productive quality - location and logistics Flashcards

1
Q

what is the main aim of choosing a location?

A

to achieve a balance between three related objectives:
- the cost of the operation
- the customer service that the business wants to provide
- the potential revenues that can be achieved from the location

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2
Q

what are supply factors to do with location?

A
  • labour costs
  • land costs
  • energy costs
  • transport costs
  • community factors
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3
Q

what is the supply factor of labour costs?

A
  • Labour costs vary from region to region, but the biggest difference is between the UK and low labour cost countries overseas
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4
Q

what is the supply factor of land costs?

A
  • Sometimes the land will be purchased, but more often it will be rented along with the business buildings and facilities
  • Rentals can vary enormously depending on the location and the facilities provided
  • Government grants and other incentives are also often available to reduce the land costs of locating in poorer regions.
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5
Q

what is the supply factor of energy costs?

A

Some businesses use substantial amounts of energy (e.g. gas, electricity) but they should be able to negotiate a good price for their energy needs regardless of location in the UK

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6
Q

what is the supply factor of transport costs?

A
  • Transport includes the cost of getting inputs into the business and also the cost of getting products delivered to customers
  • Need to be close to its source of supply if the cost of transporting raw materials is high or difficult
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7
Q

what is the supply factors of community?

A

The costs of a business location can be influenced by many non-financial factors, but which can still be significant when making the choice. These include:
* Local amenities & services (e.g. schools, professional services)
* Local government attitude to supporting business (including financial assistance)
* Language
* Political stability

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8
Q

what are the demand factors?

A
  • customer convenience
  • labour skills
  • site suitability
  • image
  • expansion potential
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9
Q

what is the demand factor of customer convenience?

A

Many businesses need to be located where customers find it quick, easy and cheap to access the service being provide

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10
Q

what is the demand factor of labour skills?

A

Where specialist skills are required, this can be a big issue. For example, technology firms tend to locate themselves in areas where there is well-established expertise (e.g. M4 corridor and Cambridge in the UK)

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11
Q

what is the demand factor of site suitability?

A

A site may need to have some particular characteristics to maximise customer satisfaction and revenues

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12
Q

what is the demand factor of image?

A

This is more intangible, but often important.
Some customers associate a product with a certain area and prefer to buy from there

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13
Q

what is the demand factor of expansion potential?

A
  • Future production capacity often has to be taken into account
  • A location might tick many other boxes, but if it provides limited scope for expansion then it might be rejected
  • If a location restricts output, then revenues are potentially damaged
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14
Q

what is supply chain management?

A

The integration of the procurement of supplies, production, warehousing and transportation

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15
Q

what are the key factors in logistics?

A
  • Warehousing-Storage depots (do firms have their own?)
  • Customer requirements (are products perishable?)
  • Information systems (ICT system that connects departments and other businesses)
  • Transportation - how should products be delivered? (road, rail, air etc.)
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16
Q

what is restoring?

A

a business returns production/operations to the host country that had previously been moved to a different international location

17
Q

what are the reasons for restoring?

A
  • Greater certainty around delivery times (including shorter delivery times)
  • Minimising risk of supply chain disruptions
  • Reducing the complexity of the supply chain
  • Making it easier to collaborate with home-based suppliers
  • Getting greater certainty about the quality of inputs and components
  • Recognising that the cost advantage of producing or sourcing overseas is not as significant as it used to be
18
Q

what is offshoring?

A

relocation of business activities from the home country to a different international location

19
Q

reasons for offshoring?

A
  • To access lower manufacturing costs (particularly in emerging markets which enjoy the advantage of lower labour costs)
  • To access potentially better skilled & higher quality supply
  • To makes use of existing capacity overseas
  • To take advantage of free trade areas and avoid protectionism
  • To make it easier to supply target international markets (where it is important to be located in, or near to, those markets)
20
Q

drawbacks to offshoring?

A
  • Longer lead times for supply & risks of poorer quality
  • Implications for CSR (harder to control aspects of operating long distances away from the home country)
  • management costs (time, travel)
  • Impact of exchange rates
  • Communication- language & time zones
21
Q

what is outsourcing?

A
  • A business does not have to do everything that is required to produce its products and services.
  • There are other businesses that are specialised in the tasks required and can do it better and cheaper. This process is called outsourcing.
22
Q

how can we define outsourcing?

A

the delegation of one or more business processes to an external provider, who then owns, manages and administers the selected processes to an agreed standard

23
Q

what does outsourcing involve?

A

getting another business to provide the service for you

24
Q

what is the main reason for outsourcing?

A
  • Reducing costs
  • However, there can also be some significant gains in the quality and flexibility of the service or product offered
25
Q

what is subcontracting?

A

The production of a particular part of the product is undertaken by another firm

26
Q
A