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Higher Business Management > Opperations > Flashcards

Opperations Flashcards

1
Q

what are the three stages of the operating system

A

input: buying raw materials and hiring labour
process: using resources to produce products for sale, including machinery and a skilled workforce
output: goods and services are packaged and sent to customer (channel of distribution)

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2
Q

what is the purpose of inventory control

A
  • to anticipate running out of stock
  • to ensure production line will always be able to run if there is stock
  • to ensure customer orders are not delayed through lack of stock
  • to control the admin costs of ordering as stock us ordered regularly
  • to avoid the high costs of storage and maintenance by avoiding over stocking
  • to minimise insurance costs for stock in storage
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3
Q

consequences of overstocking

A
  • money tied up in inventory could be invested elsewhere in a business
  • inventory can go out of fashion or spoil meaning the business will have to write it off as a loss
  • Having too much inventory results in higher storage costs in terms of both overheads and security.
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4
Q

consequences of understocking

A
  • Business cannot fulfil orders on time.
  • Production may stop due to the lack of available materials.
  • It will never be possible to meet unexpected large orders.
  • The business will be viewed as unreliable and its reputation will be damaged.
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5
Q

the two inventory control systems (methods used to keep track of stock)

A
  • traditional inventory control system
  • just in time
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6
Q

inventory control system diagram

A

Stock level
|\ |\ |\ ———— max. stock level
| \ | \ | \ ________ reorder level
| | | \_______ min. stock level
|________________—— buffer inventory
Time

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7
Q

inventory levels

A

Max stock level: This is the level that ensures that there will always be stock
available without going over the storage space. Avoids the consequences of overstocking.
Min stock level: The stock level that stock must not fall below as shortages in raw materials may result in reduced output. Avoids the consequences of understocking.
Reorder level: The level at which new stock should be ordered. Usually worked out on the amount used per day plus the lead-time (delivery time for new stock). Avoids running out of stock.
Reorder quality: This is the amount of stock that is ordered.
Lead time: The time taken between placing an order and receiving it. A short lead time allows a faster response to rush orders.
Buffer inventory: This is the extra inventory below the agreed minimum to be used in emergencies. This ensures that production doesn’t stop and sales continue to be made.

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8
Q

advantages of inventory control - EPOS

A
  • provides managers with instant, up to date information
  • allows for automatic reordering of stock
  • there is a reduction in instances of human error
  • highlights changes in demand
  • alerts management to theft of stock
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9
Q

just in time purpose

A
  • it aims to cut down the level of inventory held and costs associated with then (storage, security, insurance etc)
  • the stock is delivered ‘just in time’ for when it’s needed to ensure continuous production
  • very little margin for error
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10
Q

advantages to Just in time

A
  • Allows production to be lean ie there is no wastage as all stock is used in production
  • No money is tied up in stock which improves cash flow
  • No warehouse is required, saving costs
  • The business can be more responsive to market changes
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11
Q

disadvantages of Just in time and

A
  • No room for error
  • Admin and Delivery costs are high
  • Bulk buying discounts are lost
  • Relies on good relationships with suppliers.
  • Late deliveries can result in interruptions to production
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12
Q

what should warehouses be

A
  • Suitable design and layout: ground floor to reduce handling times, making use of stock rotation to avoid deterioration
  • Offer security for the protection of stock
  • Offer the correct environment (dry, even temperature etc)
  • Make use of mechanical handling: specialist equipment can be incorporated into new buildings, use of pallets and fork lift trucks is a relatively cheap method of organising stock
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13
Q

benefits of warehousing

A

1 Large amounts of stock can be securely stored reducing theft
2. May allow easier access/retrieval of stock resulting in more efficient delivery
3 Warehouse may break down bulk orders from suppliers
4 Allows for stock piling in advance of periods of high demand so sales will not be lost

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14
Q

costs of warehousing

A

1 Expensive to run due to
overhead/energy/rent/security costs
2 May be located in rural area due to land/premises costs
3 Fire/flood/contamination etc can affect the entire stock reserve

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15
Q

what is centralised storage

A

storing inventory in one central location in a large purpose built warehouse

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16
Q

benefits of centralised storage

A

1 Specialist staff are employed: improving security and speed of handling stock
2 Reduce the cost of supplies by gaining economies of scale from bulk buying
3 Standardised procedures for ordering, receiving and issuing stock
4 Reduces duplication of stock held throughout the organisation

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17
Q

costs of centralised storage

A

1 Recruitment, training and salaries for specialist staff
2 The cost of creating a central storage site
3 Stock may be remote from production - causing delays
4 Specialist equipment needs to be purchased and maintained

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18
Q

what is decentralised storage

A

stock is held in various locations with the organisation. Each branch/department is responsible for ordering and maintaining its own stock

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19
Q

benefits of decentralised storage

A

1 Inventory is always close at hand when needed
2 Smaller more local warehouses are more responsive to local needs
3 Inventory usage reflects actual production/sales as it is stored in the factories or retail outlets

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20
Q

costs of decentralised storage

A

1 Can lead to wastage or theft as security isn’t as good
2 Lack of specialist staff can lead to clumsy inefficient procedures
3 Each division may handle inventory differently, leading to inconsistencies making it harder for managers to pinpoint problems

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21
Q

what is logistics

A

the management of the supply chain: the process of dealing with the whole order from start to finish

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22
Q

7R’s in logistics

A

Right product
Right quantity
Right condition
Right place
Right time
Right customer
Right price

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23
Q

logistics functions

A

transportation: movement of goods - road, rail, sea, air, satellite, utilities infrastructure, mobile networks
warehousing: activated related to receiving, storing and delivering goods to and from production or distribution locations
3rd party logistics (3PL) and 4th party logistics (4PL): companies that perform or manage one or more logistics service (or even take over the entire logistics function) outsourcing

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24
Q

Role of management in logistics

A
  • Planning inventory required utilising production and sales budgets
  • Organising the resources needed for logistics, including warehouse equipment and staff
  • Commanding warehouse staff to carry out tasks
  • Co-ordinating the supply chain, channels and methods of distribution so deliveries are made on time
  • Controlling the quality, quantity, cost and efficiency of the movement and storage of inventory
  • Delegating inventory procedures to decentralised warehouses
  • Motivating other members of their team
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25
Q

what is job production

A

one-off job made to the customers requirements (labour intensive)

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26
Q

advantages of job production

A
  • Employees can use their own skills and initiative which gives job satisfaction.
  • Products can be tailored to suit customer requirements.
  • A higher price can be charged as it is a unique product.
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27
Q

disadvantages of job production

A
  • Wages are higher because specialist skills are required.
  • It is costly to recruit and train employees.
  • If a member of staff is absent, production may have to wait until they return.
  • Accuracy and quality can vary because human being are not machines.
  • Lead times can be lengthy.
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28
Q

what is batch production

A

groups of products are made, each group is identical but the batches/groups can be changed (uses mechanisation which requires both a mix of machinery and labour to operate)

29
Q

advantages of batch production

A
  • Each batch can be adapted to suit customer.
  • Standardisation can be pre-programmed, allowing production to be consistent.
  • Machinery improves the accuracy of work and completes difficult tasks for the worker.
  • Less need for highly paid workers.
  • Economies of scale are possible.
30
Q

disadvantages of batch production

A
  • Higher stock costs.
  • Machinery could break down and idle time is expensive.
  • Equipment and staff may lie idle during batches as machines may need to be reset etc
  • Machines and equipment can’t be used without humans.
  • More boring for staff due to use of machinery.
31
Q

what is continuous flow production

A

identical products are made on an assembly line with parts being added at various points (uses automation which is when machinery completely replaces the need for labour)

32
Q

advantages of flow production

A
  • Production time is quicker and can be repeated constantly with no errors.
  • Accuracy is far greater because there is no human error.
  • The is no requirement for worker to man the machinery, so this saves money.
  • Huge amounts can be produced quickly (24/7).
  • Economies of scale
33
Q

disadvantages of flow production

A
  • There is no flexibility as the machinery can only do what it is programmed to do.
  • Workers can be demotivated through the repetitive nature of the work.
  • More machinery to complete production means more pollution.
  • It causes unemployment which has an economic impact on the country.
  • Machinery breakdowns are expensive.
34
Q

what is labour intensive

A

products are made using labour
advantages:
- people can use initiative
- may work out cheaper then expensive machinery
- products can be tailored to suit customer

35
Q

what is capital intensive

A
  • capital intensive can use mechanisation (which requires both a mix of machinery and labour to operate) and automation (which is when machinery completely replaces the need for labour)
  • products are made using machinery and equipment
  • initial set up cost is expensive
  • batch is more likely to use mechanisation due to the need to vary the machinery, ingredients and processes involved
    flow is more likely to use automation as every product is identical so the process can be programmed
36
Q

what do methods of production depend on

A

Quantity: If producing a lot of products flow is likely.
Skills: Skilled workers more likely to be used in job production.
Labour costs: If wages are high more likely to invest in machinery ie flow.
Finance: Large amounts of money are required for flow production.
Technology: If you do not have a lot of technology then job production is your only option.

37
Q

quality from a customer point of view

A
  • physical appearance
  • durability and reliability
  • after sales service
  • company reputation
  • value for money
38
Q

why is quality important to organisations

A
  • good reputation
  • may be legal requirement
  • remain competitive
  • fewer returns/less costly
  • reduce waste
  • may allow a higher price to be charges
39
Q

methods of assuring quality

A
  • quality control
  • quality assurance
  • continual improvement
  • quality circles
  • quality standards and symbols
  • quality management
  • mystery shoppers
  • benchmarking
40
Q

Quality control, advantages and disadvantages

A

The most basic method to ensure quality. Quality Control is a method of inspecting raw materials or finished goods to check they are of an acceptable standards and quality.
advantages:
- Reduces chance of poor quality products being sent to customers.
- Limits the potential for a bad reputation due to faulty products.
disadvantages:
- Can create a lot of wastage as products are not checked to the end of the production line.
- Reworking faulty products costs time and money.

41
Q

quality assurance, advantages and disadvantages

A

Method of prevention where products are checked to see that they are of high quality at different stages in the development & production process than just at the end.
advantages:
- Easy to identify where faults in the production line lies.
- Reduces waste, which decreases cost spent on discarded materials.
disadvantages:
- Can slow down production as many processes are inspected.
- Can increase cost of production e.g. paying QA managers’ wages.

42
Q

continual improvement, advantages and disadvantages

A

Organisations should always attempt to improve quality, even if it has met its objectives. Every person and process in the organisation should be continually improving.
advantages:
- The business stays ahead of the competition.
- The business can react easily to changing external factors.
disadvantages:
- The business stays ahead of the competition.
- The business can react easily to changing external factors.

43
Q

quality circles, advantages and disadvantage

A

Involves small groups of employees meeting with a line manager to discuss problems in the production process and how to solve them. These are passed on to management for discussion and may then be implemented.
advantages:
- employees will be motivated as they have a say in decision making
- Management get well-informed
suggestions from the workers who actually produce.
disadvantages:
- employees meet during paid company time so production time is lost
- employees are often trained to joking quality circles costing time and money

44
Q

Quality Standards & Symbols, advantages and disadvantages

A

Proves that a product has met an agreed industry standard. Examples:
1. BSI Kitemark certification confirms that a product or service’s claim has been independently and repeatedly tested by experts.
2. CE marking shows that the product complies with EU safety, health & environmental requirements
Give Feedback
advantages:
- Awards proves to customers that a product has met an agreed standard of quality.
- Symbols can be used as a promotional tool to gain a competitive edge.
- Customers will have confidence in purchasing the product and may return.
disadvantages:
- Time-consuming processes need to be completed to achieve the award.
- Agreed standards need to be maintained at all times.
- If any award is removed, it would give the organisation a poor reputation.

45
Q

quality management, advantages and disadvantages

A

Holistic approach to ensure quality products. Incorporates a variety of methods to ensure all people in an organisation are committed to quality to ensure zero errors.
advantages:
- Should result in zero errors, which drastically reduces waste.
- Products will be renowned for being the highest quality, increasing customer confidence
disadvantages:
- Substantial staff training to ensure no mistakes are made will increase costs & lost time.
- Requires commitment of all staff which could require a stricter selection process.

46
Q

mystery shoppers, advantages and disadvantages

A

People are employed, often through an agency, to purchase products, ask questions, register complaints and behave a certain way. They then provide feedback to the business about the experience they had.
advantages:
- No bias shown as they are not employed or directly connected to the business.
- Valuable feedback is gathered when an experience is below standard.
disadvantages:
- Limited evaluation so feedback may not be representative of the business as a whole.
- Their feelings opinions may cloud their judgement from time to time.

47
Q

benchmarking, advantages and disadvantages

A

Involves copying the quality of a finished product and the processes used to achieve it, used by the market leader.
advantages:
- If successful, the product will be as good as the best on the market.
- Saves the business time developing their own approach to ensure quality.
disadvantages:
- Can be difficult to gain information about other organisations quality methods.
- Will only be ‘as good’ as the benchmark at that time. The benchmark may improve, and the business will never be better than them.

48
Q

costs and benefits of an organisation considering the environment and ethical impacts of this actions

A

benefits:
- long term saving through use of recycling
- good publicity
- better reputation
costs:
- increased costs to implement procedures
- knowledgeable staff required-may require training

49
Q

how can organisations ensure they’re being ethical

A
  • animal welfare
  • sourcing ethical suppliers
  • fair trade
  • fair treatment of employees
  • environmentally friendly
50
Q

what is fair trade

A

Fairtrade is when suppliers of raw materials receive a guaranteed and fair price for their goods. Fairtrade also ensure that employees in the supply chain are treated fairly.

51
Q

benefits of fair trade

A
  • Payment of the Fairtrade minimum price protects producers from low and volatile market prices.
  • Fairtrade Standards protect workers’ and farmers’ rights, ensure decent working conditions and prohibits child labour.
  • Business are awarded the Fairtrade mark on their products, which can appeal to customers.
  • Stocking Fairtrade goods demonstrates the retailers’ ethical commitment to its customers.
52
Q

costs of fair trade

A
  • Fairtrade benefits specific farmers and their businesses and communities, but does not change the structural trade practices that work against them.
  • Fairtrade products are often more expensive.
  • The business will have a limited choice of suppliers.
  • Losing a Fairtrade mark after gaining one will result in bad publicity.
53
Q

methods a business can use to become environmentally responsible

A

Minimising waste
Recycling
Minimising packaging
Preventing pollution
Be sustainable
Energy Policies

54
Q

what does minimising waste do

A
  • benefits the environment as it ultimately means less rubbish ends up in landfill.
  • food waste is also socially irresponsible due to world wide food shortages
  • less waste helps the organisation help prevent losing money as more waste costs money
55
Q

negative impacts businesses can cause to the environment

A

organisations have a legal responsibility to be aware of the negative impacts their business operations have on the environment:
- air pollution caused by exporting goods across the world
- water pollution by not disposing of waste safely
- contaminating land by excessive waste being dumbed
- trafic congestion caused by delivery of goods 24/7
- noise pollution cause by manufacturing process in factories
- natural habitat destruction by building more and factories not taking measures to protect the environment

56
Q

ways to minimise waste

A

• Training employees - this means that employees will be better at their jobs. As a result, fewer mistakes should be made and therefore there should be less scrap/spoiled product to be thrown away.
• Maintenance of machinery and equipment - this ensures that products are produced to the highest level and are not damaged by faulty equipment.
• Setting appropriate stock levels - if a business holds too much stock it is possible that it will become obsolete or in the case of a perishable good, it may spoil and become unusable.

57
Q

if recycling is not an option how can a business dispose of waste

A

LANDFILL
• Waste can be sent to landfill (where waste is buried in the ground) or a land-raising site (where the waste is built up in a massive pile). This incurs a cost for the business as they are charged for the volume of waste dumped. There is also a negative environmental impact as landfill/raise sites emit noxious fumes and toxic liquid.
INCINERATION
• This is more expensive than landfill as the incinerator is costly to build and maintain, and requires a constant flow of waste to run at an economically viable level. However, the energy produced can be converted into electricity.

58
Q

why did recycling important

A
  • it is an easy way for a business to improve environmental credentials
  • It is also important because there are national targets for the levels of waste being recycled, which local councils are taking steps to meet.
  • It is likely that companies who do not make sufficient effort to recycle will ultimately be hit by fines.
59
Q

recycling, how to encourage it and costs involved

A

To encourage recycling a business can introduce appropriately coloured bins - this will make recycling easier for employees and there are a variety of companies who will install these and offer uplift services.
There will be a cost involved in setting up a recycling scheme, however businesses also have to pay for the uplift landfill waste. Therefore, once recycling has started, it is likely that the reduction in landfill waste uplift costs will offset the cost of setting up a recycling programme.
Reuse materials - it may be possible to reuse materials within the production process. This has the benefit of reducing spoilt goods as well as recycling goods.

60
Q

recycling re-evaluating packaging

A

Use environmentally friendly packaging - For example, cardboard padding within a box (which can be recycled) can be used instead of foam chips (which can’t).
Use recycled materials in packaging - for example bottles made of recycled glass. This is environmentally friendly as it reduces the consumption of natural resources (eg trees for paper, sand for glass).
Minimise packaging - this can be a promotional point for a company - for example, Kenco coffee have run a massive advertising campaign highlighting their eco-friendly refill packs of coffee, designed for topping up glass jars or canisters in the home.

61
Q

steps an organisation can take to prevent pollution

A

Responsible waste disposal - by ensuring that dangerous or toxic waste is disposed of carefully, a company can ensure that they are not causing damage - to local wildlife or water supplies for example.
Reduce road traffic - one of the major causes of pollution is exhaust fumes from lorries. By investigating alternative methods of transport (eg rail or sea) or by sourcing products from near by.

62
Q

energy policies

A

An organisation may have policies in place to prompt the use of renewable energy sources, eg water (hydro power), the wind and the sun (solar power).
organisations can instal wind turbines or solar panels within their properties. Although these are expensive to purchase and maintain, they will save the organisation money in the long term due to their reduced fuel bills.
The energy policy of an organisation may cover everyday procedures like lighting - lights can be set to come on when movement is sensed, or there can be a policy stating that lights must be switched off when a room is empty. There may be maximum heat settings for central heating as well to avoid wasting energy.

63
Q

technology in operations

A

CAM
• This system uses machinery that is controlled by computers to make products. It produces consistent high quality, can run 24/7 and has fewer errors.
Online Ordering
• Use of the internet to order stock. Ordering facility available 24/7 with automated and secure card payments. Provides a quicker and much improved quality of service
Database
• Used to store supplier and stock details. Allows quick searching and sort facilities. Can create reports that can be used to list top-selling items - useful for sales teams.
EPOS
• Used for stock control. It allows stock levels to be monitored accurately and can trigger automatic reordering óf popular items.

64
Q

CAD (computer aided design)

A

CAD can be used to simulate a design in a 3D environment allowing the designer to have an idea of how the finished product will look.
• This will lead to more accurate design processes, meaning less wastage.
Amendments can be made to designs without having to redo drawings or rebuild prototypes. This saves the developers time.

65
Q

Electronically (computerised) inventory control, what it’s used for and benefits

A
  • Using barcodes allows inventory to be tracked electronically from when it arrives with the manufacturer to when it is delivered
  • This same EPOS equipment that is used at the tills when you buy something is used in the warehouse for stock control.
    Benefits of computerised stock control:
    • Provides managers with instant up-to-date data on inventory levels.
    • Allows for automatic re-ordering when re-order level reached.
    • Reduction in changes of human error.
    • Highlights changes in demand from customers i.e. has something become instantly popular or unpopular.
66
Q

use of EPOS

A

• used by retailers when consumers pay for goods.
• Scanning barcodes of products at the checkout keeps an up-to-date record of stock which is altered with every sale.
• EPOS can also be used with electronic stock control systems to automatically re-order stock.

67
Q

Robotics

A

• Robots can be used in the production process to reduce labour costs and carry out repetitive work.
• Robots are often used in conditions where employees would not be allowed to work for health and safety reasons such as a nuclear plant.
• Robots reduce the need for supervision and can reduce wage costs.
- Robots can be used to handle contaminated materials to help employees from hazardous materials

68
Q

Bar codes and QR codes

A

• Bar codes and QR codes can be used to aid the delivery process.
• Customers and businesses can use QR codes to track packages simply by canning the bar or
QR code.
• Bar codes can be used to aid stock control as part of an EPOS system so find out e.g. stock levels or most popular items.

Higher Business Management (5 decks)

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