Operations - Operations strategies Flashcards
1
Q
Define performance objectives in operation strategies and identify the 6 main performance objectives.
A
Performance objectives are goals that relate to particular aspects of the transformation processes, expressed as KPIs (key performance indicators)
- quality
- dependability
- flexibility
- customisation
- speed
- cost
2
Q
Describe quality as a performance objective
A
Quality is often determined by customer expectations.
- quality of design: how well a product is made/ service is delivered. Normally high in price for high quality design.
- quality of conformance: how well a good meets the desired specifications of the design
- quality of service: how well the service meets the needs of clients - design as service meeting customer needs, conformance as consistent service
3
Q
Describe speed as a performance objective
A
- refers to the time it takes for the production processes to respond to changes in demand
- objectives to improve speed include reduced waiting time, shorter lead time, faster processing
4
Q
Describe dependability as a performance objective
A
- refers to how consistent and reliable a business’s products are
- for products –> durability
- for services –> consistency of delivery and service standards
5
Q
Describe flexibility as a performance objective
A
- refers to the ability of operations processes to adjust to changes in the market
- for goods –> improving machinery, new technology, changing product design
- for services –> increasing the number of service providers, skill level, technology used
6
Q
Describe customisation as a performance objective and outline mass customisation
A
- refers to the creation of individualised products to meet specific needs of customers
- mass customisation: a process that creates a standard, mass-produced item to be personally modified for specific requirements
7
Q
Describe cost as a performance objective
A
- refers to the minimisation of expenses such that operations processes are conducted as cheap as possible
- done through economies of scale, bulk buy, automated production systems etc.
8
Q
What are the two main approaches for designing and developing a new product?
A
- consumer preference: determined by the preferences of consumers as identified by market research
- technology: determined by changes and innovation in technology, innovations allow for greater functionality
9
Q
Outline important aspects to consider in product design.
A
- quality: consumers demand particular quality, features
- supply chain management: a new product may extend the range of supplies
sought, timing or volume of supplies - capacity management: any new product will impact capacity and may increase the use or range of present
resources - cost: arises from the addition of value through processing, the amount of inputs, time and energy
10
Q
Outline the steps involved in product design and development.
A
- market research, product concept and specification development
- product design and prototype, with quality parameters decided
- prototype testing and assessment
- product and production process refinement
- production, product launch, distribution
11
Q
Outline factors in service design and development to be considered
A
- explicit service: tangible service aspect provided; (application of time, skill, expertise, effort)
- implicit service: intangible aspects of the service offered
- provision of goods: goods required in the delivery of the service
12
Q
Describe supply chain management in operations strategies and identify its three key apsects
A
- involves integrating and managing the flow of supplies throughout the ITO process in order to best meet the needs of customers
- involves logistics, e-commerce and global sourcing
13
Q
Define logistics and identify three aspects
A
- the method of distribution to deliver goods and services to customers
- transportation
- storage, warehousing and distribution centres
- materials handling and packaging
14
Q
Outline transportation in logistics
A
- transportation is concerned with the physical movement of inventories
- the type of good and cost of transportation determines the mode of transport selected
- e.g. bicycle, truck, train, ship, plane
15
Q
Outline storage in logistics
A
- storage involves finding a secure place to hold stock until it is required
- warehousing: the use of a facility for long term storage, protection and distribution of stock
- distribution centres: short term storage located to minimise lead times and efficiently distribute to retailers
16
Q
Outline materials handling and packaging in logistics
A
- the government has regulations that require
dangerous goods be stored and handled in particular ways, and it also requires
packaging to be of a particular standard and to carry warnings. - certain goods will require particular handling and packaging, skills, care or attention
17
Q
Outline outsourcing in operations strategies
A
- involves the use of external providers to perform business activities, can be onshore or offshore
- e.g. in manufacturing, design, merchandising, sourcing, distribution and logistics
18
Q
List the advantages of outsourcing as an operations strategy
A
-increased efficiency and cost savings, increased process capability
- access to skills/ resources lacking within the business
- capacity to focus on core business activities, reduced activities
- access to high skilled labour at lower costs
19
Q
List the disadvantages of outsourcing as an operations strategy
A
- communication and language barriers
- loss of control of standards, quality and information security
- dependent on supplier’s timings
- organisational change and redesign
- loss of corporate memory and vulnerability
20
Q
Outline technology in operations strategies and identify its two classifications
A
All machinery & systems that enable businesses to perform their processes. It can significantly improve operations processes.
- leading edge
- established
21
Q
Outline leading edge technology and provide examples
A
- technology that is the most advanced or innovative at a point in time
- drone based delivery systems
- AI in robotics
- augmented and virtual reality
- holographic projection
22
Q
Outline established technology and provide examples
A
- technology that has already been developed and is widely used and accepted
- computer aided design (CAD)
- bar codes and QR codes
- automated quality control processes
- robotics
23
Q
Outline inventory management in operations strategies
A
- inventory refers to the quantity of raw materials, work in progress and finished goods that a business has on hand at any particular point
24
Q
List advantages of holding stock in inventory management
A
- able to quickly respond to changes in consumer demand
- reduced lead times
- can move to distribution centres
- lower prices of old stock to increase cash flow
- make goods in bulk for economies of scale
- can generate immediate revenue
25
List disadvantages of holding stock in inventory management
- storage costs
- spoilage costs
- insurance costs
- theft costs
- handling costs
- obsolescence costs
26
Describe what first in first out (FIFO) is as a main inventory valuation technique
FIFO is a method of pricing inventory that assumes the first goods purchased, are also the first goods sold. This means the cost of each unit sold is the first cost recorded.
- gross profit = sales revenue of the first batch - COGS of first batch
- COGS = beginning inventory + purchases - ending inventory
27
Describe what last in first out (LIFO) is as a main inventory valuation technique
LIFO is a method of pricing inventory that assumes the last goods purchased, are also the first goods sold. This means the cost of each unit sold is the last cost recorded.
- gross profit = sales revenue of the last batch - COGS of last batch
- COGS = beginning inventory + purchases - ending inventory
28
Compare FIFO and LIFO as inventory valuation methods
FIFO:
- in times of inflation, COGS is lower, profits are higher leading to higher taxation (opposite happens with falling prices)
- inventory on balance sheet may be closer to its current market value
- inventory costs are not an accurate reflection of current business costs
LIFO:
- opposite to FIFO
29
Describe just in time (JIT) as an inventory management approach
- ensures that the exact amount of material inputs will arrive only as they are needed in the operations processes
- JIT requires a responsive operations function with flexible processing, an ability to respond quickly to changes in market demand and reliable suppliers
- they make just enough products to meet demand
30
Outline quality management in operations strategies and identify three quality management approaches
Quality management refers to the process that a business undertakes to ensure consistency, reliability, safety and fitness of purpose of their product.
- quality control
- quality assurance
- quality improvements
31
Describe quality control as a quality management approach
- involves the use of inspections at various points in the production process to check for problems and defects
- sampling or batch testing is used to test for defective products
- it is a reactive approach
- attribute inspection: an inspection to determine whether an aspect of a product is conforming or not to a set benchmark
32
Outline the advantages and disadvantages of quality control
Advantages:
- cost effective for large productions
- lower training costs
- acceptance of defects means less money trying to eradicate them
Disadvantages:
- resources are wasted when batches are discarded
- if defective goods are sold, the business may face returns/ repairs, customer complaints, damaged reputation
33
Describe quality assurance as a quality management approach
- involves the use of a system to ensure that set standards are achieved in production. Businesses emphasise quality in the design of the product and provides a level of assurance to customers
- it is a proactive approach, no defects sold
34
Outline the advantages and disadvantages of quality assuarance
Advantages:
- fewer resources wasted on producing defective goods
- fewer costs for inspections
- no resources wasted on discarding
- high quality reputation, good business image
Disadvantages:
- needs extra training
- requires a motivated workforce focused on improving quality
35
Outline quality improvement and identify its two key aspects
Quality improvement emphasises to always strive to increase quality and reduce defect rates
- continuous improvement
- total quality management
36
Describe continuous improvement as an aspect of quality improvement
- ongoing commitment to improving a business's goods or services
- involves increasing quality targets over time such that processes can be made more efficient and effective
- e.g. six sigma is an approach that seeks to identify and remove the causes of problems in the operations processes, achieving virtually defect-free production
37
Describe total quality management as an aspect of quality improvement
- an ongoing, business-wide commitment to excellence that is applied to every aspect of the business's operation
- the approach aims to create a defect free production process
- requires benchmarking, employee empowerment, a focus on the customer and continuous improvement
- quality circles: teams of employees that regularly meet to solve quality problems to achieve TQM
38
Outline overcoming resistance to change in operations strategies and identify two key sources of resistance to change
- change can often be resisted as it causes uncertainty, stress and risk
- there are financial and psychological/ emotional reasons for resistance to change
39
Identify the financial sources of resistance to change
- purchasing new equipment: can be expensive, improves speed and quality
- retraining employees: changes in job roles
- redundancy payments: expensive and is dependent on employee
- reorganising plant layout: may involve new equipment or production processes
40
Identify the psychological/ emotional sources of resistance to change
- inertia: psychological resistance to change, some managers and employees resist change due to fear of the unknown
41
Describe strategies to overcome resistance to change
- creating a culture of change: fostering a supportive environment
- positive leadership: reduces fear of change
- change agents: identify influential individuals to act as catalysts to manage change process
- effective communication: assist in the transfer of information about change
42
Identify the four global factors that present opportunities as strategies for managing operations
- global sourcing
- economies of scale
- scanning and learning
- research and development
43
Outline global sourcing as a global factor
- resources are purchased from outside the domestic economy, without
location constraints.
- this may be due to the fact that they are unavailable in the domestic economy, or
purchasing overseas will allow the business to better meet their performance objectives (cost, quality, speed etc.)
44
Outline economies of scale as a global factor
- refers to the cost advantages that can be gained by increasing size or scale of production, lowering input costs per unit
- it becomes a global factor when a business expands into the global market, sourcing globally and exporting to other countries
45
Outline scanning and learning as a global factor
- scanning and learning the global environment is a valuable operations strategy as it can allow business to adopt the best practices of other businesses around the world
- the diversity of experiences help businesses develop flexibility and insight vital to continuous improvement
46
Outline research and development as a global factor
- helps businesses create leading edge technologies and can make significant contributions to innovation, quality of products and competitive advantage of a business
- governments can encourage R&D through taxation incentives and grants
- work directed towards the innovation, introduction &
improvement of products and processes
