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Operations

Izzy Persico Englisch 140 Karten

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  1. 1What is the role of operationsKey business function concerned with planning and coordinating the transformation of inputs to outputs (i.e. production), in ways that efficiently use resources and achieve the business goals, while meeting the needs of customers.
  2. 2What is operations role in servicesOperations involves actually carrying out the service, e.g. the washing, cutting and styling of hair by a hairdresser
  3. 3What is operations role in manufacturingoperations involves turning raw materials and resources into finished products, e.g. a vehicle manufacturer turning steel into cars
  4. 4How does effective operations management add value to a businessThrough increasing productivity, lowering costs & improving quality ® strategic competitive advantage through lower costs & differentiated goods
  5. 5What is the strategic role of operationsinvolves all functional heads and the owner/CEO making strategic decisions, to help achieve the vision, mission statement and prime function of the business.
  6. 6What are the strategic decisionsMade by management to fulfil the strategic role. These decisions are long-term and interdependent
    • Products - what new products need to be developed?
    • Processes - how much capital and/or labour will be used?
    • Quality- how will quality be measured and/or improved?
    • Location- stay or relocate production?
    • Factory Layout - how will the process be set out?
  7. 7What is cost leadership (strategic role)Aiming to have the lowest cost or be the most cost competitive in market to obtain a competitive advantage.
    Operations managers must also minimise costs to ensure profitability.
  8. 8What are the types of costs involved in cost leadership• Input costs – capital, land, resources, machine installation
    • Labour costs – employee wages, recruitment and training, overtime
    • Processing costs – machinery maintenance, electricity
    • Inventory costs – storage, inventory shrinkage and theft
    • Quality management costs – sampling and inspection, warranty claims
  9. 9What are the methods of lowering costs involved in cost leadership• Reducing quality – cheaper and lower quality inputs
    • Economies of scale – increasing levels of production to lower per unit costs
    • Outsourcing – using external providers to perform business activities
  10. 10What is productOffering a good or service that is different to and competitive against rivals in the market to obtain a competitive advantage.
    Increases customer loyalty and enables the business to regain R&D costs by charging a higher price for its products.
  11. 11What are the differentiation sources in goods include (product differentiation)• Product features (different applications, design, new technology, etc.)
    • Product quality
    • Varying augmented features (add-ons or additional benefits, customisation, e.g. option for built in GPS in a car)
    • Quicker lead times
  12. 12What are the differentiation sources in services include (product differentiation)• Amount of time
    • Qualifications or experience of service provider
    • Quality of materials/technology used in service delivery
  13. 13What is the primary industryCollection of natural resources.
  14. 14What is the secondary industrytaking a raw material and making it into a finished or semi-finished product.
  15. 15What is the tertiary industryperforming a service for other people.
  16. 16What is the quaternary industryservices that involve the transfer and processing of information and knowledge.
  17. 17What is the quinary industryservices that have traditionally been performed in the home.
  18. 18What are standardised goodsmass produced, usually on an assembly line. They are uniform in quality and are generally produced with a production focus.
  19. 19What are customised goodsVary according to customer needs and are produced with a market focus.
  20. 20What are intermediate goodsUsed to finish a product
  21. 21What are perishable goods• Subject to rapid deterioration/decay
    • High standards of safety, quality and cleanliness in all operating processes
    • Very short distribution
    • Appropriate, sturdy packaging & cold storage
  22. 22What are non-perishable goods• Not subject to rapid deterioration/decay
    • More durable than perishables
    • Includes household and business goods
    • Requires effective inventory management
  23. 23What outputs do business have when they produce goods• Are tangible (can be touched)
    • Can be stored
    • Consumed after production
    • Generally standardised
    • Production is capital intensive
  24. 24What outputs do business have when they produce services• Are intangible (can’t be touched)
    • Cannot be stored
    • Consumed upon production
    • Generally customised
    • Production is labour intensive
  25. 25What does interdependence with other key business functionsEach function relies on the support of the others to perform at maximum capacity → 2 way relationship
  26. 26How does marketing interdepend with operations• Marketing researches the nature of goods and services consumers want → Operations will alter their product accordingly
    • Operations produces the product → Marketing employs promotional strategies to encourage purchases
  27. 27How does finance interdepend with operations•Finance allocates funds to Operations → Operations uses funds to produce good or service
    • Operations change product → Finance reallocate funds and create a new budget to fund production
  28. 28How does HR interdepend with operations• Human Resources recruits employees for Operations → Operations labourers produce and distribute the product
    • Operations change product → Human Resources will employ new labourers that fit the skill requirements
  29. 29What are the influences on operationsGlobalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability
  30. 30What is globalisationRemoval of trade barriers between nations
    Globalisation is characterised by:
    • Increased integration of economies
    • High international flows of goods, ideas, money, financial resources, information, labour and technology
  31. 31How must businesses respond to globalisation-Must meet needs of global consumer
    -Must establish global supply chain (range of suppliers). Supply chains must be reliable, predictable and highly responsive to changes in demand.
    -Must use a GLOBAL WEB, network of suppliers chosen based on maximum quality with lowest cost, risk and lead times
  32. 32How can globalisation threaten businesses(especially small businesses) due to increased overseas competition (overseas access into local markets).
  33. 33Explain technology as an influenceThe use of innovative products or processes.
    New technologies in production and operations enable faster production with less energy and waste.
  34. 34What are CAD and CAM (technology influence)CAD (Computer-Aided Design) and CAM (Computer-Aided Manufacture) robotics enable:
    •Greater precision/accuracy/consistency in production processes → greater quality and efficiency
    •Easy standardisation of products → economies of scale
    •Reduced number of employees required → reduced expenses
  35. 35What are some disadvantages of new technologies such as CAD and CAM (technology as an influence)Require a more highly skilled and trained workforce to operate, repair and improve them.
    Modern technology also can increase costs in the short term.
  36. 36Explain quality expectations as an influenceHow well designed, made and functional goods are or the degree of competence in which services are organised and delivered.
    Stakeholder expectations determine product design, creation and delivery to customers.
    Higher quality products improve business reputation - impacts customer loyalty.
  37. 37What are some quality expectations for goods (influence)• Quality of design
    • Fitness for purpose
    • Durability
  38. 38What are some quality expectations for services (influence)• Professionalism of service provider
    • Reliability of service provider
    • Level of customisation
  39. 39What is the main disadvantage of quality expectationsIncrease costs as higher quality inputs are needed.
  40. 40Explain cost based competition (influence)Derived from determining BREAKEVEN POINT (total costs = total revenue) and then applying strategies to create cost advantages over competitors, and thus increase profits.
  41. 41What is involved in the base cost of a product (cost-based competition)• FIXED COSTS – stay constant, regardless of the level of business activity/production (e.g. salaries)
    • Variable costs – change depending on the level of business activity/production (e.g. purchasing inventory)
  42. 42What are methods of reducing costs (cost based competition)• Bulk-buying inputs
    • Updating technology
    • Outsourcing
    • Economies of scale
  43. 43How can reducing costs in cost-based competition be disadvantageousReduced costs reduce quality, which limits the competitive advantage achieved from lower costs and can reduce/eliminate access to certain markets.
  44. 44What are government policies (influence)POLICY – course of action; methods and principles.
    Government policies are implemented by the local, state and federal government. Policies affect all Australian businesses. They can inform law making and create business opportunities, hence operations mangers must be aware of what the current policies comprise of.
  45. 45What are some examples of government policies (influence)• Work Health and Safety (WH&S) standards
    • Material handling practices
    • Public health policies
    • Environmental policies
    • Taxation policies
  46. 46What is legal regulation (influence)REGULATION – rules/procedures made and maintained by an authority.
    Legal regulations involve COMPLIANCE COSTS (expenses associated with meeting legal requirements).
    Compliance costs can be reduced or avoided by using offshore outsourcing due to regulatory differences.
    Legal regulations enable unions to promote safe workplace operations and protect employees.
  47. 47What do federal and state laws ensure (legal regulations influence)• Safe operations (e.g. WH&S in machinery use)
    • Consumer protection (minimum safety/quality standards for products)
    • Minimal environmental impact
  48. 48What aspects of operations are affected by legal regulation (influence)• Labour/employment → Fair Work Act 2009, WH&S Act 2011
    • Taxation → GST 2000
    • Intellectual property → copyright and patent laws
    • Human rights → Anti-Discrimination Act 1977 (NSW)
  49. 49What is a disadvantage of legal regulation for businesses (influence)Compliance costs increase business expenses.
  50. 50What is environmental sustainability as an influenceENVIRONMENTAL SUSTAINABILITY – practices which ensure resource use today does not deplete or compromise future access to these resources.
    Climate change awareness has created a need for businesses to integrate long-term sustainable processes for resource management.
  51. 51How can businesses be environmentally sustainable (influence) and how can it be disadvantageous• Using renewable resources
    • Minimising and recycling waste
    • Reducing carbon footprint
    Environmentally sustainable practices can increase production costs.
  52. 52What is corporate social responsibility as an influenceCORPORATE SOCIAL RESPONSIBILITY (CSR) – open and accountable business actions which have a positive social impact, based on respect for people, community and the broader environment → exceeding legal regulations and government policies.
  53. 53What do CSR businesses aim to do and how do consumers respond to them (influence)CSR businesses aim to achieve the TRIPLE BOTTOM LINE (profit, social justice, environmental protection).
    Consumers may reward CSR businesses by purchasing their products, while non-CSR businesses (e.g. exploit employees, accept bribes, pollute environment) may be boycotted.
  54. 54What is the difference between legal compliance and ethical responsibility (CSR- influence)Legal compliance → meet prescribed standards dictated by legislation → non-compliance can result in fines or imprisonment.
    Ethical responsibility → meeting legal obligations and taking it further by following the intention and ‘spirit’ of the law → not legally punishable.
  55. 55Why can variation in laws be difficult for businesses in terms of CSR (influence)Can make it hard to know what is ethical. Businesses may choose to follow ethical standards from ILO (International Labour Organisation).
  56. 56What is environmental sustainability (CSR - Influence)ENVIRONMENTAL SUSTAINABILITY – practices which ensure resource use today does not deplete or compromise future access to these resources.
    -requires business to evaluate the environmental effects of their operations.
    -growing expectation that products should be “clean, green and safe,” hence businesses are expected to adopt greenhouse reduction measures and develop long-term sustainable strategies.
  57. 57What is social responsibility (CSR - influence)SOCIAL RESPONSIBILITY – businesses interacting positively with, and improving the quality of life of, community members.
    Consumers may reward SR businesses by purchasing more, and may stop purchasing from a business which exploits its customers.
  58. 58What are the operations processesa. inputs
    -transformed resources (materials, information, customers)
    -transforming resources (human resources, facilities)
    b. transformation processes
    -the influence of volume, variety, variation in demand, visibility (customer contact)
    -sequencing and scheduling- gantt charts and critical path analysis
    -technology, task design and process layout
    -monitoring, control and improvement
    c. outputs
    -customer service
    -warranties
  59. 59What are inputs (processes)INPUTS - resources used in the production process
    Common direct inputs include energy and technology.
  60. 60What are transformed resources (Inputs - processes)Changed or converted into products during transformation.
  61. 61What are the types of transformed resources (inputs - processes)• Materials → basic elements → raw elements or intermediate goods
    • Information → knowledge → results in an increase in understanding → can be internal (e.g. financial reports, production data) or external (e.g. ABS, media reports)
    • Customers → choices shape inputs → can be divided into needs (dictate what the business produces) and feedback (to improve output quality)
  62. 62What are transforming resources (inputs - processes)Used to change and add value to inputs.
  63. 63What are the types of transforming resources (inputs - processes)• Human resources → mental and physical efforts → effectiveness determines success of transformation and value-adding
    • Facilities → plant (factory/office) and machinery → locate and design facilities for efficiency and to reduce operation costs
  64. 64What are transformation processes (processes)inputs (resources) are converted into outputs (goods and services), i.e. the value-adding activities.
  65. 65Explain the influence of volume in terms of transformation processes on a business (processes)VOLUME - how much of a product is made.
    Businesses must have VOLUME FLEXIBILITY (fast adjustment to increases/decreases in demand) to prevent over-producing (wastage, increased inventory costs) or under-producing (lost sales).
    Responsiveness to changes in volume is essential to manage lead times.
  66. 66Explain the influence of variety in terms of transformation processes on a business (processes)VARIETY – mix/variations of the goods made or services delivered.
    Greater variety = greater complexity of transformation process (more operations processes needed to allow for variation).
    • Low variety = high volume = mass production and standardisation, e.g. soft drinks
    • High variety = low volume = batch or job production, e.g. bakery
  67. 67Explain the influence of variations in demand in terms of transformation processes on a business (processes)VARIATIONS IN DEMAND - how much of the product is needed.
    It is difficult for businesses to predict demand to avoid over-producing or under-producing.
    Increased demand = increased inputs, decreased demand = decreased inputs.
  68. 68What are variations in demand caused by (transformation processes - processes)• Seasonal changes
    • Competition
    • Technological advances
    • Shifts in consumer demand
  69. 69Explain the influence of visibility (customer contact) in terms of transformation processes on a business (processes)VISIBILITY - amount of customer contact during the operations process.
    Customer contact can be direct (e.g. feedback from surveys interviews, warranty claims) or indirect (e.g. feedback from sales data, market, consumer reviews).
    Generally:
    • Low visibility = manufacturing/goods-based
    • High visibility = service-based
  70. 70What are the types of productionJOB PRODUCTION – outputs are customised, e.g. master built home.
    BATCH PRODUCTION – outputs are produced in groups, e.g. bakery.
    FLOW PRODUCTION – outputs are standardised, e.g. soft drink.
  71. 71What is sequencing and scheduling (transformation processes - processes)SEQUENCING – determining the order of tasks.
    SCHEDULING – determining the total length of time all activities will take.
    Sequencing and scheduling minimises operational costs.
  72. 72What are gantt charts (transformation processes - processes)A bar chart that shows both the scheduled and completed work over a period of time. It shows the order in which they must be done and how long they will take.
    Often used to plan and track a project
  73. 73What is a critical path analysis (transformation processes - processes)The critical path is the path that takes the shortest length of time to complete all tasks.
    To calculate, find the longest path. This ensures all tasks are completed.
  74. 74Explain the influence of technology in terms of transformation processes on a business (processes)Use of innovative products or processes, such as CAD and CAM robotics.
    Enables businesses to relocate dangerous or repetitive tasks away from employees, making production:
    • Quicker
    • More efficient
    • Less wasteful
    • More consistent quality
  75. 75Explain the benefits and disadvantages of technology in terms of transformation processes on a business (processes)While technology is costly (due to purchasing/leasing costs and retrenchment/redundancy/retraining costs) it can be more cost-effective in the long term.
  76. 76Explain the influence of task design in terms of transformation processes on a business (processes)TASK DESIGN - breaking down a large task into a smaller, more manageable series of activities.
    Enables employees to perform efficiently and complete the task successfully.
    -Involves job analysis (number of staff required, skills required, whether training/retraining is necessary, etc.), which can be done after a skills audit.
  77. 77Explain process layout (transformation processes - processes)PROCESS LAYOUT – a type of plan layout which involves arranging machines and equipment by grouping them based on their function/process.
    -means the product moves from department to department, which increases efficiency and flexibility to customise products.
  78. 78Explain monitoring (transformation processes)MONITORING – measuring the business’s actual performance against its forecasted performance.
    Involves measuring KPI’s (Key Performance Indicators) such as lead times, defect rates and inventory turnover.
    Operations managers must identify reasons why actual vs forecasted performance differs.
  79. 79Explain control (monitoring controlling and improvement - transformation processes)CONTROL – monitoring and taking short-term actions to keep current production on target.
    Controlling involves comparing KPIs against predetermined targets and taking corrective action where necessary.
  80. 80Explain improvement (monitoring controlling and improvement - transformation processes)IMPROVEMENT – identifying and implementing changes to transformation processes to meet long-term business objectives.
    Improvement is usually sought in quality, speed, dependability, flexibility and cost improvements (i.e. performance objectives).
  81. 81What does improvement aim to reduce (monitoring controlling and improvement - transformation processes)• Inefficiencies
    • Wastage
    • Poor work processes
    • BOTTLENECKS (aspect of operations that delays)
  82. 82What are outputs (processes)OUTPUTS - everything produced as a result of business operations.
    Common outputs include goods/services and waste.
  83. 83Explain customer service as an output (processes)CUSTOMER SERVICE – how well the business interacts with customers before and after sales to meet customer expectations.
    Customer services adds value to the product and ensures profitability.
    Operations management is responsible for the provision and quality of the product. Hence, if customers are disappointed they will purchase from a competitor.
  84. 84What are the main methods of customer service delivery (outputs - processes)• Telephone
    • Internet
    • In person
    • Written communication
  85. 85Explain warranties as an output (processes)WARRANTIES – written guarantees by business, that faulty products (not for neglect and misuse, or normal wear and tear) will be repaired, replaced or refunded for a stated period of time.
    All products legally guarantee they will serve their advertised purpose.
    Businesses must ensure that the product quality outlasts the warranty period.
    The number of warranty claims indicates whether a business’ transformation process requires adjustment.
  86. 86What are the operations strategies (part 1)a. performance objectives
    -quality, speed, dependability, flexibility, customisation, cost
    b. new product or service design and development
    c. supply chain management
    -logistics, e-commerce, global sourcing
    d. outsourcing -advantages and disadvantages
    e. technology -leading edge, established
  87. 87What are the operations strategies (part 2)f. inventory management
    -advantages and disadvantages of holding stock, LIFO, FIFO, JIT
    g. quality management
    -control, assurance, improvement
    h. overcoming resistance to change
    -financial costs, purchasing new equipment, redundancy payments, retraining, reorganising plant layout, inertia
    i. global factors
    -global sourcing, economies of scale, scanning and learning, research and development
  88. 88What are the performance objectives (strategies)quality, speed, dependability, flexibility, customisation, cost
  89. 89What is involved in performance objectives and what can they be based on (strategies)Setting performance objectives involves setting targets and measuring/monitoring progress, however, not all performance objectives can be achieved simultaneously.
    Performance objectives can be based on:
    • Previous performance (different time periods)
    • Competitors performance (similar businesses)
    • Industry standards (benchmark)
  90. 90Explain quality as a performance objective and what does it include (strategies)QUALITY - the meeting of standards (for goods) and the level of customer satisfaction (for services).
    Determined by consumer expectations, improving quality = higher quality inputs + higher skill employees,= higher cost
    Quality objectives include:
    • Quality of design
    • Quality of CONFORMANCE (how well it meets prescribed standard)
    • Quality of service
  91. 91Explain speed as a performance objective and how can it be achieved (strategies)SPEED – time taken for production and other operations processes to respond to market demand.
    Aims to satisfy customer demands ASAP, thus bottlenecks must be removed.
    Speed can be achieved by:
    • Faster PROCESSING TIMES (time taken for inputs to be transformed into outputs)
    • Reducing WAIT TIMES (time taken for product to reach customer after transformation)
    • Shorter LEAD TIMES (time taken for an order to be fulfilled from the moment it is made)
  92. 92Explain dependability as a performance objective and how it is measured (strategies)DEPENDABILITY – consistency and reliability of products.
    Improving dependability can be achieved by improving quality (sourcing higher quality inputs, which increases production costs).
    Dependability is measured by the amount of:
    • Warranty claims → shows how long products are useful before they fail
    • Complaints → shows consistency of service standards and reliability
    • Returns/refunds → shows level of customer satisfaction
    Fewer of the above = more dependable product.
  93. 93Explain flexibility as a performance objective and how can it be achieved (strategies)FLEXIBILITY – how quickly operations processes can adjust to changes in the market (e.g. demand, input variability).
    Flexibility can be achieved by:
    • Increasing capacity of production for goods (e.g. changing product mix, volume, delivery times)
    • Increasing the number of service providers for services
  94. 94Explain customisation as a performance objectiveCUSTOMISATION – creation of individualised products to meet specific customer needs.
    Businesses customise products to appeal to a range of markets, which increases market share.
    MASS CUSTOMISATION (process allowing standard, mass-produced items to be customised e.g. cars) is becoming increasingly popular.
  95. 95Explain cost as a performance objective and how can costs be reduced (strategies)COST – minimisation of expenses to conduct operations as cheaply as possible.
    Decreasing costs may decrease output quality.
    Businesses can reduce operational costs by:
    • Sourcing cheaper suppliers, inputs and labour
    • Redesigning plant layout to boost efficiency
    • Minimising wastage
    • Acquiring new technology
    • Reducing storage/distribution costs → JIT management
  96. 96Explain a new product or service design and development as a strategyNew products/services help the business to grow, gain a competitive advantage and keep up with changes in demand. Businesses can take a consumer preference approach or a changes/innovations in technology approach.
  97. 97Identify + Explain the key stages in design and development of new services and new products (strategy)Key stages in the design and development of new products:
    1. Identifying an opportunity → changes in consumer demand (indicated by market research), advancements in technology, or gaps in the market.
    2. Designing the product → consider quality, supply chain management (volume, range, timing), capacity management and cost (must be profitable for business and useful/valuable to customer).
    3. Testing and refining the product → until ready for production
    Key considerations in the design and development of new services:
    1. Explicit service → time, expertise, skill, effort
    2. Implicit service → feeling of being looked after, i.e. treatment and wellbeing of customer
  98. 98What is involved in supply chain management and what is itlogistics, e-commerce, global sourcing
    SUPPLY CHAIN MANAGEMENT (SCM) – managing the flow of supplies through all processes to maximise efficiency through reduced inventory, increased transaction speed and increased customer satisfaction.
  99. 99What are logistics and what does it involve (SCM - strategies)LOGISTICS – moving inputs, resources and outputs through the supply chain as fast as possible, i.e. management of resources between supply and consumption.
    Logistics involves:
    • Distribution and modes of transportation
    • Storage, warehousing and distribution centres
    • Material handling and packaging
  100. 100Describe distribution and modes of transportation (SCM - Strategies)DISTRIBUTION – ways of getting products to the customer.
    Distributional channels include:
    • Producer → global agent → domestic offshore agent → retailer → consumer
    • Producer → wholesaler → retailer → consumer
    • Producer → agent → retailer → consumer
    • Producer → retailer → consumer
    • Producer → consumer
    TRANSPORTATION – physical movement of inventories, e.g. vans, trucks, trains, aeroplanes, ships.
    Speed, distance, cost and capacity of mode of transportation must be considered.
    Due to the nature of some products, they can only be transported in particular modes (e.g. coal).
  101. 101Explain storage - storage, warehousing and distribution centres (SCM - Strategies)STORAGE – a secure place to hold stock in the short or long term.
    -Storage is necessary with variable demand and requires a responsive supply chain.
    -Storage may help to preserve a product (e.g. cold storage for perishables).
    -JIT management minimises storage and associated costs.
  102. 102What is warehousing and what are some costs involved - storage, warehousing and distribution centres (SCM - Strategies)WAREHOUSING – facility for storage, protection and later, distribution of stock.
    Warehousing is useful for storing durable items which need to be transported with little notice.
    Warehousing costs include:
    • Premises
    • Insurance
    • Security measures
    • Transport
    • Damage
    • Theft
    • Obsolete products
  103. 103Explain distribution centres - SCM (Strategies)DISTRIBUTION CENTRES – short term storing, handling and wholesale distribution of goods.
    Distribution centres are strategically located (e.g. near major roads) to centralise the distribution hub, which enables efficiency and cost savings.
    Distribution centres may help to preserve a product.
  104. 104What is involved in materials handling and packaging in terms of supply chain management (strategies)Involves meeting particular standards and applying particular methods when moving goods.
    Governments impose regulations on goods that require extra skill, care or attention (e.g. glassware, chemicals) to be handled and packaged in a specific safe manner.
  105. 105What is ecommerce and what are some negatives and positives (SCM - Strategies)E-COMMERCE – buying and selling of products via the internet.
    Provides real-time instant access to information on quantity, quality, availability, source and price of all products from a range of suppliers (local and international) for businesses, eliminating time-consuming manual processes.
    Poses privacy/security issues and an increased risk of buying unsatisfactory/faulty materials.
  106. 106What is business to business (B2B) and Business to consumer (B2C) ecommerce(B2B) ecommerce involves E-PROCUREMENT (online systems to manage supply, granting suppliers direct access to the business's level of supplies). When stock falls to a pre-determined point, the supplier will supply without a formal purchase request (preventing supply shortages).
    (B2C) e-commerce provide customers direct access to products. They must communicate with suppliers regularly to present accurate stock levels to customers.
  107. 107Explain global sourcing and what businesses must consider when determining a supplier (SCM - Strategies)GLOBAL SOURCING – sourcing supplies or services without being constrained by location.
    Businesses expand supply chains over national boundaries to seek the most cost-efficient location for product manufacturing.
    When determining, suppliers, a business must consider:
    • Consumer demand → determine volume of inputs
    • Quality of inputs → determine if they match desired quality of finished products
    • Timeliness of supplier → responsiveness to changes in demand
  108. 108What are advantages of global sourcing (SCM - Strategies)• Cheap high-quality inputs (materials and skilled labour)
    • Expertise → better quality
    • New resources and technologies
    • Tax advantages
    • Low trade tariffs
  109. 109What are disadvantages of global sourcing (SCM - Strategies)• Increased costs of logistics, storage and distribution
    • Difficulty managing different regulatory conditions between nations
    • Increased complexity of operations
    • Possible relocation of operations aspects
  110. 110What is outsourcing and what must businesses consider (Strategies)OUTSOURCING – use of external providers to perform business activities.
    Must consider along with pos + neg:
    • Which country should we outsource to?
    • Which business should we outsource to?
    • How long should we outsource for?
  111. 111What are outsourcing advantagesSimplification
    Cost savings
    Access to skills/expertise lacking in business
    Increased process capability
    Increased accountability
    Strategic benefits
  112. 112How is simplification an outsourcing advantage (strategies)Fewer activities to perform → can concentrate on core function → improvements to in-house performance.
  113. 113How is cost-savings an outsourcing advantage (strategies)Offshore locations → cheaper skilled labour and regulatory differences.
  114. 114How is Access to skills/expertise lacking in business an outsourcing advantage (strategies)Offshore locations → low cost highly skilled and disciplined labour → no need to spend on training/development → increases product quality and durability.
  115. 115How is increased process capability in business an outsourcing advantage (strategies)Access to improved technologies and highly skilled labour → products delivered with improved levels of service.
  116. 116How is increased accountability in business an outsourcing advantage (strategies)Service Level Agreements (SLA’s) → contractually binds vendor to predetermined KPI’s.
  117. 117What are the strategic benefits of outsourcing (strategies)1. Offshore → get around trade barriers (e.g. producing in Chinese provinces to become a 'local' supplier and hence getting around barriers that prevent foreign companies from trading).
    2. Vendor that outsources for competitors→ gain expertise.
    3. Different time zones → operations during day, outsourced processing overnight.
    4. Vendor suggesting innovative solutions → increase efficiency and productivity
  118. 118What are the outsourcing disadvantagesPayback periods and cost
    Loss of control of standards
    Security and confidentiality risks
    Miscommunication
    Loss of corporate memory and vulnerability
    Organisational change and redesign
  119. 119How are payback periods and costs an outsourcing disadvantage (strategies)Cost of organising outsourcing and making required changes → cost savings in long term → fixing internal inefficiencies could be more cost efficient than outsourcing.
  120. 120How is loss of control of standards an outsourcing disadvantage (strategies)Vendors may not adhere to design specifications → difficulty achieving and maintaining quality standards → more managerial control in-house.
  121. 121How are security and confidentiality risks an outsourcing disadvantage (strategies)Proper physical and information security measures may not be in place → more secure in-house.
  122. 122How is miscommunication an outsourcing disadvantage (strategies)Cultural, language, operational and managerial differences → misalignment, confusion over expectations and misunderstanding about agreed service levels/ acceptable KPIs.
  123. 123How is loss of corporate memory and vulnerability an outsourcing disadvantage (strategies) How can it be counteractedReliance on vendor → knowledge of processes and solutions may be lost → can be counteracted by:
    1. Strategies to counteract regional crisis (e.g. earthquake) that could disrupt communication and cause loss of information.
    2. Creation of ‘shadow teams’ to retain corporate knowledge and processing capability.
  124. 124How is organisational change and redesign an outsourcing disadvantage (strategies)1. In-house downsizing → loss of domestic employment.
    2. New hierarchies → inefficient → outsourcing aims to eliminate hierarchical costs
    3. Information technology → cost and time for use and adaptation of IT for outsourcing requirements → increased short term costs
  125. 125Explain technology as a strategyTechnology provides a competitive advantage by increasing business efficiency, safety and accuracy.
    Not adapting to new technology can cause the business to fall behind its competitors.
    Operations management must choose the level of technology and timing of its adoption.
  126. 126What is leading technology, what does it enable, and what is a disadvantage (technology - strategy)LEADING EDGE TECHNOLOGY – currently most advanced or innovative.
    Leading edge technology enables:
    • Quicker production
    • Increased efficiency
    • Higher quality
    • Less waste
    However, it can be costly, risky (lack of experience) and complex to adapt.
  127. 127What is established technology, what does it include and what may businesses experience without having it (technology - strategy)ESTABLISHED TECHNOLOGY – is developed, widely used and accepted without question.
    Established technology includes:
    • IT for administration
    • Robotics for complex manufacturing
    • Barcoding and point-of-sale (POS) data for inventory management
    Businesses without established technology may experience:
    • Falling behind competitively
    • Lower productivity
    • Slower operational speed
    • Trouble maintaining and servicing older technology
    • Appear to be an outdated business
  128. 128What comes under inventory management (Strategy)advantages and disadvantages of holding stock, LIFO (last-in-first-out), FIFO (first-in-first-out), JIT (just-in-time)
  129. 129What is involved in inventory or stock (strategy) e.g. definition, what managers must doINVENTORY (or stock) – amount of raw materials, work-in-progress and finished goods that a business has at a point in time.
    Operational managers seek to minimise inventory levels (as it ties up cash and incurs costs, e.g. storage) without minimising sales.
  130. 130What are the advantages of holding stock (inventory management - strategy)• Sufficient back up stock → increases in consumer demand met quickly
    • Dependability of delivery → customer satisfaction
    • Access to spare parts for repairs or replacements → reduced costs
    • Inputs can be bulk purchased at low prices → reduced input costs
    • Older stock can be sold at reduced prices → attracting other sales → encouraging cash flow
  131. 131What are the disadvantages of holding stock• Capital intensive → opportunity cost → ties up cash and resources that could be used elsewhere
    • Holding costs → storage, insurance, handling, managing, security, etc.
    • Risk of stockpiled goods spoiling or becoming obsolete → no recoupment of COGS → wastage
    • Risk of theft or damage → replacement costs
    • Consumer demand may change → inventory may not sell → no recoupment of COGS
  132. 132What is LIFO (inventory management - strategy)Last-In-First-Out (LIFO) – stock purchased most recently is sold first (used for non-perishable goods).
    The cost of each unit sold is assumed to be the cost of the most recently purchased stock.
    Hence:
    • With falling prices, LIFO understates costs, overstates profits and maximises taxes → undervalues inventory
    • With rising prices, LIFO overstates costs, understates profits and minimises taxes → overvalues inventory
  133. 133What is FIFOFirst-In-First-Out (FIFO) – oldest stock is sold first (used for perishable goods).
    The cost of each unit sold is assumed to be the cost of the oldest stock.
    Hence:
    • With falling prices, FIFO overstates costs, understates profits and minimises taxes → overvalues inventory
    • With rising prices, FIFO understates costs, overstates profits and maximises taxes → undervalues inventory
  134. 134What is Just in Time (JIT), what are benefits and what does it requireJust-In-Time (JIT) – stock is supplied only when demanded (holding minimal stock).
    JIT is a method of managing the flow and storage of inventory.
    Benefits of JIT include:
    • Increases liquidity/working capital → less cash tied up in inventory
    • Reduced costs of storing and securing stock
    • Ability to display a wide range of products
    • Minimised shrinkage costs and losses due to obsolescence
    However, JIT requires a flexible operations function with reliable suppliers, as unforseen changes in market demand can cause increased lead times.
  135. 135What is quality management (strategy)QUALITY MANAGEMENT – processes undertaken to ensure a product’s consistency, reliability, safety and fitness for purpose.
  136. 136What are quality management advantages• Less need for product replacement or repair
    • More customer satisfaction
    • Better brand image
  137. 137What are quality management disadvantages• High-quality inputs and skilled labour increase production costs
    • Monitoring measures can be expensive and time-consuming
  138. 138Explain control as a part of quality management (strategy)QUALITY CONTROL – reduces problems and defects through inspection at various points during production (reactive approach).
    Quality control involves comparing outputs and processes against predetermined quality targets or performance objectives. Corrective action is taken if the product falls below the standards.
    Labour may need to be trained to apply/meet these standards.
  139. 139Explain assurance as a part of quality management (strategy) and what it must considerQUALITY ASSURANCE – system to ensure set standards are achieved in production (proactive approach).
    -involves evaluating finished products -assessing against pre-determined quality targets or performance objectives.
    - ensures global businesses meet same standards worldwide. Can be achieved by voluntarily following the International Organisation for Standardisation’s (ISO) standard, which enhances domestic and international competitiveness.
    Quality assurance must consider:
    • Fitness for purpose
    • Meeting correct standards the first time (so re-working isn’t required)
  140. 140What are the two aspects of quality improvement (quality management - strategy)• CONTINUOUS IMPROVEMENT – ongoing commitment to improve the efficiency and effectiveness of goods/services → helps the business to obtain and maintain a competitive advantage
    • TOTAL QUALITY MANAGEMENT (TQM) – ongoing, business-wide commitment to deliver quality to customers → requires benchmarking, employee empowerment, a focus on the customer and continuous improvement

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Karteikarten am Operations, erstellt von Izzy Persico am 29/07/2019.
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