Test 1 Flashcards
What is Operations management?
The design, operation, and improvement of the systems that create and deliver the firm’s primary products and services
What are the process activities?
Planning, sourcing, making, delivering, and returning
Which of the five process activities is consistently used?
Planning - process needed to operate an existing supply chain
What is the difference between operations and supply chain?
- operations is the manufacturing and service processes used to transform resources into products
- supply chain is a process that moves information and material to, through, and from the firm
What is the difference between a good and service?
Goods:
1. can be stored
2. aspects of quality are measurable
3. tangible
Services:
1. difficult to inventory
2. quality is hard to measure
3. intangible process
4. heterogeneous
What is a pure-good?
Food products, chemicals, mining
What is a Core Good?
Appliances, automobiles, data storage systems
What is a core service?
hotels, airlines, service providers
What is a pure service?
Universities, medical, investment
What is the difference between efficiency and effectiveness?
- Efficiency is doing something at the lowest possible cost
- Effectives is doing the right things to create the most value
What is strategy?
Describes how a firm will create and sustain value for its current shareholders
Shareholder vs. Stakeholder
shareholder = owners
stakeholder - influenced by the actions of the firm
Triple Bottom Line
- economic prosperity
- environmental stewardship
- social responsibility
What is OSCM Strategy?
policies and plans for using the resources of a firm – must be integrated with corporate strategy
Operations Strategy Formula consists of…
- Customers
- Company
- Competitors
What are the competitive dimensions?
Price
Quality
Delivery speed
Delivery reliability
Coping with changes in demand
Flexibility and new product introduction speed
Trade-offs are when…
Management must decide which parameters are critical and concrete resources
What is straddling?
Seeking to match a successful competitor by adding features, services, or technology to existing activities
Managers will pick tradeoffs that…
align with goals
What is an order qualifier?
Dimension that are necessary for a firm’s products to be considered for purchase by customers (features customers will not give up)
What is an order winner?
Criteria used by customers to differentiate the products and services of one firm from those of the other firms (features customers use to determine which product to ultimately purchase)
What is productivity?
A measure of the effective use of resources, usually expressed as the ration of output to input
Productivity is what kind of measure?
Relative measure
Partial Measure
output/ labor, output/capital, etc
Multi-factor measure
output/labor+capital+energy
Total measure
outputs/inputs
What are the new product opportunities?
- understand the customer
- economic change
- sociological and demographic change
- technological change
- political/legal change
- market practices/standards
Does human/customer behavior impact a business?
Yes
What part of the product life cycle includes r&d?
introduction
What part of the product life cycle includes the product stabilizing and forecasting capacity?
Growth
What part of the product life cycle consists of establish competitors, high volume production, and improved cost control?
Maturity
What part of the product life cycle consists of planning to terminate the product?
Decline
What was the historical approach for organizing product development?
Distinct departments where duties were defined and forward thinking was difficult (silos)
What is today’s approach for organizing product development?
team approach where there is cross functioning/ concurrent engineering. Representatives from all disciplines or functions
What is concurrent engineering?
Simultaneous development of project design functions with open and interactive communication existing among all team members
What is the purpose of concurrent engineering?
- reduce time to market
- decrease costs
- improve quality and reliability
- can be dangerous if not well organized
What is the purpose of Value Analysis/Value Engineering (VA/VE)?
simplify products, processes, and achieve better performance. Used with concurrent engineering
What is a supply chain?
interconnected network that includes organizations, activities, and people working together to achieve efficient flow of inventory and information
What is supply chain management?
involves overseeing and managing the flow of inventory, information, and finances, as products move from start (origin) to end (customer)
How does supply impact demand and vice versa?
The more demand you have the more supply you need. This is key to efficiency
What are the two types of supply chains?
Agile and Lean
What is an agile supply chain?
Designed to operate efficiently while optimizing speed and adaptability
What is a lean supply chain?
Designed to operate efficiently while focusing on eliminating waste and minimizing costs
Which supply chain is fast and flexible, is used for products with short life cycles or innovative products such as cell phones?
Agile
Which supply chain focuses on reducing waste and costs, is most suitable for traditional products with long life cycles like can openers?
Lean
What is vertical integration?
owning multiple assets within a supply chain
Raw materials
Parts and materials obtained from suppliers and used in the production process
Work-in-process (WIP)
partly finished parts, components, or modules
Finished goods
items are ready to ship to the customer and no more work is required
What is strategic sourcing?
development and management of supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of the business
Request for Proposal (RFP)
Used for purchasing items that are more complex or expensive and where there may be a number of potential vendors
Vendor managed inventory
when a customer actually allows the supplier to manage an item or group of items for them
What is the importance of procurement?
Effective procurement strategies ensure that quality products are sourced while maintaining cost-efficiency
What is essential for successful procurement?
balancing quality and cost
What has a SHORT contraction duration, a LOW specificity, and a HIGH transaction cost?
Request for proposal
What has a LONG contraction duration, a HIGH specificity, and a HIGH transaction cost?
Strategic Alliance
What has a LONG contraction duration, a HIGH specificity, and a LOW transaction cost?
Vendor managed inventory
What is outsourcing?
good and services are obtained from outside providers
What is insourcing?
Goods and services are produced by the company itself
Why is outsourcing preferred?
- Reduces costs
- Improve quality and productivity
- Improve the effectiveness of the organization
- Has to align w/ core competencies
What is supplier evaluation and criteria?
A process to identify best and most reliable suppliers
Sourcing decisions are made on…
facts not perception
When evaluating a new supplier use…
criteria
When evaluating an old supplier use…
performance metrics
Step 1 - Material/Purchase Requisition
First step in procurement process, states product, quantity needed (planned order release)
Step 2 - Request for Quotation (RFQ)
Second step in procurement process, buyers request a quote on for product
Step 3 - Purchase Orders (PO)
is the buyers offer and becomes a binding contract. If initiated by the supplier its a sales order
What does EDI stand for?
Electronic Data Interchange
What are the benefits to a strategic alliance?
- lower investment and financial risk
- increases brand presence/strong partnerships
- speed to market
Green Sourcing
- Important to reduce waste!!
- suppliers are focused on sustainability
What is inventory turnover?
How often the inventory is replaced during the year
Inventory Turnover formula
COGS/ Avg. aggregate inventory value
Avg. aggregate inventory value
total value of all items held in inventory
Weeks of supply
how many weeks worth of inventory is in the system at a particular point in time
Weeks of Supply Formula
(Avg. aggregate inventory/COGS) x2
What is logistics?
art and science of obtaining, producing, and distributing material and product in the proper place and proper qualities
International logistics
managing logistic functions on a global scale
Logistics involves the flow of…
information and money
3PL
an outside company used to mange all or part of another company’s logistics functions and warehouse fulfillment
What logistic system has HIGH volume, LOW cost, and SLOW delivery speeds?
Water
What logistic system has LOW volume, HIGH cost, and FAST delivery speeds?
Air
What is a warehouse?
Facility where goods are stored for future use
What is a distribution center?
Warehouse that performs additional services for processing orders
What is cross-docking?
Large incoming shipments are broken down into small shipments for local delivery
What is a fulfillment center?
Distribution center designed to handle small, individual orders that are prepared for shipment to individual retail cutomers
What is the common process in a distribution facility?
- inventory tracking
- receiving
- stowing
- picking
- packing
- shipping
What criteria should be looked at when locating for a logistics facility?
- proximity to customers
- business climate (clustering)
- total costs
- tariffs (gov’t barriers)
- infrastructure
- quality of labor
- host community
What is the factor rating system?
Most widely used and has a range of possible points assigned to each factor. The sums of assigned points for each site are computed and site with the most points is selected
What is the centroid method?
Used for locating single facilities and their proximity to other facilities.
Total cost equation
TC = VCx + FC
Capacity is…
the ability to hold, receive, store, or accommodate (about balance)
The basic questions in capacity are:
- What type of capacity is needed?
- How much is needed?
- When is it needed?
Planning horizons is…
a period of time over which a company or organization plans its production or operations. Duration of time planning for product.
The standard for capacity planning is?
Intermediate range
- monthly or quarterly for next 6-18 months
Design capacity
MAXIMUM designed capacity or output rate (glass is filled to brim)
Effective capacity
MAXIMUM capacity with consideration to circumstances
What is capacity utilization?
measure of the degree to which a system. process. or resource is being used to its full capacity.
Capacity Utilization formula
actual output/design capacity x100
What is efficiency rate?
measure of how effectively a system, process, or resource is being used to produce output
Efficiency rate formula
actual output/effective capacity x100
What is capacity cushion?
level of capacity in excess of the avg utilization rate or level of capacity in excess of the expected demand
Capacity fusion formula
(1/avg utilization rate)-1
When is a large capacity cushion suitable?
- uncertainty in demand
- service industry
When is a small capacity cushion suitable?
- highly capital intensive
-time perishable
Economies of scope
economies of scale through product line diversification (Apple making iPad and iPhones on the same equipment)
Decision Node
represented by squares
Chance Node
represented with circles
Paths
