Production Flashcards
What are the main way to add value?
Transformation process Additional features Distinct brand image Assumed value Excellent customer service Delivery service Range of models/options
Advantages of adding value?
Allows a higher price (higher profit)
Creates USP
Disadvantages of added value?
Increased cost
Might reduce sales
Elasticity of product might affect ability to change price
What are the three aspects of value analysis?
Function, cost and aesthetics
What is research?
Finding out what customer want or improving products
What is development?
Taking research and improving
Innovation is …
where the idea becomes an economic reality
What are the problems with R and D?
Cost Risk Copying Limited protection Changes in technology Changing customer needs Unemployment
Factors influencing level of R and D
Level of competition
Product
External environment
State of economy
What is market orientated?
Where a company finds out what the market wants and develops a product in relation to this
What is product orientated?
When you develop a product and try to sell it
What are the different types of production?
Job production - one off
Batch production - certain number made before specification changed
Flow/mass production - involves a production line
Process production - a series of process which raw materials go through e.g. oil
What factors affect the type of production used?
Initial capital Customer needs Type of good/market Product lifetime Business objectives Competition
What is cell production?
When workers are organised into multi-skilled teams responsible or a particular production process
What does critical path analysis allow?
The overall time for the project to be calculated
What are the advantages of critical path analysis?
Helps reduce risk and cost
Helps identify slack
Decision making and planning tool
Can help other aspects of business planning
What are the disadvantages of critical path analysis?
Based on estimates
CPA does not guarantee success
Resources might not be as flexible as management hopes
Too many activities might make diagram confusing
How to calculate total float?
Lastest finish time - duration - earliest start time
LFT - duration - EST
How to calculate free float?
Earliest start time (next activity) - duration - earliest start time
EST (next activity) - duration - EST
What is PERT analysis?
A pessimistic variation of critical path analysis
What is the formula for PERT analysis?
Optimistic time + 4 x likely time + pessimistic time / 6
A GANTT chart is …
a graphical representation of the order and duration of tasks
What are the benefits of a GANTT chart?
Visual representation
Easy to manage
Shows what is happening
Allows time and resource management
What are the drawbacks of a GANTT chart?
Does not show critical activities
Can not see EST and LFT
Can not calculate float
Does not allow for external factors
Productivity is …
the amount of output per given input in a given time period
What is the formula for productivity?
Total output/total input
What is the formula for labor productivity?
Outputs/average no. of employees
How can you increase productivity?
Training Improved motivation More or better capital equipment Better quality raw materials Improved organization of production Target setting Factory layout Teamwork
An economy of scale is when …
Unit cost falls as output increases
What is an internal economy of scale?
An economy of scale arising from growth of the business its self
What is an external economy of scale?
Economies of scale which occur within the industry
What are the internal economies of scale?
Purchasing Technical Specialisation Marketing Managerial Financial Network Risk-bearing
What are the external economies of scale?
Development of local facilities
New research
Relocation of suppliers
Agglomeration economies
What is a purchasing economy of scale?
Discounts offered on large orders
What is a technical economy of scale?
Large businesses can afford to invest in the latest technology
What is specialization in the workforce as an economy of scale?
It is when production can be broken up into tasks which are then completed by specialists
What is a marketing economy of scale?
If they offer a large range of products it gives them power when negotiating with suppliers, also some products might provide passive benefits to others
What are financial economies of scale?
Large businesses are often more creditworthy and floated on the stock market
What are network economies of scale?
The cost to add one new user is often negligible to large companies
What are risk baring economies of scale?
Risks are spread across a large company with a range of products
A diseconomy of scale is …
when a businesses growth causes a rise in unit cost
What are the diseconomies of scale?
Poor communication
Lack of motivation
Lack of direction
Loss of organization
What is capacity utilization?
The percentage of total capacity that is actually being achieved in a given period
What is the formula for capacity utilization?
(Actual level of output/maximum possible output)*100
How can you increase capacity utilization?
Lower maximum possible output
Increase demand (marketing, price)
Differentiate product
Why might a company not have 100% capacity utilization?
Competition
Stage in product life cycle
Seasonality
Alternative costs
What are the benefits of having high capacity utilization?
Fall in average costs Less wastage Increased profit Employee motivation Increased competitiveness
What are the drawbacks of having high capacity utilization?
Coping with maintenance and breakdowns
Cannot accommodate additional orders
High-pressure environment
Reduced quality
What is stock control?
The process used by a business to ensure that it has sufficient stock for its purpose
What are the types of stock?
Raw materials
Work in progress
Finished goods
What is maximum and minimum stock?
Maximum stock is the highest amount a company is willing to hold and minimum is the lowest amount
What is buffer stock?
A reserve of stock which is maintained to allow for changes in demand
What is the lead time?
The difference between the order time and when the company receives the goods
What is the reorder level?
Trigger point for when the next order for stock should be placed
What is a stock out?
When you run out of stock
What are the costs of holding too much stock?
Can be damaged as hard to monitor
Takes up space (increased costs)
Money tied up (opportunity cost)
Raw materials and work in progress hard to liquidate
Depreciation of stock
Space for storage cannot be used for anything else (opportunity cost)
What are the benefits of holding stock?
Allows you to meet demand
Buffer stock allows for fluctuations in demand
Economies of scale
How do you calculate average stock level?
Maximum stock level + minimum stock level / 2
What are the problems associated with a stock out?
Cannot meet demand
Cannot hold buffer stock
Bad reputation
Cash flow issues
What is first in first out (FIFO)? - Stock control
The first stock in should be the first out
What is last in first out (LIFO)? - Stock control
Most recent stock in should be first out (cannot use for perishable goods)
What is EPOS (Electronic Point Of Sale)? - Stock control
A computerized system including barcodes and scanners which tracks the volume of a stock
What is Kanban? - Stock control and Lean production
A traffic light system in which stock is only brought forward when the light is green
What is JIT (Just In Time)? - Stock control and Lead production
When goods are received only when they are needed but relies upon dependable suppliers
What is Economic Order Quantity (EOQ)? - Stock control
The order quantity in that minimizes total inventory holding cost and ordering cost
What is lean production?
An approach to management that focuses on cutting out waste, whilst ensuring quality
What is time management? - Lean production
A method of looking to reduce wasted time allowing for; quicker response time, faster product development and reduced staff costs
What is motivation? - Lean production
Increasing your workers desire to perform and increasing productivity
What is Kaizen? - Lean production
Means “continuous improvement” and is employee lead small changes to improve production
What is cell production? - Lean production
When the production line is spilt into cells responsible for a part allowing the people in the cells to rotate their roles
What is Total Quality Managment (TQM)? - Lean production
An attitude to quality where there are zero defects and total customer satisfaction. It is achieved through regular checking and removing defects early
What is Jidoka? - Lean production
Building into production the ability to detect faults
What are quality circles? - Lean production
Groups of employees and external counsel brought together to identify potential improvements
What do you need for successful implementation of lean production?
A culture for change
A budget/suitable finances
Customer and employee centered
Good relationship with suppliers
What are some examples of waste production?
Over-production
Waiting time
Stock
Defects
What are the supply factors affecting location?
Labour costs Land costs Energy costs Transport costs community factors - local amenities, local government
What are the demand factors affecting location?
Customer convenience Labour skills Site suitablity Image Expansion potential
Logistics are …
The general commercial activity of transporting, storing and acquiring goods
What are the key factors of logistics?
Storage facilities
Customer requirments
Information systems
Transportation
What factors affect logistical decisions?
Specific product requirements Location of demand and supply Size and type of product Nature of demand Cost of modes of transport Cost of storage Lead time
What are the benefits of internal logistics?
Greater control Cheaper in the long run Don't rely on third party Greater flexibility Increases asset value
What are the benefits of external logistics?
Doesn't have a setup cost Predictable expenses Lower unit cost Specialist firm Easier to adapt to demand
Reshoring is …
the act of reintroducing domestic manufacturing/processes
Offshoring is …
the process of relocating a business process from one country to another
Outsourcing is …
an agreement where one company contracts out part of an internal process to another company
What are some reasons for resourcing?
Shorter delivery times
Minimise risk in supply chain
Reduce complexity of supply chain
Easier to collaborate with domestic suppliers
Cost advantage of offshoring not as great as it once was
What are the reasons for offshoring?
Lowers cost Access skilled and higher quality labour Use additional capacity Take advantage of different laws Move closer to target markets
What are the disadvantages of offshoring?
Longer lead time
Additional management cost
Must consider exchange rates
communication barriers
Reasons for outsourcing
Reduced cost
Improvement in quality
Meet changes in demand
What is subcontracting?
When the production of a particular part of production is completed by another firm
What are the advantages of subcontracting?
Reduction in cost
Increase in quality (specialized firm)
Allows for an increase in production
What are the disadvantages of subcontracting?
Loss of control - reliant on another business
Risk lower quality
Potentially longer lead times
What is quality?
It is meeting the needs and expectations of all customers
What are the key aspects of quality?
Design, functionality, reliability, consistency, durability, after sales and value for money
Why is quality important?
Increases competitiveness
Modern customers are knowledgeable and demanding
Customers are prepared to complain about poor quality
Customers are able to share information about quality
What are the benefits of high quality?
High customer loyalty Customer satisfaction Repeat purchases Customer recommendations Lower marketing costs
What is quality assurance?
The process that ensures production quality meets the requirements of customers
What are the international standards for quality?
Kitemark
ISO 9000
Wool mark
What are the costs of quality assurance implementation?
Staff training costs
Downtime between change
Demotivation from change
Recruitment costs
What is quality benchmarking?
A general approach for a business to improve by looking at the best practice in the industry
What is the formula for wastage rates?
No. of rejects/total produced * 100
What is quality of control?
The process of inspecting products to ensure that they meet the required quality standards
What is the difference between quality assurance and control?
Assurance is based on the processes and looks to make sure no defects occur and quality control is based on inspection and takes defects out
What are the costs of poor quality?
Bad reputaion Loss of customers Cost to replace goods Wasted materials Less competitive
What are serivices?
Activities that other people or businesses do for you