Operations Management Within A Business Environment Flashcards
Types of Production
Job, Batch, Flow, Lean
PESTLE
Political Economic Social Technological Ethical Legal Environmental
How to add value
Build a brand Deliver excellent service Product features and benefits Offer convenience Lower costs
Benefits of adding value
Can change a higher price
Creates a point of difference from competitors
Protects from competitors asking customers
Focuses a business on its target market
Lower average costs
Invention
An entirely new product is created for the first time
Innovation
An existing product is improved, using a new idea or approach
Market orientated
When a business reacts to what the the customer needs or wants
Product orientated
The business develops products based on what it is good at making or doing
Job
Products are made individually that are Iquitos to a customer’s standards
Advantages of job production
Better quality Can change higher price staff are motivated due to variety Greater flexibility Customer requirements can be handled
Disadvantages of job production
Slow and labour intensive Higher average costs Must have high skilled, expensive workers Do not Benfro from EoS Requires close working with the client
Batch production
A group of identical products are made at once. The product being made can change
Advantages of batch production
Many products made Lower average costs Benefit from EoS Customers still retain some choice of productCan hire less products Faster than job Some flexibility
Disadvantages of batch
Greater risk of error Not motivational for worker Higher initial costs Down time between batches Must store the resources
Flow production
Also called mass production, there is a continuous flow of items moving through the production process
Advantages of flow production
EoS- lower average cost per unit
Fastest method
Can hire less, and less skilled, workers
Disadvantages of flow production
High initial costs and set-up time
Demotivated worker
Customers get very little choice
If something happens whole production is stopped
Process production
The act of changing a raw material into a finished product
Cell production
The whole production process is split amongst a team into small groups called cells
Advantages of cell production
Shorter lead times Higher productivity Decreased throughput Improved quality Increased output Less work in progress goos have to be stored Workers are much more motivated
Disadvantages of cell production
Low equipment utilisation
If equipment goes down, so does whole cell
Higher cost per unit
Any small change can have a large impact on the whole structure
Not suitable for all types of products
Factors that may cause a change in production method
Culture, nature of product, cost of machinery, workforce, finance, customers, competition, stakeholders / objectives, practicality of change
Productivity
Output per unit of input which can be applied to any factor of production
Factors of production
Land, labour, capital and enterprise
Division of labour
Occurs when labour is split into many different tasks
Productivity formulas
Number of goods produced divided by average number of employees
Output divided by number of employees and machines
Sales revenue divided by number or value of machines
Sales revenue divided by wage bill or number of employees
Economies of scale
A reduction in unit costs achieved as the scale of production increases
Diseconomies of scale
An increase in unit costs as a result of a decrease or increase in production
Internal growth
When a firm grows naturally over time simply done by increasing its size to satisfy an increase in demand
External growth
When a firm grows quickly by merging with, or taking over another business
Internal economies of scale
Achieved as a result of. Firm growing internally
External economies of scale
Achieved by a firm as a result of growth Edith in the industry in which it operates
Purchasing economies
Gained as a result of being able to purchase raw materials and other supplies in large quantities
Financial economies
Larger firms can negotiate cheaper loans, and are more likely to secure one in the first place because of less perceived risk and more assets to act as security
Managing economies
Larger firms can employ specialist managers to allow them to operate more effectively
Technical economies
As a firm grows, it can buy more effective equipment
Marketing economies
Larger firms can afford more effective marketing. Some advertising like television adverts are out of reach for small firms
Risk-bearing economies
Larger firms can spread risk by diversifying into different products
Agglomeration economies
The benefits from concentrating output and housing in a particular area
Capacity
The amount of products that a business can produce
Capacity utilisation
The percentage of total capacity that is being achieved in a given period
Capacity utilisation formula
Actual level of output divided by maximum possible output times 100
Capacity management
The process used to ensure the capacity is capable of meeting current and future needs in a cost effective fashion
Stock control
The process of ensuring that appropriate amounts of stock are maintained by a business, so that they can meet customer demand while keeping associated costs to a minimum
Minimum stock amount
The lowest amount of product that a business wants to hold
Maximum stock level
The highest amount of stock that a business wants to hold
Re-order level
The level at which a new order of stock will be placed
Lead time
The time between placing an order and receiving the stock
Buffer stock
The stock held incase of unexpected orders
Lean production
Focuses on cutting out waste whilst ensuring quality. This approach can be applied to all aspects of a business
Judoka
Method used to ensure quality, and to fix the problem for the future. Discover an abnormality Stop the process Fix the immediate problem Investigate and stop the root cause
Advantages of Jidoka
Bad practices aren’t spread within the business
Improved quality and less defective products
Automated equipment benefits from human judgement
Employees have responsibility - motivated
Disadvantages of Jidoka
Reliant on employees noticing the issue
Downtime to check machines stops the whole production
May take a while to find the root cause
Kaizen
A continuous improvement approach of introducing incremental changes to improve the production process
Advantages of Kaizen
Improve team work
Builds leadership skills
Better safety practices
Disadvantages of Kaizen
People can be resistant to change
Had to go back to old management
Friction may occur
Kanban
A system for managing work as it moves through a process. It visualises the process and the actual work. Aims to identify potential bottlenecks
Just In Time
Materials are delivered immediately as they are needed to minimise inventor stock
Advantages of JIT
Less space required to hold stock
Good for smaller businesses
Prevents over production
Disadvantages of JIT
Risk of running out
More planning is needed
Lack of control when Ealing with suppliers
Advantages of Cell Production
Workers are committed and motivated
Better for the environment
Worker ]s became multi skilled and adaptable
Disadvantages of Cell Production
Needs responsible and skilled workers
High set up costs
Whole production stops if maintenance is needed
Tune Based Management
Seeks to reduce the amount of wasted time in the production process
Advantages of Time based management
More productivity
Less friction
Less time wasted
Disadvantages of Time based management
Non-clear objectives
Mismanagement
Demotivating
Location
Where the business is located
Location supply factors
Labour costs, land costs, energy costs, transport costs, community factors, Language, political stability
Location demand factors
Customer convenience, labour skills, site suitability, image, expansion potential, infrastructure
Supply chain management
The integration of the procurement of supplies, production, warehousing and transportation
Reshoring
Bringing a business operation back from oversees
Offshoring
The practice of locating some of a company’s processes oversees of take advantage of lower costs
Subcontracting
Part of production is undertaken by another firm
Warehouse management
The control of the day to day operations of a warehouse, such as shipping, receiving, put-away and picking of goods
Distribution management
The process of overseeing the movement of goods from supplier or manufacturing to point of sale. Processes such as packaging , inventory, warehousing and logistics.
Quality assurance
The processes that ensure production quality meets the requirements of customers
Quality control
The process of inspecting products to ensure they meet the required quality standards.
Benchmarking
A general approach to business improvement based on the best practice in the industry
Service businesses
A business that provides intangible products
TQM
Total quality management
Quality circles
A voluntary scheme where workers meet during the day to consider problems affecting their work and quality
Gantt chart
A graphical representation of the order and duration of tasks
