The Program Evaluation Review Technique. Using the technique helps project planners identify start and end dates, as well as interim required tasks and timelines.
-optimistic time (shortest)
-pessimistic time (longest)
PEST calculations
Estimated duration of a project= optimistic time+ (4 x likely time) + pessimistic time / 6
