Strategies (ops) Flashcards

1
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Quality (performance objectives)

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What: A product that conforms to customer expectations
What are the effects on a business if it does not meet the quality expectations of its customers?
Design quality
• By understanding what consumers wants… this can be delivered in the design (very important for Apple’s products)
Service quality and consistency
• How reliable is the service
• Meets customers’ expectations?
• Timely service?
Quality of conformance
• How well the product meets the specifications?
• Quality is important because:
• Reduces costs (less defects, less warranty claims, eliminates wastage) (GP link here)
• Reliability – brand reputation of the business

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2
Q

Speed (performance objectives)

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What: Speed refers to the time difference between a customer’s request for a G or S and when it is actually received
Why is speed important?
• reduced wait times
• shorter lead times
• faster processing times ultimately meets cost objective (and customers objectives)
How?
To achieve these goals requires a reduction in procedural and technical bottlenecks and smooth internal communications.

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3
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Flexibility (performance objectives)

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What: Flexibility is the ability to change products and services the business offers, the mix of products, the volume of products manufactured and the speed at which these are delivered
• E.g. changes in market demand can cause pressure on capacity

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4
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Dependability (performance objectives)

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WHAT:
Dependability refers to consistency and reliability
• Reliability of a good or service
• Predictability of quality and satisfaction
How do you measure?
• The number of warranty claims for a good (increases in COGS)
• The number of complaints for a service (impact on brand thus sales)

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5
Q

Customisation (performance objectives)

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What: refers to the ability to modify a standard product to meet the individual needs of the customer
Why?
• Better meet the needs of the customer, provides a competitive advantage (point of difference), charge a higher price
Considerations:
• Customisation is a compromise between the cost advantages of volume production and more effectively meeting customer needs by providing variety.
• The cost of customisation is higher than cost of mass producing standardised products

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6
Q

Cost (performance objectives)

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WHAT: Cost refers to the minimisation of expenses so that operations are conducted as cheaply as possible
• Impact on COGS and thus GP
• Productivity is the efficiency with which a given set of inputs produces the outputs
Why? Cost leadership enables a business to maximise profits
How? Strategies such as :
• Acquiring new technology can assist in reducing costs, minimise waste
• Supplier’s costs
• Inventory management
• Distribution methods that are cost and time effective

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7
Q

New product or service design and development

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OPS and marketing work together for the product design (interdependence)
OPS responsible for how can the products be made, materials that should/could be used
OPS produces the final product
Approaches to design and development:
1. Consumer approach to product development:
The preferences and desires of customers is identified through market research and determined how products are designed and developed
2. Changes and innovation in Tech:
Enables new appealing products to be made because they use advanced technology which give products greater functionality.

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8
Q

Supply Chain Management (SCM)

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WHAT: involves integration and managing the flow of supplies throughout the inputs, transformation processes and outputs
LEGS (logistics, e-commerce, global sourcing)

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9
Q

Logistics SCM

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WHAT: Involves the transport of physical raw materials, inputs and the distribution of finished goods to markets
→ Involves distribution channels → Involves transport modes → Warehousing → Use of storage
→ Materials handling and packaging
WHY:
Focus - Moving inputs, resources and outputs through the supply chain as quickly as possible, saving as much time at each point in the supply chain (SPEED)
Includes - Inventory management → Purchasing points → Transporting inventory and products → storage/warehousing → Purchasing →Planning → Scheduling
HOW:
Automated warehouse trucks (AWT) can replace traditional forklift and driver

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10
Q

E-commerce (SCM)

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WHAT: Involves buying and selling of goods and services on the internet (relevant to particular forms of sourcing)
WHY: Impact of e-commerce is important as it allows a BUS to source efficiently and receive customers orders electronically
HOW:
E-produced (B2B process)→ The use of an online systems to manage supply
→ Allows supplies direct access to the BUS level of supplies
→ When stock falls to a predetermined point, the supplier will supply even without a formal request from the buyer.
B2C Process → Bus may opt to sell directly to consumers
POS: 1. Access to more buyers 2. Easy/accessible 3. Improve brand awareness
NEG: 1. Cost 2. Speed 3. Efficiency down

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11
Q

Global Sourcing (SCM)

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WHAT: Refers to the purchasing of inputs for the transformation processes from external nations
WHY: Increasingly businesses are not constrained due to location - they are able to source inputs from any location around the globe.
→ A global surveying strategy involves a BUS sourcing it’s inputs from different nations, creating a global supply web
POS: → More corners of the globe a BUS has penetrated in order to benefit from cost savings, the more intricate the web
NEG: 1. Lay off domestic staff 2. Speed possible delays

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12
Q

Outsourcing WHAT WHY

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WHAT: Refers to the use of external providers to perform BUS activities
WHY: These businesses are usually specialists, can perform the activity at lower costs more effectively
→ Widely used in the business space and increasingly so
HOW: →Onshore offshore → In house or use of outside parties → E.G = Manufacturing, design, merchandising, office work, IT, HR, finance, knowledge, management such as marketing functions such as PR

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13
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Outsourcing Implications

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POS: 1. Simplification (reducing the number of activities to perform) 2. Increase process capabilities (Produced and delivered to the market more efficiently) 3. Access to skills/labour that a business may not have in house 4. Access to expertise
NEG: 1. Loss of control of business process 2. Reduced employee morale (job loss)
3. The supplier may gain expertise by manufacturing components and
develop a competing product 4. Language problems

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14
Q

Technology

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WHAT: The application of science or knowledge that enables people to do new things or perform established tasks new and better ways
HOW:
Leading edge:
Refers to the technology that is the most advanced or innovative at any point in time (3D printing, remote manufacturing, lasers in manufacturing, AI, drone based delivers
Established Technology:
Refers to the technology that has been developed and widely used and is accepted (CAD, CAM, robotics, PC’s, software, Bar-coding)
Bleeding Edge Tech:
So new that the tech is uncertain when using

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15
Q

Technology implications

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POS: 1. Can ensure precision and reliability exceeding human capacity. 2. Added capability (speed and quality) 3. 24/7 capability (can produce at any time with no breaks meaning that increased volume)
NEG: 1. Changes to plant layout may have to be taken 2. Increase short term cost in tech costs 3. Maintenance of tech

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16
Q

Inventory management

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WHAT: Refers to the store of transformed resources waiting to be processed

If not managed effectively it can lead to spoilage
Need enough to meet customer requirements
ADV: 1. Mitigates risk for the business 2. Ability to access discounts for component parts (bulk buying)
3. Allows firms to meet unexpected demand (speed objective/Flexibility)
NEG: 1. Costs associated with holding the stock 2. Chance of spoilage (food going off) 3. Possible theft.

17
Q

(IM) Just in time (JIT)

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WHAT: Aims to have the business only enough products to meet demand
No expensive holding costs and insurance costs
Requires good system
Shrinkage costs are minimised (Shrinkage = loss of inventory due to employee theft, error, damage in transit, cashier errors, other theft)
ADV: 1. Avoids obsolescence 2. Decreased waste and shrinkage costs 3. Avoids cost associated with holding stock
NEG: 1. Supply Chain disruptions may affect short term supply (covid) 2. Demand may not be accurate

18
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(IM) First in first out (FIFO)

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WHAT: FIFO is a stock rotation method of recording the value of inventory. Assumes first goods purchased are the first goods sold
CHARACTERISTICS: Under this method of inventory valuation, COGS is based on the materials purchased earlier in the year.
Oldest stock sold first
Implications:
If the value of inventory is understated, therefore: > COGS understated
Gross profit and net profit overstated
Increased tax liability/payments

19
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(IM) Last in first out (LIFO)

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WHAT: Stock rotation method and a method of recording the value of inventory (assumes the last goods purchased are the first goods sold) (last goods purchased sold first) (illegal in AUS)
The value of the inventory is based on the basis of the price paid for the last units sold
Since that it is likely that prices will rise over time, inventory that was purchased first is valued at the higher price of the last units
Implications:
If the value of inventory is overstated therefore COGS is overstated and profits understated
Advantage is that GP measurement reflects recent costs.

20
Q

Quality Management context

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WHAT: A product that conforms to customer expectations/Refers to those processes that a business undertakes to ensure consistency, reliability, safety and fitness of purpose(Products do what they are supposed to)
→ A quality product should be reliable, easy to use, durable, well designed, delivered on time, include after sales services, have an attractive appearance
WHY:
→ Reduce waste/defaults, reduce variance, strengthen the competitive position, improved reputation, reduced costs, improved customer satisfaction, increased productivity and profits.

21
Q

QC ABOUT

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WHAT: Involves the use of inspections at various points in the production process
WHY: Check for defects and rectify
HOW: → Predetermined quality standards
→ Using samples (i.e check 1 in every 100 products and ensure that it meets the predetermined standards)
→ KPI’s, bonus payments if they meet the goals
→ Interventions designed to address the quality issues and any quality variability (such as training of staff or X-ray Tech)

22
Q

QC implications

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ADV: 1. Reduces variability 2. Ensures quality standards are met 3. Protects brand reputation
DIS: 1. Cost of the X-Ray tech and samples 2. Speed objectives may be compromised due to time wasting while checking for defects 3. May have to retrain the staff to achieve the required standards

23
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QA

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WHAT: Involves the use of systems to ensure that set standards are achieved in production
HOW: → Pre determined quality standards
→ Putting systems/processes in place to ensure that errors don’t occur
→ Certification standards e.g standards Australia
→ Establishes the criteria and language of quality.
POS: 1. Help BUS plan, control and document issues related to quality 2. Provides customers with a level of assurance that the organisation has a quality systems in place. 3.Allows a BUS to market their certification
DIS: 1. Possible changes required to task design and layout 2. Cos objective may be compromised 3. Speed objective may be compromised

24
Q

QA ISO Standards

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Implement International standards (ISO) and Aus standards to ensure that the BUs is following the best operational process
Certification by independent bodies ensure successful processes

ISO 9000 series: Quality certification which allows businesses to enhance their competitiveness through compliance
ISO 9001 → Indicates that the BUS has quality assurance in product design, development, manufacturing and installation
ISO 9002 → Indicates QA in manufacturing
ISO 9003 → Covers service based industries
ISO IMPLICATIONS:
Relates to quality of production only
They don’t include provisions for evaluating the quality of the product
Firms with the same rating don’t necessarily have the same quality

25
Q

QI ABOUT

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WHAT: An ongoing commitment to the improvement
Often called Kaizen
All staff encouraged to take ownership and improve processes
Continuous
TQM: Seeking continuous improvement consistently, responsibility of all employees
HOW:
Employee Management: → Use of Quality circles to solve problems (solve process, design or quality problems)
POS: 1. Allows constant BUS progression 2. Allowing employee responsibility to improvement (feel part of it)
DIS: 1. Cost objective 2. Speed objective 3. May lead to unnecessary change

26
Q

QI continuous

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WHAT: Involves commitment to perfection
Kaizen - in all aspect in business
SIX SIGMA approach: Seeks to identify and remove cause of problems in the operations process (attempt to achieve nearly zero defect rate) using statistical tools to measure variations in the ops process, empowerment of staff and training.
STRATS: 1. Monthly training programs focusing on improvement 2. Time/work Study (analysing and benchmarking performance) 3. Think tanks (Problem solving and identifying possible issues)
4. Surveys (Customer insight on performance)

27
Q

Overcoming/Managing Changes

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DRIVING FORCES → There are some forces in business which push towards the need for change
RESTRAINING FORCES → Are those that hold the business back and resist any change that is attempted

Managing Change (Non syllabus)
Identify the sources of the change and assess whether there is a need to accommodate change through adjustments to BUS processes
Sources of change are often external
Lower the resistance to change through communicating with employees about the need for change and getting widespread support for the change. 
May need to use change agents (internal staff or external agents who incentivise change)
28
Q

Overcoming change further

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→ Financial: Purchase of new equipment: investment in plant and capital required for the change (machinery and tech)
→ Redundancy: Payout of the employees whose skills are no longer required - costs depends on Length of employment, how high they were paid, amount of unused leave
→ Retrain: May have to retrain staff into new roles
→ New plant layout: Costs associated on relaying out the plant (transporting equipment/loss of productivity during the change)
Cost benefit analysis is required to assess if change is required

29
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Overcoming Change - Inertia

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WHAT: Psychological resistance to change due to uncertainty and fear which can lead to slower progress in changing impacting the speed objective negatively.
Managers can be resistant to change and demonstrated by lack of response to impending changes

30
Q

Global Factors (GF)

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WHAT: Global sourcing refers to the acquisition of products outside of the home country of the firm
WHY: → Concerned with finding ways to improve the competitive position of the BUS in a global environment
→ Responsibility for global outsourcing and also operations management of inventories, supply chain and quality issues.

31
Q

(GF) Global Sourcing

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WHAT: Refers to the purchasing of inputs for the transformation processes from external nations
→ Involves any BUS operations outsourced
POS: 1. Can enable advantages in the area of cost, efficiency, productivity, technical ability and an ability to operate more hours on day 2. Allows access to new tech, advantages of expertise and labour specialisation, access to other resources (quality parts/products)
NEG: 1. Cost of transport 2. Loss of jobs 3. Speed objective compromised with possible delays

32
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(GF) Economies of scale and scanning/learning

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WHAT: Refers to the cost advantages that can be gained by producing goods on a large scale
→ Cost savings are derived from spending fixed costs and increased output
Cost per unit decreases

WHAT: Scanning and learning refers to improvements a BUS can make for ‘scanning’ the globe for best practice.
→ Learning - by employing the most skilled people from other industries

33
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(GF) R and D

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WHAT: Refers to work directed towards the innovation, introduction and improvement of products and processes
→ Concerned with developing new ideas and ways of doing things
WHY: → Research and development is critical for many companies to create leading edge tech and solutions
POS: 1. New products/innovations may translate into future profitability and growth for the BUS
2. COMP ADV 3. Can assist with the expansion of your product range
NEG: 1. Requires significant and sustained investment (long term view) 2. Not all R and D will be commercialised 3. Requires skilled, expert staff proactively working on new ideas, processes (higher costs as a result)

34
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Logistics implications

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POS: 1. Reduce transport cost, storage and delivery 2. Reduce distribution centres for economies of scale 3. Outsourcer strategy by getting pro’s (FEDEX, DHL)
NEG: 1. Increased automation (decrease in labour) 2. SIG cost for tech (software/robots)