Operations Strategies Flashcards
Capital intensity
The extent to which production or operations depend on investment in and use of capital – i.e. machinery, IT systems, buildings etc
Critical path analysis
Project management tool that uses network analysis to help manage complex and time-sensitive operations
Diseconomies of scale
Factors which result in higher unit costs as production output reaches too high a level
Economies of scale
Cost advantages that a business can exploit as a result of expanding its scale of production. Economies of scale reduce the average (unit) cost of production
Efficiency
A measure of the ability of a business to achieve the required level of production whilst minimising the use of resources
Industrial inertia
Where a business decides to stay in its existing location despite potentially better locations being available to it
Innovation
Putting an new idea or approach into action – the commercial exploitation of ideas
Just-in-time
Method of lean production where production resources arrive at the moment they are required rather than being held in stock
Kaizen
A cultural approach to lean production and quality assurance. Involves encouraging employees to constantly seek and implement small incremental changes to production in order to improve quality and efficiency
Labour intensity
The extent to which production or operations depend on investment in and use of labour – i.e. people, training
Labour productivity
The level of output per unit of labour
Lead-time
The period of time between an order being placed and being received
Lean production
An approach to management that focuses on cutting out waste whilst still ensuring quality.
Marketing economies
Where marketing costs per unit sold can be lowered by spreading marketing costs over larger output
Minimum efficient scale
The minimum output a business needs to achieve in order for its to be able to minimise unit costs
Multinational
A business which owns operations in more than one country
Network analysis
Breaking a project down into separate activities and their requirements
Offshoring
Where a business has work done for it overseas
Outsourcing
Where a business has work done for it by someone else
Productivity
Measures of how effective a business is in turning resources (e.g. labour hours) into output
Purchasing economies
Cost savings that arise from buying in bulk or from a more powerful relationship with a supplier due to increased output
Quota
A restriction on the volume or quantity of a good that can enter or be sold in a market (form of trade barrier)
Scale
The size or output of a business, best measured relative to that of direct competitors
Subcontracting
Part of outsourcing – where another business is used to provide part of the production process
Tariff
A tax levied on imports to increase their price compared with domestic goods (form of trade barrier)
Technical economies
Reductions in unit costs arising from the effective use of technology
Unit costs
The key measure of productive efficiency – calculated as total costs divided by total output (over a specific period)
