Operations Notes Flashcards
Define operations
Operations is the business processes that involve transformation or, more generally, ‘production’
Define transformation
Transformation is the conversion of inputs into outputs
Define value adding
Value Adding is the creation of extra or added value as inputs are transformed into outputs
Given that inputs are the resources used in the transformation (production) process, provide examples of inputs
Inputs can be goods or services tangible or intangible
Broad groups of inputs:
Labour;
Energy;
Raw materials;
Machinery and technology
Define Lean Production
Lean Production is the aim to eliminate waste at every stage of production, involving analysing each stage of the production process, detecting where inefficiencies are, and correcting them
Recall the informal term for lean production
The informal term for lean production is minimising waste
Identify the features of lean production
Features:
- Reflect fair value for any labour used in processes
- Operate at low cost so as to maximise affordability
- Operations processes adjust to shifting needs
Define strategic
Strategic refers to long-term, broad aims affecting all key business areas; that is, the strategic role of each key business function involves the managers of each function contributing to the strategic direction or strategic plan of the business
3 - 5 years
Define profit centres
Profit Centres are those aspects of a business that directly derive revenue and profits
Define cost centres
Cost Centres are particular areas, departments or sections of a business to which costs can be directly attributed
Define cost leadership
Cost Leadership involves aiming to have the lowest costs or to be the most price-competitive in the market
Define economies of scale
Economies of scale are cost advantages that can be created as a result of an increase in scale of business operations
Identify the relationship between cost and quality
As the cost spent increases or decreases, the quality also tends to
Cutting costs compromises quality but high quality products are costly
Define good/service differentiation
Good/ Service Differentiation is when products (goods or services) are distinguished in some way from those of competitors
Recall the characteristics that distinguishes goods and services
The characteristics are:
- Tangibility and Perishability
- Customisation
- Ownership
- Time between production and consumption
- Determination of Value
Define standardisation
Standardisation refers to the making of products that are homogeneous or identical
Recall how goods are differentiated
Variation in:
- Features
- Product Quality
- Augmented Features
Recall how services are differentiated
Variation in:
- Time spent on a service
- Level of expertise
- Providing self-service options
- Flexibility
- No ‘fuss’
- Qualifications and experience
- Quality of materials/ technology
Define globalisation
Globalisation refers to the removal of barriers of trade between nations. Globalisation is characterised by an increasing integration between national economies and a high degree of transfer of capital (facilities and/or machinery), labour, intellectual capital and ideas, financial resources and technology
Define fixed costs
Fixed Costs are ones that are not dependent on the level of operating activity in a business. Fixed costs do not change when the level of activity changes — they must be paid regardless of what happens in the business
Define variable costs
Variable Costs are ones that vary in direct relationship to the levels of operating activity or production in a business. Such costs include labour costs and costs of energy
Define instant asset write-off
Instant Asset Write-off is a policy that allows businesses to claim a tax deduction for the cost of an asset, such as technological equipment
Define compliance costs
Compliance Costs are the expenses associated with meeting the requirements of legal regulations, i.e. abiding by all laws
Define environmental sustainability
Environmental Sustainability (ecological sustainability) shapes business operations around practices that consume resources today without compromising access to those resources for future generations
Define precaution principle
Precautionary Principle requires that, where environmental impacts are uncertain, a business undertakes actions that are most likely to cause the least environmental impact
Define triple bottom line
Triple Bottom Line refers to the financial profitability, social impact and the environmental impact of a business
Define sustainability report
A sustainability report provides a comprehensive account of a business’ commitment to areas of ethical decision making, beyond legal requirements
Define fiduciary
Fiduciary is a person in a position of financial trust with respect to others’ money
Recall the types of outsourcing
The type of outsourcing includes:
- Onshore outsourcing
- Offshore outsourcing
Define capital-labour substitution
Capital-labour substitution is when machinery and technology displace people by doing the work they do, thus making labour redundant
Define intermediate goods
Intermediate Goods are manufactured and used in further manufacturing or processing
Define key performance indicators
Key Performance Indicators is a quantifiable measure used to evaluate the success of an organisation, employee, etc. in meeting objectives for performance
Define customer relationship management
Customer Relationship Management (CRM) are the systems that businesses use to maintain customer contact
Define lead time
Lead Time is the time it takes for an order to be filled from the moment it is made
Define volume flexibility
Volume Flexibility refers to how quickly the transformation process can adjust to increases or decreases in demand
Define mix flexibility
Mix Flexibility is the costs a business incurs when implementing changes within its product range
Define Gantt Charts
Gantt Chart is a type of bar chart that shows both the scheduled and completed work over a period of time. It is often used in planning and tracking a project
Define critical path analysis
Critical Path Analysis (CPA) is a scheduling method or technique that shows what tasks need to be done, how long they take and what order is necessary to complete those tasks
Define monitoring
Monitoring is the process of measuring actual performance against planned performance
Define control
Control occurs when KPIs are assessed against predetermined targets and corrective action is taken if required
Recall the statistic over customer dissatisfaction
1 dissatisfied customer tells 11 others, who, in turn, tell another 5 people
Define warranty
Warranty is a promise made by a business that they will correct any defect in the goods that they produce or in the services that they deliver
Define performance objectives
Performance Objectives are goals related to particular aspects of the transformation process
Define quality of design
Quality of Design is the effectiveness of the business in designing a product that meets the preferences of consumers
Define quality of conformance
Quality of Conformance is the focus on how well the product meets the standard of a prescribed design with certain specifications
Define mass customisation
Mass Customisation is a process that allows a standard, mass-produced item to be personally modified to specific customer requirements
Outline the 2 approaches towards product development and design
There are 2 approaches towards the design and development of new products:
1. The preferences and desires of consumers, as identified by market research, determine which product are designed and developed
2. Changes and innovations in technology that enable new, appealing products to be made, because they use advanced technologies, which give products greater functionality
Define supply chain management
Supply Chain Management (SCM) involves integrating and managing the flow of supplies throughout the inputs, transformation processes (throughput and value adding) and outputs in order to best meet the needs of customers
Define capacity management
Capacity management – any new product will have an impact on capacity and may increase the use of range of present resources, or require an investment in new capital equipment
Define product utility
Product Utility is the usefulness and value that a product has from the consumer’s point of view
Define explicit service
Explicit Service is the tangible aspect of the service being provided, such as the application of time, expertise, skill and effort
Define implicit service
Implicit Service is based on a feeling and is therefore intangible. The implicit aspects of a service are the psychological wellbeing — the feeling of being looked after — that comes with the provision of the service
Define implicit satisfaction
Implicit Satisfaction can be provided through the embedding of level of skill, time, and expertise so the consumer knows they have been specifically catered for
Define top-down approach (supply chain)
Top-down Approach is an approach to supply chain management that traces the processes of the supply chain from the final product to the inputs
Define bottom-up approach (supply chain)
Bottom-up Approach is an approach to supply chain management that traces the processes of the supply chain from the inputs to the final product
Define logistics
Logistics broadly refers to distribution but encompasses transportation (including transportation modes), the use of storage, warehousing and distribution centres, materials handling and packaging
Recall how warehouses and distribution centres differ
Distribution centres differ in that they were not designed to store items for the long-term
Define e-commerce
E-commerce is the buying and selling of goods and services via the internet
Define e-procurement
E-procurement is the use of online systems to manage supply, which allows suppliers direct access to the business’s level of supplies
Define B2B
B2B is direct access from one business (the supplier) to another (the buyer), allowing the supplier to assess the needs of the buyer and meet them in a timely manner
Define B2C
B2C is the selling of goods and services to consumers over the internet, with payment usually by credit card
Define global sourcing
Global Sourcing refers to businesses purchasing supplies or services without being constrained by location. In the supply chain management activity, global sourcing means buying or sourcing from wherever the suppliers are that best meet the sourcing requirements.
Define Business Process Outsourcing (BPO)
Business Process Outsourcing is outsourcing that involves the use of external providers to perform business activities
Recall the elements of the business that can be outsourced
Business Process Outsourcing (BPO)
Finance and Accounting outsourcing (FAO)
Knowledge Process outsourcing (KPO)
Legal Process outsourcing (LPO)
Outline the advantages and disadvantages of globalisation
Advantages
- Larger market
- Outsourcing can be cheaper
- Provides greater access to materials
Disadvantages
- Creates disparity of wealth between nations
- Minimally benefits developed countries
- Exploition of physical & intellectual resources
Define cost-based competition
Cost-based Competition is derived from determining the breakeven point (the level at which the firm’s total revenue is exactly equal to its total costs) and applying strategies to create cost advantages over competitors
Recall statistics in relation to environmental sustainability
- 80% of consumers indicate sustainability is important to them
- 71% of employees and employment seekers say that environmentally sustainable companies are more attractive employers
- Investment in environmental, social and governance ESG (environmental, social, and governance) assets may reach $53 trillion by 2025, representing over a third of global assets
Recall the types of quality management
The 3 types of quality management are
- Quality control
- Quality assurance
- Quality Improvement
Recall how the operations can be improved
The operations of a business can be improved through:
- Quality
- Cost
- Time
- Process flows
- Efficiency
Recall the statistics related to customer service
Businesses that provide superior customer service:
- Charge an average of 10% more for the same products
- Grow twice as fast as their competitors
Define leading edge technology
Leading-edge Technology is the technology that is the most advanced or innovative at any point in time
Define established technology
Established Technology is technology that has been developed and is widely used and simply accepted without question
Identify the advantages of leading edge technology
Leading edge technology:
- Create more products quickly and to higher standards
- Reduce waste
- Operate more effectively
Recall the types of inventory valuation techniques
The types of inventory evaluation techniques are:
- LIFO
- FIFO
Define LIFO
LIFO (last-in-first-out) is a method of pricing inventory that assumes that the last goods purchased are also the first goods sold and therefore the cost of each unit sold is the last cost recorded
Define FIFO
FIFO (first-in-first-out) is a method of pricing inventory that assumes that the first goods purchased are also the first goods sold and therefore the cost of each unit sold is the first cost recorded
Assuming for inflation and other rising costs, describe the effect of the inventory valuation techniques on the books
LIFO: (assuming for inflation and other rising costs)
Overstate stock cost and understate gross profit
Undervalue stocks on hand at the end of the period
FIFO: (assuming for inflation and other rising costs)
Understate stock costs and overstate profits
Overvalue stocks on hand at the end of the period
Define JIT
Just-in-time (JIT) is an inventory management approach which ensures that the exact amount of material inputs will arrive only as they are needed in the operation process
Define JIC
JIC (Just-in-Case) is a stock control method that involves producing or purchasing stock with excess, or buffer stock in place. This means that there is always stock available for the business if required
Define quality management
Quality Management are those processes that a business undertakes to ensure consistency, reliability, safety and fitness of purpose of product
Define quality control
Quality Control (QC) involves the use of inspections at various points in the production process to check for problems and defects
Recall whether quality control is reactive or proactive
Quality control is reactive
Define attribute inspection
Attribute Inspection is when the goods or services are inspected and can be designated as ‘okay’ or ‘defective’
Define quality improvement
Quality Improvement (QI) emphasises continuous improvement and total quality management
Define continuous improvement
Continuous Improvement is an ongoing commitment to improving a business’s goods or services
Define total quality management
Total Quality Mangement focuses on managing the business to deliver quality to customers in all aspects
Define telecommute
Telecommute is to ‘commute’, or travel to work, electronically. This means that home or another location becomes the worksite and work is delivered via email or the internet
Define robotics
Robotics is used in engineering and specialised areas of research, as well as on assembly lines where a programmable machine capable of doing several different tasks is required
Recall the benefits of robotics
Benefits of Robots:
- Efficent
- Minimise waste
- Degree of precision and accuracy unattainable by human labour
Define Computer-Aided Design
Computer-Aided Design (CAD) is a computerised design tool that allows businesses to create product possibilities from a series of input parameters
Define Computer-Aided Manufacturing
Computer-Aided Manufacturing (CAM) is software that controls manufacturing processes
Define task design
Task Design involves classifying job activities in ways that make it easy for an employee to successfully perform and complete the task
Define skills audit
Skills Audit is a 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
Define process layout
Process Layout is the arrangement of machines so that the machines and equipment are grouped together by the function (or process) they perform
Define process production
Process Production deals with high-variety, low-volume production; a feature of this approach is the creation of work cells or work teams
Define product production
Product Production (mass production) is production that is characterised by the manufacturing of a high volume of constant quality goods
Define product layout
Product Layout is a layout in which the equipment arrangement relates to the sequence of tasks performed in manufacturing a product; e.g. assembly line
Define project production
Project Production deals with layout requirements for largescale, bulky activities such as the construction of bridges, ships, aircraft or buildings
Define fixed position layout
Fixed Position Layout is an operational arrangement in which employees and equipment come to the product
Define transformed resource
Transformed Resources are ones that are changed or converted in the operations process; they are transformed by the operations processes
Define transforming resource
Transforming Resources are ones that carry out the transformation process and enables the change and value adding to occur
Define Cross Branding
Cross Branding is when products are differentiated, but the differentiation is not from the product itself but rather from an external factor that the business has brought into the mix
Recall what cross branding is also known as
Strategic alliance
Define specialisation
Specialisation is a method of production where a business focuses on the production of a limited scope of products or services to gain greater degrees of productive efficiency within an overall system
Define Six Sigma
Six Sigma is a quality management approach that seeks to identify and remove the causes of problems in the operations processes, achieving virtually defect-free production
Recall features of environmental sustainability
Aspects of Environmental Sustainability:
- Sustainable use of renewable resources
- A reduction in the use of non-renewable assets
- Application of the precautionary principle
Recall factors for Variety
Factors to account for in regard to variety:
- Specialised machinery
- Differently trained employees
- Altered contracts with suppliers
Define volume
Volume is how much of a product is made
Recall what visibility encompasses
Visibility encompasses customer feedback
Recall the benefits of Gantt charts
Benefits of Gantt charts:
- Forces the planning of the steps needed to complete a task and to specify the time required for each task
- Can easily monitor progress against the planned activities
Differ between critical tasks and non-critical tasks
Critical tasks are on the critical path, non-critical tasks are not
Recall the benefits of critical path analysis
Benefits of Critical Path Analysis
- Identifies what needs to be done and duration of the task
- Provides a direction and organisation
- Better coordination of the operations
- Visually display bottlenecks
Recall all aspects of quality as a performance objective
- Quality of Design
- Quality of Conformance
- Quality of Service
Recall the advantages and disadvantages of global sourcing
Advantages:
- Cost
- Expertise
- Access to new technology and resources
Disadvantages:
- Possible relocation of aspects of the operations process
- Increased cost of logistics, storage and distribution
- Managing different regulatory conditions between nations
- Complexity of overall operations when sourcing from diverse locations
Recall factors that impact the choice of supplier
Factors:
- Consumer demand
- Quality of inputs required
- Flexibility and timeliness of supply
- Cost of supply
Recall how a business can reduce costs
- Economies of Scale
- Bulk buy inputs
- Eliminate waste
- Standardise products
- High volume output
- Automated production systems
