OPERATIONS: Strategies

Question 1

What are the forms of outsourcing?

Answer 1

Captive or in house (do-it-yourself).
Non-captive (third parties).
Onshore vs offshore.

Question 2

What are the advantages of outsourcing?

Answer 2

Simplification - reducing the number of activities performed within the business.
Efficiency and cost savings - access to cheaper labour.
Access to skills/resources lacking within the business.
Improvements to in-house performance.

Question 3

What is the difference between leading edge and established technology?

Answer 3

Leading edge - most advanced or innovative at a point in time.
Established - technology that has been developed and is widely used/accepted like barcoding + POS.

Question 4

Performance objectives: quality.

Answer 4

Quality of design.
Quality of conformance - how well the product meets the standard of certain specifications.
Quality of service.

Question 5

Performance objectives: speed.

Answer 5

The time it takes for the production processes to respond to changes in demand.
Objectives include: reduced waiting time, shorter lead times, faster processing times.

Question 6

Performance objectives: dependability.

Answer 6

How consistent and reliable a business’s products are - can be measured through the number of warranty claims.

Question 7

Performance objectives: flexibility.

Answer 7

How quickly operations processes can adjust to changes in the market.

Question 8

Service design and development.

Answer 8

Explicit: the application of time, expertise, skill and effort.
Implicit: the feeling of being looked after.

Question 9

What is logistics?

Answer 9

Managing the movement + storage of the materials involved in the production process.

Question 10

What is included in logistics?

Answer 10

Distribution.
Packaging.
Warehousing, Storage & Distribution Centres.

Question 11

E-commerce: B2B.

Answer 11

(Business to business) allows business to source directly from other businesses - common in manufacturing.

Question 12

What factors must business consider for sourcing globally?

Answer 12

Consumer demand.
Quality of inputs desired.
Flexibility.
Cost of supplier.

Question 13

What are the challenges of global sourcing?

Answer 13

Increased cost of logistics
Managing different regulatory conditions between nations.

Question 14

What are the advantages of holding stock?

Answer 14

Consumer demand can be met when stock is available - prevent them from buying from a competitor.
Older stock can be sold at reduced prices - encourage cash flow.

Question 15

What are the disadvantages of holding stock?

Answer 15

Costs including storage charges, insurance, handling expenses etc.

Question 16

LIFO.

Answer 16

The most recent stock is sold first.
Used for products that can be stored for longer periods of time such as clothing.

Question 17

What are the impacts of using LIFO inventory system?

Answer 17

Profit likely to be lower - minimise tax burden.

Question 18

FIFO.

Answer 18

First items to come are the first ones sold.
Used for perishable goods such food.

Question 19

What are the impacts of using FIFO inventory system?

Answer 19

Profit is likely to be higher increasing tax burden.

Question 20

JIT.

Answer 20

Aims to hold as little stock as possible + order new supplies as they are needed.

Question 21

What are the impacts of using JIT system?

Answer 21

Saves money as there are no expensive holding and insurance costs.

Question 22

What is quality management?

Answer 22

The processes to ensure consistency, reliability, safety and fitness of purpose of product.

Question 23

What is quality control?

Answer 23

Checking transformed + transforming resources at various stages of the production process.
Pre-determined quality targets would be set.

Question 24

What is quality assurance?

Answer 24

Establishing procedures + standards that will limit the product defects from occurring - a proactive approach.
Business emphasises quality in the design.

Question 25

Quality assurance: ISO.

Answer 25

International Organization for Standardization - are voluntary but many businesses comply with their requirements to enhance their competitiveness.

Question 26

What is quality improvement?

Answer 26

Focus on continuous improvement - over time processes will be made more efficient and effective.

Question 27

Overcoming resistance to change: inertia.

Answer 27

A psychological resistance to change - feeling of uncertainty/fear of the unknown.

Question 28

What are some financial resistances to change in business?

Answer 28

Purchasing new equipment.
Retraining.
Reorganising plant layout.

Question 29

What is global sourcing?

Answer 29

Business taking advantage of global markets to gain access to labour, capital and inputs from around the world.

Question 30

What are economies of scale?

Answer 30

Where production costs are reduced by increasing the size of the operations.
The average cost per unit will fall by: using facilities at full capacity, ensuring staff are continually productive, getting discounts for large orders of materials.

Question 31

What is scanning and learning?

Answer 31

Scanning the global environment + learning from the best practice of businesses around the globe.
‘Kaizen’ emphasises continuous improvement in all areas of a business, from the way the CEO downwards.

Question 32

What are the advantages of R&D?

Answer 32

Extend product lifecycle.
Open new markets.
Give the business a reputation of innovation.

Question 33

What are the disadvantages of R&D?

Answer 33

Can be costly.
Many projects may not be able to market.