Unit 4 Flashcards
The importance of quality ?
+ provide a USP
+ allows the business to charge a premium price, increasing profit margins
+ enables the business to increase its sales
+ enhances reputation and brand loyalty
What are the 3 main ways to improve quality ?
Quality assurance
Quality control
Total quality management
Kaizen
What is quality assurance ?
a mechanism put in place to ensure quality is checked throughout the entire operations process
What is quality control ?
When quality is checked at the end of the production process
What is total quality control (TQM) ?
a type of quality assurance, where the business instills a culture of quality throughout the organisation
What are the characteristics of total quality management (TQM) ?
+ focuses on customer needs
+ continuous improvement
+ employee involvement and empowerment
+ managing suppliers
What is Kaizen ?
The Japanese business philosophy of continuous improvement, where all employees are encouraged to identify and suggest possible improvements in the production process
What are the main benefits of improving quality ?
+ USP
+ ability charge a premium price
+ competitive advantage
+ higher sales
+ increased brand loyalty
What are the main difficulties of improving quality ?
- expensive
- employees may be resistant to change
What are the consequences of poor quality ?
. Costs of scrapping or reworking products
. Costs of returned goods or replacement under warranty
. The costs resulting from damage to the businesses reputation
What does the supply chain refer to ?
1) the supply of materials to the manufacturer
2) the manufacturing process
3) the distribution of the finished goods to the consumer
In business what does flexibility refer to ?
the ability of a business to meet a customers requirements. E.g. number of orders
What is sipped of response ?
refers to how quickly a business fulfils an order
What does dependability refers too ?
The punctuality or whether a business fulfils its order on time.
It’s is important that a business is able t meet its demand with supply ?
What is the problem if there is too little supply ?
a business will miss out on lucrative order but will lose future orders use to lack of dependability
What is the problem with too much supply ?
the business will incur costs of holding excess supply, and the business may be forced to sell it good at a reduced price
What are the 3 ways a business can manage demand ?
. Increasing prices or reducing prices
. Increasing or reducing advertising
. Sales promotion
How can supply be managed ?
. Flexible workforce
. Increase capacity
. Increase productivity
. Outsourcing
What are the main influences on the amount of inventory held ?
+ nature of product (perishable good or not)
+ nature of production (a just in time method of production JIT)
+ nature of demand (seasonal demand)
+ opportunity cost (any money tied up in stocks could be better used elsewhere)
What influences the choice of supplier ?
. Dependability
. Flexibility
. Quality
. Price and payment terms
. Ethics
What are the Benefits of outsourcing ?
+ enabling of quicker response to increases in demand
+ greater dependability for customers during increases in demand
+ lower cost, particularly in the event of temporary increases in demand
What are the drawbacks of outsourcing ?
- quality may suffer
- reliability of suppliers may not be guaranteed
- it is likely to be more costly than producing in-house
