Unit 4 (not on paper 3) Flashcards
Operations management (not on paper 1)
Describes activities, decisions + responsibilities of managing production + delivery of products + services
Supply chain
Series of activities involved in taking initial resources to providing final production
What ethical issues are there in operations
- How to reward + treat employees
- Where to locate business, low wage location?
- Safety features
- the environment
Operational objectives (not on paper 1)
- quality
- costs
- speed
- dependability
- flexibility
Competitive advantage
Superiority that a business possesses over its rival that may allow it to achieve objectives eg increased market share
Labour productivity = (not on paper 1)
Total output/ no. Of employees
Unit costs = (not on paper 1)
Total costs / total output
Capacity utilisation = (not on paper 1)
Existing output/ max possible output x 100
Capacity
Max output of a business at a moment in time given its resources
Capacity utilisation (not on paper 1)
Measures existing output over a given period as % of max output
Higher the cap utilisation, the more resources are being fully utilised
Why may low capacity utilisation concern a manager? (not on paper 1)
Suggests demand low
Cost per unit likely to be high
Efficiency not on paper 2
Measures how well inputs are used to generate output
How may a business try to improve low capacity utilisation? not on paper 2
- improve marketing to boost sales
- reduce its capacity - rationalising
How may a business deal with demand that is too high?not on paper 2
- outsource to other producers
- find a way to reduce demand in ST eg pushing price up
Ways of increasing labour productivity not on paper 2
- training
- new reward systems
- better management
- new ways of working
- new technology
Lean production not on paper 2
Occurs when managers reduce waste + therefore operations become more efficient inc Kaizen, Kanban, Time based management
Being lean aims to reduce waste by: not on paper 2
- improving quality + reducing no. Of items thrown away
- reducing amount of investory so reduces costs of storing -> JIT
- reducing the time items are waiting for something to happen to them -> changing layout
To become lean a business may adopt a no. Of processes: not on paper 2
Kaizen -> continuous improvement, those doing the work are more likely to know how to do the work more efficiently
Changes to layout -> makes process more efficient
Difficulties of lean production
not on paper 2
- more vulnerable when no inventory if there is a disruption
- employees may be reluctant to introduce lean production as expected to take more of an active role
- employees have to come up with consistent ideas
- it requires excellent links with supplier which may require investment in communication + technology
What do technological developments enable a business to do?
not on paper 2
- be more flexible with customer needs
- reduce costs by having more efficient processes with less errors
- be innovative
Why may managers find technology difficult?
not on paper 2
- have to have finance
- have to have training to use it
- understand & manage impact on other functions
- be able to judge which tech will be useful in longer term
Quality not on paper 2
Measured by the extent to which an operation meets its customer requirement
Why is quality important?not on paper 2
To remain competitive = usp, to gain and retain loyalty as fewer complaints + refunds so can focus on other things eg innovation
poor quality can lead to customer dissatisfaction + bad rep
high quality can allow premium pricing
Quality assurance not on paper 2
Maintenance of target quality by attention to detail at every stage of the process
errors avoidable
employees check their own work -> right first time, zero defects, empowering employees to self check
Quality control not on paper 2
A system of maintaining standards by testing the output against standards, checking goods as you make them
Product moved along the line
errors unavoidable -> detect errors put them right
Benefits of improving quality not on paper 2
- can meet set targets
- can be competitive
- process is under control
Difficulties in improving quality not on paper 2
Employees may see it as extra work, be unwilling to suggest improvements as not their job, believe business is doing well enough as is
From the business improving quality will require not on paper 2
- investing in training
- possibly changing suppliers
- developing a new culture of getting it right first time
What are the consequences of poor quality not on paper 2
It’s expensive as it costs money to recall faulty products, can damage brand reputation, costs money to rework faulty items
Mass customisation
Producing on large scale while still enabling individual customer preferences to be met
Inventory
Stock the business holds eg raw materials
Why is managing the amount of inventory held important?
- uses up resources
- opportunity costs, money for producing products could be used for something else
- inventory may go out of date + become worthless if held for too long
Buffer inventory
Min amount of inventory a business wants to hold. Held to ensure production can continue in emergency
Lead time
How long it takes from an order being placed with suppliers to item arriving
Re order level
Level at which new order must be placed for suppliers
Why might problems arise with inventory control?
- supplies are delayed and do not arrive on time
- the usage rate is faster than usual could be due to increased demand
How may managers match supply to demand?
- employing flexible staff eg part time or temp
- using queuing systems
- outsourcing production to other business
- accepting orders to produce for others if demand is low
What will effective management of supply chain ensure?
- right supplies arrive on time
- fair price paid for the items
- the products are produced in a way which is acceptable to business
Vertical integration
When one business joins together with another at different stage of same production process
Influence on choice of suppliers
- the costs of materials + quality
- dependability
- ethical considerations
Outsourcing
When an organisation uses a separate business to complete part of its work
Benefits of outsourcing
- can make use of specialist skills -> better quality of work provided more efficiently
- can increase capacity of business by getting some aspects of its provision provided by others
What disadvantages of outsourcing?
- business will affected by work undertaken by other business eg costs + quality’s of their supply
- business may be accountable for actions of suppliers
- business will have to pay enough for the products for the supplier to make a profit
kaizen not on paper 2
continuous improvement, workers come up with ideas (can run out + feel overwhelmed)
JIT not on paper 2
aims to reduce waste by having little stock as possible
+ storage costs decrease + cash flow improve
+ removes possibility of products going out of date + increasing inventory turnover
- can mean customers can’t be supplied in event of production strike or change in demand
- miss out on purchasing economies of scale
time based management not on paper 2
aims to reduce wasted time in production process
+ decrease lead times, decrease costs
+ customer can be satisfied quicker
- speed is above quality
capital intensive not on paper 2
use more machinery than workers
+ cheaper in LT, consistent quality levels, able to work 24/7
- high set up costs, only suited to one task, breakdown = long delays
labour intensive not on paper 2
more workers + less machinery eg NHS
+ flexible, cheaper for small scale, low cost labour
- harder to manage, people unreliable ( absenteeism), wage increases
what is the optimal mix of resources? not on paper 2
depends on
- finance -> IT might be difficult to afford in small business
- should use resources to meet objectives
benefits of technology not on paper 2
- increased productivity + quality
- reduced waste
- more effective + efficient delivery of goofs
- more effective marketing campaigns that target right customers
drawbacks of technology not on paper 2
- initial costs may be high
- requires maintenance + constant updating
- new IT systems mat = increased need for staff training
difficulty of increasing labour productivity not on paper 2
- could mean that quality suffers if workers offered bonuses
- if the business if not planning on increasing capacity may lead to redundancies as too much stock - morale low
