Operations Strategy Flashcards
what are the main strategic operations decisions
TO MEL
- tech - AI and IT
- outsourcing
- methods of production (e.g. lean, capital intensive)
- expanding or downsizing
- location - offshoring, reshoring and relocating
key eval point when considering an expansion of capacity
IS THERE GOING TO BE ENOUGH DEMAND IN THE LONG TERM?
is the rise in demand temporary or likely to be sustained? If the latter, then business will not recover the huge capital costs and is likely to make a loss
pros of CAD
- lower development costs - fewer physical prototypes
- faster, more efficient design - can reduce time to market, first mover competitive edge can increase market share
- software suggests optimal design/measures- higher product quality -
cons of CAD
- costs of software
- requires highly skilled employees or huge training costs
pros of CAM
- more precise and consistent quality than human labour- customersatisfaction for meeting expectations thus increases repeat custom and loyalty+trust
- more reliable than labour - no motivation issues, absenteeism, strikes
- higher productivity - more work per unit time
- with CAD, more flexible product design allows for mass customisation
cons of CAM
- costs
- hardware breakdown will halt production
- program errors still possible
1 - tech is rapidly becoming cheaper with advancements
3 - QA needed, cannot take quality for granted just because it is automated
CAD VS CAM
CAD - computer software to design 2D/3D models of physical objects
CAM - using computer software to automate equipment in the manufacturing process
operational flexibility
ability to vary both the level of production and the type of goods being produced in response to changing customer demand and needs, including supply chain flexibility like delivery times
ways to improve operational flexibility
- Increase capacity
- Outsource some production (faster compared to capacity changes)
- Just in Case
- multiskilled labour force
- flexible machinery allowing mass customisation
- Process innovation - e.g. internet tracking of exact location of parcels being delivered to improve the speed of delivery
enterprise resource planning
use of a single computer application to plan the purchase and use of resources more efficiently, coordinating all business functions to complete customer orders
ERP and marketing
- NPD prototypes and testing
- producing products for which sales have increased rapidly
- logistics to get products to required distribution channels
finance and ERP
- budgets
- payroll for operations staff
- funding new equipment
- invoicing customers
- sales forecasts to inform production
HR and ERP
- workforce planning depending on sales forecasts
operations and ERP
- record orders
- automatically purchase inputs when needed
- manage inventories - e.g. automatic re-order
pros of ERP
- produce according to demand - sustainability
- support JIT- order inputs exactly when order is placed - cost benefits of JIT
- accurate costing and pricing as direct costs allocated accurately - pricing; cost management (e.g. find cheaper substitutes)
- improved delivery times/predictions - customer service
- quicker response to changing demand - easily re-allocate resources like labourso competitive edge that increases sales and market share
- improve coordination between deparments - fewer mistakes and waste
cons of ERP
- cost of program and training
- may cause resentment as it forces employees to change the way they work- resistance to change
- time to implement ERP system fully to link to supply chains of customers and suppliers - risk of software going redundant by then
1- costs of software falling with tech advancements
lean production
minimising waste in production while maintaining high quality
main sources of waste
- Waiting times (for inputs, processes, etc)
- Excessive inventory and overproduction
- - Defects
- Overprocessing - overcomplicating the design of goods
- Unnecessary movement of employees
- Underutilised talent - Excessive transportation
approaches to lean production
Kathy Saw Queen Chris Take Wallet
Kaizen
Simultaneous engineering
Quality circles
Cell production
just in (T)ime
Waste management
Kaizen
culture of continuous improvement where all employees are encouraged to make gradual and incremental process improvements that will result in big efficiency gains
inclusiveness is key as workers in day-to-day production likely to better understand areas of improvement than managers without hands-on experience
conditions for Kaizen
- inclusive management culture that involves employees
- teamworking to generate better ideas
- must all be committed to the idea and motivated well
- Theory Y - empower workers to implement decisions, which enriches jobs (Herzberg) and motivates them to continue innovating
MUST link to job enrichment and Herzberg in analysis
pros of kaizen
- job enrichment (Herzberg) - everyone’s work is important, they all have responsibility for generating improvements
- encourages innovation - better efficiency gains
limitations of Kaizen
- some efficiency improvements cannot be incremental, must be radical like AI production system
- will be resisted by Theory X/autocratic managers who may not sufficiently empower employees
- costs of training including lost output in the ST
- diminishing returns - most significant improvements tend to occur early on, less so afterwards
quality circles
small worker groups discuss quality issues and find solutions to them