Unit 4 Flashcards
What are the operational objectives?
- Cost
- Quality
- Speed of response and flexibility
- Dependability
- Environmental objectives
- Added value
What are the internal influences on operational objectives?
- Finance (budget)
- People (skills of workforce)
- Effective marketing ( important in service sector)
- Capital ( Capital intensive will mean high initial costs)
- Target market
- Regulatory environment
- Geographical
What are the external influences on operational objectives?
- Benchmarking
- Environmental targets
- Innovation
- PED and YED
- Ethical factors
What is the formula for labour productivity?
total output / number of employees
What is labour productivity influence by?
- Training and skills of the workforce
- Motivation
- Complexity of the product
What is the formula of unit cost?
Total cost / output
What is unit cost influenced by?
- Number of units produced
- Labour productivity
- Suppliers
- Material usage
What is capacity?
The maximum amount of output achievable
What is the capacity utilisation formula?
Actual output / maximum output x 100
What are the different ways of increasing efficiency
- Increasing capacity utilisation
- Increasing labour productivity
- Lean production techniques
- Choosing the optimal resource mix
- Using technology
How to utilise capacity effectively?
Under utilisation:
- Increase demand.
- Downsize.
- Lease of spare capacity.
Over utilisation:
- Reduce demand (increase price).
- Outsource parts of the business’ operations.
- Increase capacity by investing more resources.
How can labour productivity be increased?
- Training
- Increasing motivation
- Implement new technology
- Better working practises
- Improved recruitment and selection
What is the problems with increasing labour productivity?
May Impact negatively on quality and customer satisfaction:
- Damage to long term reputation
- Increase waste affecting unit cost
Employees may feel exploited:
- Working harder for same pay
- Business benefiting but not employees
- Increased workload.
What is lean production?
Techniques that focus on cutting waste
What are the types of lean production?
- Just in time (minimise stock holdings)
- Kaizen (concentrates on small but frequent improvements)
Pros of Just in time?
- Less costs in holding stock.
- Less working capital required
- Less obsolete or ruined inventory
- Lower associated costs
- Avoids having unsold stock
Cons of Just in time?
- Little room for error
- Very reliant on suppliers
- Unexpected orders harder to meet
- Any delays in deliveries could cause production to halt
- high initial set up costs
- Complex systems have to be put in place and understood
What is a capital intensive workforce?
Uses machinery in goods and services.
What is labour intensive workforce?
Uses people in goods and services.
Pros of capital intensive
- Increased productivity
- Improved quality and speed
- Reduced labour costs
- Greater opportunities for economies of scale.
Cons of capital intensive?
- High investment outlay
- Lack of human initiative.
- Greater resistance to change by workforce
Pros of labour intensive?
- Often cheaper when in low wage locations
- Workforce can easily adapt to change
- Continuous improvement in workforce can benefit the firm
- Government funding available to protect jobs.
Cons of labour intensive?
- Industrial relations can be a problem
- Lack of skilled workers in some industries
- HRM costs can be high e.g. recruitment, selection and training.
How can technology be used in increasing efficiency?
- Robotics
- Automation
- Communication
- Design technology
What factors can affect interpretation of quality?
- Price
- Brand
- Customer’s personal expectations and experiences
- Nature of product or service.
Why is quality important?
- Less waste
- PR
- USP
- Pricing decisions
- Improved competitiveness
Methods of improving quality?
- Training and motivating employees
- Understanding customers’ expectations
- Using tech
- Working with suppliers
- Quality systems
What is quality control?
The checking of a good and service at the end of the process.
Pros of quality control?
- Quality can be monitored
- Stops faulty products reaching the customer
- Common problems can be identified
- Inspector takes responsibility
- Often robust system
Cons of quality control?
- Takes responsibility away from operatives
- Requires specialist to check
- Problems only identified at end.
- Waste levels may be high.
What is quality assurance?
The checking of a product or service at each stage of production.
Total quality management (TQM)
Pros of quality assurance?
- Spots faults early saving resources being wasted at next stages
- Motivates workers
- Ensures clear systems are in place
- Enhances the reputation of the business as less chance of faulty goods reaching at the end customers
Cons of quality assurance
- Requires staff training and high levels of staff commitment
- Can slow down the production process and labour
- May demotivate workers under pressure
- Opportunity cost of managers time when implementing systems.
What is Total Quality Management?
Sees quality as the responsibility of all employees.
Pros of TQM?
- Achieve operational objectives
- Gain a competitive advantage
- Reduce unit costs
- Better PR
- Motivated workforce working towards a common goal.
Cons of TQM?
- Reluctance of employees to adapt
- Requires finance to invest in training, test and implement new systems
- Reliant on good relationship with suppliers
- Once made must be monitored and reviewed to ensure standards are meet.
What is flexibility in supply chain?
- To meet a sudden increase or decrease in demand
- Change an aspect of the product to meet changing consumer tastes
- Respond to erratic demand.
To be flexible what does a business need suppliers to be?
- Fast
- Dependable
How can demand be met?
- Outsourcing can be used to be able to match a sudden demand in the business.
- Using temporary and part time employees.
Pros of outsourcing?
- Provides flexibility
- Can increase capacity without high capital expenditure
- Can buy in expertise
Cons of outsourcing?
- Quality must be maintained
- Sub-contractor will also want to be making a profit
Pros of temporary and part time workers
- Flexible workforce
- Better able to match supply to demand
- Not tied into paying workers when they are not being used to their full potential
Cons of temporary and part time workers
- Recruitment and training costs may be high and not seen as value for money when employees are only with the business for a short period of time
- May be more transient
- May lack commitment
Influences on the amount of stock held?
(Useful on questions where a business may go JIT)
- The business’ attitude to risk
- The importance of speed of response as an operational objective
- Speed of change within the market
- Nature of the product e.g. perishable or long lasting
Pros of buffer stock?
- Can meet customer demand
- Quickly respond to increases in demand
- Continue with production even if a problem with stock deliveries
Cons of buffer stock
Money tied up in holding stock
Costs associated with stock holding e.g. storage, staff, insurance
Risk of waste e.g. out of date, damaged or obsolete
