term 4 y12 - operations Flashcards
operations
the various processes involved in transforming inputs into outputs of goods and services
strategic role of operations
gaining a long term competitive advantage over its competitors both local and overseas. may also use either a cost leadership and/or product differentiation strategy
inputs
the resources used in the transformation process
outputs
the finished good/service that is ready to be sold
transformation
the conversion of inputs into outputs; the activities that determine how value will be added
lean production
ESD
cost leadership
aiming to have the lowest costs and/or to be the most profitable in the market in order to maintain a stable competetive advantage
product differentiation
distinguishing products away from competitors eg. free delivery, loyalty card, quality, longer warranty – providing the business with a sustainable competitive advantage
cross branding
another word for strategic alliances. This adds value to products by offering consumers added benefits from the agreements
globalisation
the removal of barriers of trade between nations. it is characterised by high degrees of capital, labour, intellectual property and technology
supply chain
the range of suppliers a business has and the nature of its relationship with those suppliers. a business needs to be proactive and adapt to changes quickly
global web
the network of suppliers a business has and the nature of its relationship with those suppliers. a business needs to be proactive and adapt to changes quickly
reverse engineering
process involving a business taking the product of a competitor that has already been released into the market. the product is taken apart and imitated using different materials for a lower cost
innovation
when a business creates new products and in doing so leads the market. innovation can lead to the development of new products of a new technology
technology
the design, construction and/or application of innovative devices, methods, and machinery to operation processes. it enables people to communicate easily and improve business processes
quality
how well designed, made and functional goods are. it is also the overall degree of which services are developed and executed
cost based competition
derived from determining the break even point and then applying strategies to create cost advantages over competitors
fixed costs
costs that do not change regardless of business activity
variable costs
costs that vary according to business activity level
carbon pricing
compliance costs
the expenses associated with meeting the requirements of legal regulations. these often lead to the business outsourcing
environmental sustainability
business operations should be shaped around practices that consume resources today without compromising access to resources for future generations
fiduciary
a person in a position of financial trust with respect to others’ money
outsourcing
the use of outside specialists to undertake one or more business functions
onshore outsourcing
involves the use of domestic businesses as the outsourcing provider
offshore outsourcing
involves taking activists to a provider in another country, taking advantage of regulatory differences
determining price is based on
- cost market
- market (customer demand)
- competition
low costs through operations may be achieved by:
- cheaper inputs (as long as quality is not compromised)
- maximising efficiency by minimising waste
- maximising productivity by producing more outputs from less inputs
- using technology
- producing faster
- having lower quality outputs
- increasing size of operations
relationship between cost and quality
as the standard of materials, labour and other inputs rises, and the precision and speed of facilities and equipment rises, the prices of products made by the business will increase
cross branding
adds value to products by offering consumers added benefits from the arrangements
economies of scale
cost advantages that can occur when a company increases their scale of production and becomes more efficient, resulting in a decreased cost-per-unit.
effects of achieving economies of scale
if they increase the scale, the average cost per unit decreases, a b. can achieve cost leadership ( be the lowest cost producer in the industry), giving them a competitive advantage. cost reduction opens up more opportunity for expansion or investing in new technologies. this will increase profits.
standardised goods
mass produced, uniform in quality
customised goods
varied according to the needs of customers
intermediate goods
not completed in production process or may become inputs into further processing of another product eg. an apple tv used to teach at reddam
advantages of standardised goods
- cheaper = cost leadership
- savings can be invested in growth
- greater speed
disadvantages of standardised goods
- limited market
- high volume may compromise quality
customised goods advantages
- customers are prepared to pay more
- cater for individual needs = max satisfaction
- can recruit a wider range of customers
customised goods disadvantages
- higher production cost
- need to aquire a wider range of inputs
- production process is more complex
- reduces ability to be resold - returns are deffective
4 key business functions
- marketing
- operations
- human resources
- finance
interdependance
the mutual dependance that the key business functions have on one another. interdependence occurs when each key business function area is committed to the same business goals and work in a coordinated and collaborative way to achieve these goals
operations
processes that involve transformation or production
marketing
meeting the needs and wants of customers through the distribution of products at prices that the market is willing to pay.
- product
- price
- place
- promotion
finance
recording and summarising financial transactions into a series of reports that can be easily interpreted
The main influence of operations are
- technology
- environmental sustainability
- legal regulation
- globalisation
- government policies
- quality expectations
- cost based competition
- corporate social responsibility (CSR)
technologies used in the administration of operations
planning technologies, office technologies, software
sourcing
an operations strategy that requires finding the suppliers needed so that the production process can flow smoothly
technologies used in the operation processes
large machines in manufacturing plants, robotics, CAD, CAM, CIM, rapid manufacturing
compliance
the range of laws that a business ,ust abide by
compliance costs
the expenses associated with meeting the requirements of legal regulations. Compliance costs often result in the business outsourcing to avoid them
workplace health and safety
employees need to be given appropriate safety training, protective equipment and abide by safety standards when working with machines
fair work and anti discrimination laws
employees treated equally regardless of their race, sex religion, and marital status
environmental protection
minimising pollution and disposing of waste safely
public health
meeting product safety standards and ensuring fitness for purpose of products
environmental sustainability
business operations should be shaped around practices that consume resources today without compromising access to those resources for future generations
- the sustainable use of renewable resources
corporate social responsibility
refers to an open and accountable business actions based on respect for people, community/society, and the environment. it involves the business doing more than complying with laws and regulations. CSR places value on financial returns as well as social responsibility and environmental sustainability i.e. the business can achieve the ‘triple bottom line’
ethical responsibility
involves businesses going beyond the law and taking into account broader social, community and environmental concerns
types of inputs
labour, energy, raw materials, machinery and technology
transformed resources (CIM)
inputs that are changed or converted/transformed in the operations process
customers, information, materials
transforming resources (HRF)
inputs that carry out the transformation process
Human resources and facilities
the 4 vs
volume, variety, variation in demand, visibility
volume flexibility
how quickly the transformation process can adjust to increases or decreases in the quantity demanded
advantages of achieving high volumes
- enables mass production = achieving economies of scale/cost leadership
- reduced lead times = increased customer satisfaction because excess stock can be used to meet surges in demand
- simplification of the production process
disadvantages of achieving high volumes
- may not be able to sell = resource wastage
- often standardised = may not be able to appeal to all customers
- mass production may compromise quality
- need to manage higher inventory levels
- may flood the market, cheapening the b’s brand image
mix flexibility
variety –> the mix of products made or services delivered
advantages of achieving variety
- enables b. to recruit more customers
- customers are more receptive to new products
- spreads out risk
- reinforces a b.s brand image with customers
disadvantages of achieving variety
- more complex production process
- reduces ability to undertake mass production
- unsold stock may be difficult to sell
- if one product range is defective it may damage the entire brand’s image
when do businesses experience variation in demand?
- seasonal changes
- end of financial year
- special occasions eg. christmast
advantages of being able to respond to variation in demand
- a b. can take advantages of sudden surges by increasing production, or lowering it in response to decreases in demand
- can increase their prices in response to surges
- potentially less wastage of stock
disadvantages of being able to respond to variation in demand
- it may be difficult to aquire certain inputs quickly
- if the product is too widely available it may cheapen the brand image
direct customer contact (visibility)
surveys, interviews, warranty claims, letters, and verbal contact
indirect customer contact (visibility)
review of sales data, observation of decision making processes, customer reviews
advantages of visibility
- can tailor product to suit the tastes and preferences of consumers
- creates stringer relationship with customers, strengthening brand loyalty
- makes b. more responsive to changes in demand due to changes in the b. environment
disadvantages of visibility
- requires b. to invest more resources
- negative reviews may be leaked to the public
Sequencing and scheduling (GC)
- Gantt charts
- critical path analysis
advantages of gantt charts
- enable management to plan and organise the resources to complete a project
- make it easier to monitor actual progress against planned activities
- can determine the quickest way to complete task
- visual representation of steps making it easier to communicate
critical path
the shortest amount of time it takes to complete all tasks to complete the project
advantages of working from home
- enables b. to allocate less work space for employees = saves $ in rent and provision of other amenities
- higher productivity of employees due to reduced commute times
- greater flexibility to work at convenient times outside business hours –> increase staff retention and reduces absenteeism
disadvantages from working from home
- little support for workers if they experience difficulties with technology
- less quality control due to lack of supervision
- worker may not be as productive when socially isolated (especially in creative fields)
manufacturing technologies
- computer aided design (CAD)
- computer aided manufacturing (CAM)
task design
classifying job activities in ways that make it easy for an employee to successfully perform the task
skills audit
a formal process used to determine the present level of skilling and any skill shortfalls that need to be made up either through recruitment or training
plant layout
the arrangement of equipment, machinery, and staff within the facility
process layout
layout where machines and equipment are grouped by function.
- high variety, low volume productions
- work cells or work teams
eg. hospitals
product layout
- high volume, constant quality
eg. assembly line –> car production
fixed position layout
- large scale, bulky activities
- product remains in one position due to its weight or bulk
eg. road construction, apartment blocks, home rennovations
office layout
- organised around separate workstations
- tailored to fit the needs of a business
monitoring
the process of measuring actual performance against planned performance –> monitoring kpis (key performance indicators)
key performance indicators (KPIs)/ performance objectives
- quality
- speed
- dependability
- flexibility
- customisation
- costs
control
when KPIs are assessed against predetermined targets and corrective action is taken if required (improvement).
improvement
systematic reduction of inefficiencies and wastage, poor work processes and the elimination of any bottlenecks
continuous improvement
an ongoing commitment to achieving perfection
other outputs
customer service and warranties
customer service
to make sure the right good or service is delivered or provided at the right place at the right time.
Market research has shown that businesses that provide superior customer service can:
1. Charge an average of 10% more for the same goods and services
2. Grow 2x faster than their competitors
3. Increase their market share and profit
Exceeding customers’ expectations is likely to be the key in developing long-term customer relationships (marketing).
what are warranties and what do they indicate
Warranty claims are made against goods that have defects arising from an issue in transformation.
The number of claims made against a business on a particular product line or range will give an indication of problems in the processing.
operations strategies
SNOOT QRIG
supply chain management (KPIS?)
new product/service design and development
outsourcing
objectives
technology
quality management
resistance to change
inventory management
global factors
product/service design and development approaches
- the consumer approach –> the preferences of consumers determine which products are designed and developed
- greater use of technology allows for new appealing products to be made
product/service design and development considerations
quality
supply chain management
capacity management
machinery
costs
explicit service
the tangible aspect of the service being provided such as the application of time, expertise, skill and effort.
implicit service
the feeling of being looked after that comes with the provision of the service
supply chain management
involves integrating and managing the flow of supplies throughout the inputs, transformation processes and outputs to best meet the needs of customers
LEG
Logistics
E-commerce
Global Sourcing
sourcing
the purchasing of inputs for the transformation processes.
supplier rationalisation
assessing the number of suppliers in order to reduce the number of suppliers to the minimum amount
global sourcing
businesses purchasing supplies or services without being constrained by location
advantages of global sourcing
- cost and expertise may be superior overseas
- access to new technologies and resources unavailable in the domestic market
disadvantages of global sourcing
- possible relocation of some aspects of production = possible loss of control of certain tasks
- increased use of logistics, storage and distribution
- managing different regulatory conditions between nations
e-commerce
involves the buying and selling of goods and services via the internet
advantages of e-commerce
- more convenient for some customers = increases brand loyalty
- reduces amount of retail space required = saves money in rent and wages
- increases competitiveness of a business
disadvantages of e-commerce
- the b. needs to manage inventory more effectively
- the website must be user friendly
B2B (business to business arrangement)
direct access from one business (the supplier) to another (the buyer)
B2C (business to consumer)
businesses may opt to sell directly to consumers
logistics
broadly refers to distribution but also includes transport, storage, ware housing and material handling
warehousing
long term facility for the storage, protection and distribution of a product
distribution center
not intended for long term storage
EDI (electronic data interchange)
ordering stock and supplies via a business’s computer system eg. a scanner in a supermarket that detects stock levels and automatically orders new stock when necessary
co-sourcing
a variation of outsourcing where the work is not done by an external party, but rather an external expert who works within the business as a contractor.
advantages of outsourcing
- focus on core functions
- access to cheaper labour, regulatory differences and skilled labour = fewer costs
- increased process capability = increased quality
disadvantages of outsourcing
- loss of control over standards and information
- loss of corporate memory and vulnerability
- organisational change and redesign
leading edge technology
the technology that is most advanced or innovative at any point in time.
bleeding edge technology
technology that is so new that it has a greater degree of risk in terms of unreliability for those who adapt it
advantages of leading edge technology
- increased speed of operations
- cost leadership
- minimises resource wastage (detecting product defects)
- competitive advantage
disadvantages of leading edge technology
- exposure to risk if its unreliable
- may be difficult to repair if its use is not widespread
- expensive
established technology
technology that has been developed and is widely used
advantages of established technology
- cheaper to acquire, repair and maintain
- customers are more receptive
- more reliable
disadvantages of established technology
- cannot use to gain a competitive advantage
- can create the perception that the business lacks innovation
- less efficient = competitive disadvantage
advantages of holding stock
- consumer demand can be met
- reduces lead times
- older stock can be sold at reduced prices
- stocks are an asset, reflecting well on the balance sheet
disadvantages of holding stock
- storage charges
- spoilage
- theft
LIFO (last in first out)
where the most recent stock in the storeroom is the first to be sold
FIFO (first in last out)
where stock is used in the order that it was put in the stockroom
quality management types
- quality control –> reactive
- quality assurance –> proactive
- total quality management –> continuous improvement
