Unit 4 Flashcards
What is operation management?
describes the activities, decisions and responsibilities of managing production and delivery of products and services
What does operation management involve?
managing the process of converting inputs into outputs. It transforms resources into products and services
What things are considered when setting operational objectives?
- level of output a business needs to be able to produce
- range of products a business wants to offer, the level of customer service to provide and how flexible a business wants to be in relation to customer demands
- how best to produce the good or service: labour intensive and capital intensive
- how best to provide the good or service to the customer
- how much of the process managers want the business to provide themselves and how they want to use supplied
What is labour intensive?
means that a higher proportion of labour is being used compared to capital equipment
What is capital intensive?
means that a higher proportion of capital equipment is being used compared to labour
What is the supply chain?
the series of activities involved in taking the initial resources to providing the final product
What are the series of stages throughout the operations process?
1 - raw materials 2 - manufacturing 3 - transportation 4 - retail 5 - disposal / recycling
What are the 4 v’s in categorising operations?
volume of output
variety of demand
variability of production
visibility of output
What is the visibility of production
refers to how visible the staff are in relation to the final customer (direct contact)
What are the features of having low volume of output?
- high unit costs
- employees likely to be multiskilled
- little repetition of tasks
What are the features of having high volume of output?
- low unit costs
- high repeatability
- capital intensive
What are the features of having low variability of demand?
- stable
- routine
- predictable
- high capital utilisation
What are the features of having high variability of demand?
- changing levels of capital utilisation
- need to try and predict demand
- need flexibility
What are the features of having high visibility of production?
- good customer service skills needed
- flexible in terms of information and communication to customer
What are the features of having low visibility of production?
- limited customer service skills
- time lag between production and consumption
What are the features of having high variety of output?
- flexible
- quite complex operations to manage
- high unit costs
- can meet customer needs precisely
What are the features of having low variety of output?
- routine operations
- standardised processes
- low unit costs
What is the operational decision making process?
1 - analyse operations data 2 - make operations decision 3 - implement decisions 4 - review 5 - set operations decision
How can ethics and environment affect operational decisions?
- treatment of employees - increased workload may improve amount produced but place higher stress on employees
- location factors - locate in low wage location
- safety
- environment e.g noise, pollution and emissions
What are 5 operational decisions?
quality costs flexibility speed dependability
What is quality as an operational objective?
based on what the customers expect and want
What are the benefits of high quality?
more competitive
What is speed as an operational objective?
producing goods or services faster than competitors
What are the benefits of increasing speed?
competitive advantage
What is dependability as an operational objective?
the ability to deliver on time
What is flexibility as an operational objective?
meeting customer needs better than competitors
What are some other operational objectives?
environmental objectives
defect rates
safety targets
speed of response
What is competitive advantage?
an advantage a firm has over its competitors to encourage sales from consumers
How do PEST-C factors affect operations?
- political and legal factors - greater legal regulation and concerns over health and safety. This may place restrictions on what can be produced
- economic factors - greater globalisation enables businesses to source supplies more easily from other countries
- social factors - there is now greater demand for choice and variety
- technological factors - technology improved
What is the calculation to work out labour productivity?
output (per period) / number of worker (per period)
What is the calculation for unit costs?
total costs / total output
What is unit costs also known as?
average costs
What is capital utilisation?
is about the use that a business makes from its resources
What is the calculation for capital utilisation?
current (existing) output / maximum possible output x 100
What does efficient mean?
getting more output from a given level of inputs and/or using less resources to achieve a given level of output and quality
Why is efficiency important?
Lowers unit costs, so they can lower prices or increase profit margins
How can efficiency be improved?
- using capacity more effectively - the amount and quality of its employees, capital and land - the maximum produced at that given time
- choosing the optimal mix of resources
- increasing labour productivity
- introducing lean production
- using technology
What would a business do if capacity utilisation is too low?
- try and improve their marketing to boost sales
- reduce its capacity - rationalising or down sizing
What would a business do if capacity utilisation is too high?
- outsource to other producers
- find a way to reduce demand in the short term - increase price, waiting list etc
What is labour productivity?
output per employee
How can labour productivity be improved?
- training
- new reward systems
- better management
- new ways of working
- new technology
What are the problems with improving labour productivity?
- rushing leads to quality issues
- employees wanting higher pay
- waste through excess stock
What will impact on the best (optimal) combination of resources?
- the production process
- what is affordable and achievable
What is lean production?
when managers reduce waste and therefore operations become more efficient
How can lean production reduce waste?
- improving quality - reducing the amount of items needed to be fixed
- reducing the amount of inventory held
- reducing the time items are waiting for something to happen to them
- reducing the time between products are in stages
What processes can a business do to become leaner?
kaizen
andon cord
changes to the layout of a store or factory
change the process
What is kaizen?
continuous improvement
What are the issues with lean production?
- more vulnerable as hold little to no stock
- issues in the production process will halt operations - deliveries, absences
- risk from external factors e.g. weather
- employees are checking their own work - engaged, skills and training
- need excellent links to suppliers
- need excellent communications and technology - expensive
How can technology improve operational efficiency?
- flexible to customer needs
- innovative
- reduce costs by being more efficient with less errors
What are the disadvantages of using technology to improve operational efficiency?
- have to have the finance invest
- have the training to use it effectively
- be able to judge which technology will be useful
What is quality?
- the extent to which an operation meets its customer requirements
- a quality good or service is ‘fit for purpose’.
What does a quality operation process need?
- clear targets - set to meet customer requirements
systems to achieve these targets - training so employees have the right skills
- ongoing measurement of what is achieved relative to targets
- action to be taken if performance does not meet the targets
What is the name of the theorists which introduced something to do with quality?
Edward Deming
What did Edward Deming create?
PDCA cycle
What is the PDCA cycle?
Plan
Do
Check
Act
Why is quality so important?
reputation price customer satisfaction repeat sales standards
How can quality be achieved?
- training
- understanding customer requirements
- investment in technology
- new processes
- selecting the right partners
What are the 2 ways which quality can be ensured?
quality control
TQM (quality assurance)
What is involved in a quality assurance process?
- teamwork
- quality circles
- technology
- kaizen
- training
- lean production
- empowerment
What is theory X?
according to this view, management must actively intervene to get things done
Who created theory X?
McGregor
What do X-Type organisations tend to be like?
- top heavy, with managers and supervisors required at every step to control workers.
- little delegation of authority and control remains firmly centralised.
What does theory X style of management assume about workers?
- dislike working
- avoid responsibility and need to be directed
- have to be controlled, forced, and threatened to deliver what’s needed
- need to be supervised at every step, with controls put in place
- need to be enticed to produce results; otherwise they -have no ambition or incentive to work
What are the benefits of improving quality?
- reputation
- price
- customer satisfaction
- repeat sales
- standards - legislation
- more competitive
- reliable
- better brand image
What are the difficulties of improving quality?
- rest on their success, don’t push for higher targets, may see it as a criticism
- extra work - may want higher wages
- unwilling to suggest improvements - above their pay grade
- unwilling to carry out the check due to paperwork and increased workload
What inventory (stock)?
the goods or stock a business holds
What are the different type of inventory?
inventory of supplies
inventory of work in progress
inventory of finished products
What are the costs of holding inventory?
storage costs
opportunity costs
security costs
cost of it losing value
What is stock rotation?
using the oldest stocks first
What is stock rotation also known about?
FIFO ( first in first off)
What is stock wastage?
wastage is a cost to the firm through paying for stock that cannot be used
When might a business have issues with inventory control?
- supplies are delayed
- usage rate is faster than usual
- failure to reorder inventory - generally done electronically
How has technology helped with stock control?
- electronic point of sale scanners
- marketing databases - forecast likely sales
- communication with suppliers
What can businesses do to match supply to demand?
- flexible workforce - multiskilled employees and part time or temporary staff
- part time staff work less than a full working week
- queuing systems or waiting lists
- outsourcing production
- increasing prices
- producing to order
What is stock wastage?
wastage is a cost to the firm through paying for stock that cannot be used
When might a business have issues with inventory control?
- supplies are delayed
- usage rate is faster than usual
- failure to reorder inventory - generally done electronically
What decisions will be involved in managing the supply chain?
- what to produce themselves and what to buy from others
- which other businesses to work with - supplier - build a good relationship or multiple suppliers
What can businesses do to match supply to demand?
- flexible workforce - multiskilled employees and part time or temporary staff
- part time staff work less than a full working week
- queuing systems or waiting lists
- outsourcing production
- increasing prices
- producing to order
What is the supply chain?
refers to all of the providers of resources at different stages of the operations process.
What are some examples of providers in a supply chain?
such as money, people, finance, machinery and equipment
What will effective management of the supply chain will mean?
- materials come on time
- fair price is paid for materials
How will the way in which the supply chain is managed will affect?
- the extent to which suppliers meet the requirements of the business reliably
- the costs of the business
- the ability of the business to be flexible to customer requirements
What is outsourcing?
occurs when a business uses another provider for some of its goods and services
What is good about outsourcing?
- can make use of specialist skills and services - leading to a better quality of worker provided more efficiently
- increase the capacity of a business
What is bad about outsourcing?
- cost and quality of suppliers
- how does that business behave - ethical?
- may be more expensive than producing themselves
