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Anyalsing financial performance > Understanding Operations, Logistics and Supply Chain Management > Flashcards

Understanding Operations, Logistics and Supply Chain Management Flashcards

1
Q

Productivity

A

Units Produced/input used

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1
Q

Labour Productivity

A

Units Produced/Labour-hours used

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2
Q

Multi-Factor Productivity

A

Output/Labour+Material+Energy+Capital+Miscellaneous

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3
Q

Why companies select Good and services?

A

1) Organizations exist to provide goods or services to society
2) Great products are the key to success
3) Top organizations typically focus on core products
4) Customers buy satisfaction, not just a physical good or service
5) Fundamental to an organization’s strategy with implications throughout the operations function

Limited and predictable life cycles require constantly looking for, designing, and developing new products
Utilize strong communication among customer, product, processes, and suppliers
New products generate substantial revenue

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4
Q

Product Decision

A

The objective of the product decision is to develop and implement a product strategy that meets the demands of the marketplace with a competitive advantage

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5
Q

Product Strategy Options

A

Differentiation
Low cost
Rapid response

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6
Q

Product Life Cycles

A

Introduction
Growth
Maturity
Decline

can last days to decades

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7
Q

Quality Functions Deployment

A

Quality function deployment (QFD)
Determine what will satisfy the customer
Translate those customer desires into the target design

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8
Q

House Quality

A

House of quality
Utilize a planning matrix to relate customer wants to how the firm is going to meet those wants

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9
Q

QFD House of Quality

A

1) Interrelationships
2)How to satisfy
customer wants
3a)Customer importance ratings
3b)What the customer
wants
4)Relationship matrix
5)Competitive assessment
6)Weighted Rating
7)Target Values
8)Technical Evaluation

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10
Q

Designing Processes

A

Process types are defined by the volume and variety of ‘items’ they process
Process types go by different names depending on whether they produce products or services.

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11
Q

Manufacturing Process Types

A

Project
Job Shop
Batch
Mass
Continuous

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12
Q

Project

A
  • Made or provided on site as it is too large or difficult to move after completion.
  • Resources to make the product are brought to the site, allocated for the duration of the project and then reallocated once their part of the task is finished.
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13
Q

Job Shop

A
  • Unique one-off or special product. Requirement is that the product is transportable.
  • One person or a small group of skilled people do everything (including clarifying issues with the customer)
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14
Q

Batch Production

A
  • Standard, repeat products, the volume demand for which justifies the process investment.
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15
Q

Mass (or Line) Production

A

Standard, repeat, high volume, mass products.
Sequential process

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16
Q

Continuous processing

A
  • Standard, very high volume (mass) products
  • Materials are processed through successive stages, with automatic transfer of the product from stage to stage.
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17
Q

Customer Process Types

A

Professional Service
Service Shop
Mass Services

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18
Q

Professional service

A

High degree of labour intensity (low degree of capital intensity)
High degree of interaction and customisation (high-contact)

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19
Q

Service shop

A

Mix between people and equipment
Medium degree of interaction and customisation

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20
Q

Mass service

A

Equipment-based (high degree of capital intensity)
Low degree of interaction and customisation (low-contact)

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21
Q

Location

A

the place where a firm decides to site its operations.

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22
Q

The Strategic Importance of Location

A
  • One of the most important decisions a firm makes
    Increasingly global in nature
  • Significant impact on fixed and variable costs
  • Decisions made relatively infrequently
    Long-term decisions
  • Once committed to a location, many resource and cost issues are difficult to change

The objective of location strategy is to maximize the benefit of location to the firm

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23
Q

Options for Location

A

Expanding existing facilities
Maintain existing and add sites
Closing existing and relocating

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24
Q

Location and Costs

A

-Once in place, location-related costs are fixed in place and difficult to reduce
-Determining optimal facility location is a good investment

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25
Q

Country Decision

A

Political risks, government rules, attitudes, incentives
Cultural and economic issues
Location of markets
Labor talent, attitudes, productivity, costs
Availability of supplies, communications, energy
Exchange rates and currency risks

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26
Q

Region/ Community Decision

A

Attractiveness of region
Labor availability and costs
Costs and availability of utilities
Environmental regulations
Government incentives and fiscal policies
Proximity to raw materials and customers
Land/construction costs

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27
Q

Site Decision

A

Site size and cost
Air, rail, highway, and waterway systems
Zoning restrictions
Proximity of services/ supplies needed
Environmental impact issues

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28
Q

Factors That Affect Location Decision

A

Labour Productivity
Exchange rate and Currency risk
Cost
Political risk, values, and culture
Proximity to markets
Proximity to suppliers
Proximity to competitors (clustering)

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29
Q

Factor-Rating Method

A

1) Develop a list of relevant factors called key success factors
2) Assign a weight to each factor
3) Develop a scale for each factor
4) Score each location for each factor
5) Multiply score by weights for each factor for each location
6) Make a recommendation based on the highest point score

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30
Q

Locational Cost-Volume Analysis

A

1) Determine fixed and variable costs for each location
2) Plot the cost for each location
3) Select location with lowest total cost for expected production volume

31
Q

Service Location Strategy

A

1) Purchasing power of customer-drawing area
2) Service and image compatibility with demographics of the customer-drawing area
3) Competition in the area
4) Quality of the competition
5) Uniqueness of the firm’s and competitors’ locations
6) Physical qualities of facilities and neighbouring businesses
7) Operating policies of the firm
8) Quality of management

32
Q

Strategic Importance of Layout Decisions

A

The objective of layout strategy is to develop an effective and efficient layout that will meet the firm’s competitive requirements

33
Q

Layout Design Considerations

A

1) Higher utilization of space, equipment, and people
2) Improved flow of information, materials, or people
3) Improved employee morale and safer working conditions
4) Improved customer/client interaction
5) Flexibility

34
Q

Types of Layout

A

Office layout
Retail layout
Warehouse layout
Fixed-position layout
Process-oriented layout
Work-cell layout

35
Q

Office layout

A

Positions workers, their equipment, and spaces/offices to provide for movement of information

Three physical and social aspects
Proximity
Privacy
Permission
Two major trends
Information technology
Dynamic needs for space and services

36
Q

Retail layout

A

Allocates shelf space and responds to customer behavior

Five Helpful Ideas for Supermarket Layout
1) Locate high-draw items around the periphery of the store
2) Use prominent locations for high-impulse and high-margin items
3) Distribute power items to both sides of an aisle and disperse them to increase viewing of other items
4) Use end-aisle locations
5) Convey mission of store through careful positioning of lead-off department

37
Q

Warehouse layout

A

Addresses trade-offs between space and material handling

All costs associated with the transaction
Incoming transport
Storage
Finding and moving material
Outgoing transport
Equipment, people,
material,supervision, insurance,
depreciation
Minimize damage and spoilage

38
Q

Fixed-position layout

A

Addresses the layout requirements of large, bulky projects such as ships and buildings

Product remains in one place
Workers and equipment come to site
Complicating factors
Limited space at site
Different materials 
required at different 
stages of the project
Volume of materials 
needed is dynamic

39
Q

Process-oriented layout

A

Deals with low-volume, high-variety production (also called job shop or intermittent production)

Arrange work centers so as to minimize the costs of material handling
Basic cost elements are
Number of loads (or people) moving between centers
Distance loads (or people) move between centers

40
Q

Work cell layout

A

Arranges machinery and equipment to focus on production of a single product or group of related products

Advantages of Work Cells
Reduced work-in-process inventory
Less floor space required
Reduced raw material and finished goods inventories
Reduced direct labor cost
Heightened sense of employee participation
Increased equipment and machinery utilization
Reduced investment in machinery and equipment

Requirements of Work Cells
Identification of families of products
A high level of training, flexibility and empowerment of employees
Being self-contained, with its own equipment and resources

41
Q

Repetitive and Product-Oriented Layout

A

Organized around products or families of similar high-volume, low-variety products

1) Volume is adequate for high equipment utilization
2) Product demand is stable enough to justify high investment in specialized equipment
3) Product is standardized or approaching a phase of life cycle that justifies investment
4) Supplies of raw materials and components are adequate and of uniform quality

Fabrication line
Builds components on a series of
machines
Machine-paced
Require mechanical or engineering
changes to balance
Assembly line
Puts fabricated parts together at a
series of workstations.
Paced by work tasks
Balanced by moving tasks

Advantages
Low variable cost per unit
Low material handling costs
Reduced work-in-process inventories
Easier training and supervision
Rapid throughput

Disadvantages
High volume is required
Work stoppage at any point ties up the whole operation
Lack of flexibility in product or production rates

42
Q

Inventory Management

A

The objective of inventory management is to strike a balance between inventory investment and customer service

43
Q

Importance of Inventory

A

One of the most expensive assets of many companies representing as much as 50% of total invested capital
Operations managers must balance inventory investment and customer service

44
Q

Functions of Inventory

A

To provide a selection of goods for anticipated demand and to separate the firm from fluctuations in demand
To separate various parts of the production process
To take advantage of quantity discounts

45
Q

Types of Inventory

A

Raw material
Work-in-process (WIP)
Maintenance/repair/operating (MRO)
Finished goods

46
Q

Material Flow Cycle

A

Input
Wait for inspection
Wait to be moved
Move/Wait in queue time for operator time
Setup time
Run Output

47
Q

ABC Analysis

A

Divides inventory into three classes based on annual dollar volume
Class A - high annual dollar volume
Class B - medium annual dollar volume
Class C - low annual dollar volume

Other Categories
High shortage or holding cost
Anticipated engineering changes
Delivery problems
Quality problems

Policies employed may include
More emphasis on supplier development for A items
Tighter physical inventory control for A items
More care in forecasting A items

48
Q

Inventory Models

A

Independent demand - the demand for item is independent of the demand for any other item in inventory
Dependent demand - the demand for item is dependent upon the demand for some other item in the inventory
Holding costs - the costs of holding or “carrying” inventory over time
Ordering costs - the costs of placing an order and receiving goods
Setup costs - cost to prepare a machine or process for manufacturing an order

49
Q

Inventory Models for Independent Demand

A

Basic economic order quantity (EOQ) model
Production order quantity model
Quantity discount model

50
Q

Basic EOQ Model

A

Demand is known, constant, and independent
Lead time is known and constant
Receipt of inventory is instantaneous and complete
Quantity discounts are not possible
Only variable costs are setup (or ordering) and holding

51
Q

Minimising Costs

A

By minimizing the sum of setup (or ordering) and holding costs, total costs are minimized
Optimal order size Q* will minimize total cost
A reduction in either cost reduces the total cost
Optimal order quantity occurs when holding cost and setup cost are equal

52
Q

ECQ Equations

A

Q= Number of pieces per order
Q*= Optimal number of pieces per order (EOQ)
D= Annual demand in units for the inventory item
S= Setup or ordering cost for each order
H= Holding or carrying cost per unit per year

Annual setup cost =(D/Q)S
Annual holding cost = (Q/2)H

Optimal order quantity is found when annual setup cost equals annual holding cost

When including actual cost of material P

Total annual cost = Setup cost + Holding cost + Product cost

TC = (D/Q)S + (Q/2)H + PD

53
Q

Reorder Points

A

The reorder point (ROP) tells “when” to order
Lead time (L) is the time between placing and receiving an order

ROP = Demand per day*Lead time for a new order in days.

Demand per day = Annual demand in units for the inventory item/Number of working days in a year

54
Q

Transportation

A
  • Largest proportion of overall logistics cost for most retailers
  • Must suit both the materials to be moved and the other components of the system as precisely as possible.
  • Consider each mode of transport, identify the main characteristics, and decide in what ways the benefits of these features can best be used to move goods along the supply chain.
55
Q

Factors determining Transportation model selection

A
  • State (solid, liquid, gas)
  • Mass (weight, volume and dimensions)
  • Urgency (commercial perishability – compare transit times, which operator is likely to meet deadlines)
  • Cost vs. value (transport cost vs. commodity value)
  • Market (geographic concentration of a product or market)
56
Q

Transportation Modeling

A

An interactive procedure that finds the least costly means of moving products from a series of sources to a series of destinations

Can be used to 
help resolve 
distribution 
and location 
decisions

A special class of linear programming
Need to know
The origin points and the capacity or
supply per period at each
The destination points and the
demand per period at each
The cost of shipping one unit from
each origin to each destination

57
Q

Northwest-Corner Rule

A

Start in the upper left-hand cell (or northwest corner) of the table and allocate units to shipping routes as follows:

Exhaust the supply (factory capacity) of each row before moving down to the next row

Exhaust the (warehouse) requirements of each column before moving to the next column

Check to ensure that all supplies and demands are met

58
Q

Intuitive Lowest-Cost Method

A

Identify the cell with the lowest cost

Allocate as many units as possible to that cell without exceeding supply or demand; then cross out the row or column (or both) that is exhausted by this assignment

Find the cell with the lowest cost from the remaining cells

Repeat steps 2 and 3 until all units have been allocated

59
Q

Distribution channel/Product distribution

A

a route taken by a commodity between the point of its production and the point of its sale and/or consumption

60
Q

Traditional distribution channel

A

Supplier / manufacturer -> Customer

Supplier / manufacturer -> Retailer -> Customer

Supplier / manufacturer -> wholesaler ->Retailer -> Customer

Supplier / manufacturer -> Agent->wholesaler ->Retailer -> Customer

61
Q

Some distribution channel options

A

Manufacturer direct to retailer

Manufacturer - own warehouse – retailer

Manufacturer - wholesale warehouse – retailer

Manufacturer - retailer’s warehouse – outlets

Manufacturer - third party – distributor – retailer

62
Q

Objectives of Channel Selection

A

Maximise sales opportunities

Achieve high levels of product (on shelf) availability

Achieve high levels of customer service

Minimise costs

Smooth integration of commercial and physical aspects of the distribution chain

63
Q

Supply-Chain Management

A

The objective of supply chain management is to structure the supply chain to maximize its competitive advantage and benefits to the ultimate consumer

64
Q

The Supply Chain’s
Strategic Importance

A

The coordination of all supply chain activities, starting with raw materials and ending with a satisfied customer

Includes suppliers, manufacturers and/or service providers, distributors, wholesalers, retailers, and final customers

65
Q

Sourcing Issues

A

Make-or-buy decisions
Choosing between obtaining products
and services externally as opposed to
producing them internally
Outsourcing
Transfer traditional internal activities
and resources to outside vendors
Efficiency in specialisation
Focus on core competencies

66
Q

Sourcing Strategies

A

Many suppliers
Few suppliers
Vertical integration
Joint ventures
Virtual companies

67
Q

Many Suppliers

A

Commonly used for commodity products

Purchasing is typically based on price

Suppliers compete with one another

Supplier is responsible for technology, expertise, forecasting, cost, quality, and delivery

68
Q

Few Suppliers

A

Buyer forms longer term relationships with fewer suppliers

Create value through economies of scale and learning curve improvements

Suppliers more willing to participate in JIT programs and contribute design and technological expertise

Cost of changing suppliers is huge

Trade secrets and other alliances may be at risk

69
Q

Vertical Integration

A

Developing the ability to produce goods or services previously purchased
Integration may be forward, towards the customer, or backward, towards suppliers
Can improve cost, quality, delivery, and inventory but requires capital, managerial skills, and demand
Risky in industries with rapid technological change

70
Q

Joint Ventures

A

Formal collaboration
Enhance skills
Secure supply
Reduce costs
The challenge is to cooperation without diluting brand or conceding competitive advantage

71
Q

Virtual Companies

A

Rely on a variety of supplier relationships to provide services on demand
Fluid organizational boundaries that allow the creation of unique enterprises to meet changing market demands
Relationships may be short- or long-term
Exceptionally lean performance, low capital investment, flexibility, and speed

72
Q

Supply Chain Risk

A

More reliance on supply chains means more risk
Fewer suppliers increase dependence
Compounded by globalization and logistical complexity
Political and 
currency risks

73
Q

Risk and Mitigation Tactics

A

Research and assess possible risks
Innovative planning
Reduce potential disruptions
Prepare responses for negative events
Flexible, secure supply chains
Diversified supplier base

74
Q

Building the Supply Base

A

Supplier evaluation
Finding potential suppliers
Determine likelihood of their
becoming good suppliers
Supplier certification
Qualification
Education
Certification

Supplier development
Integrate the supplier into the system
Quality requirements
Product specifications
Schedules and delivery
Procurement policies
Training
Engineering and production help
Information transfer procedures

Negotiation
A significant element in purchasing
Highly valued skills
Cost-based price model
Supplier opens books
Market-based price model
Based on published, auction, or
indexed prices
Competitive bidding
Common policy for many purchases
Does not generally foster long-term
relationships

Contracting
Share risks, benefits, create incentives
Centralised purchasing
Leverage volume
Develop specialised staff
Develop supplier relationships
Maintain professional control
Devote resources to selection and
negotiation
Reduce duplication of tasks
Promote standardisation

75
Q

The SCOR (supply chain operations reference) Model


A

Plan: Demand/Supply planning and Management
Source: Identify, select, manage, and assess sources
Return: Raw material
Make: Manage production execution, testing, and packaging
Deliver: Invoice, warehouse, transport and install
Return: Finished goods

Anyalsing financial performance (2 decks)

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