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Business Studies > Operations > Flashcards

Operations Flashcards

1
Q

Operations

A

Business processes that involve transformation or, more generally, production

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2
Q

Cost leadership

A

Aiming to have the lowest costs/be the most price-competitive in the market whilst still being profitable.
Can be achieved through:
- Economies of scale
- Supply chain management
- Using technology to increase productivity and speed
- Minimising waste

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3
Q

Goods/service differentiation

A 
Distinguishing products in some way from competitors
Goods:
- Varying actual product features
- Varying product quality
- Varying any augmented feature
Services:
- Varying time spent
- Varying expertise level
- Varying provider's qualifications and experience
- Varying material/equipment quality
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4
Q

Standardised goods

A

Mass produced on an assembly line, uniform pre-determined quality level
- Produced with production focus

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5
Q

Customised goods

A

Varied according to customer demands

- Produced with a market focus

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6
Q

Perishable good processes

A
  • High quality, safety and cleanliness standards
  • Short, quick and effective lead and distribution times
  • Appropriate, robust packaging and cold storage processes
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7
Q

Non-perishable good processes

A
  • Quality is managed throughout the entire process
  • Implement effective inventory management strategies
  • Be highly responsive to market demand in order to not overproduce
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8
Q

Intermediate goods

A

Goods that become inputs in other processes

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9
Q

Standardised services

A

All customers receive the same streamlined process

- Increases cost leadership but decrease personalisation

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10
Q

Customised services

A

All customers receive treatment based off their desires

- Tailored to individual circumstances

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11
Q

Interdependence

A

Finance
- Operations cut production costs to free up funds
- Finance provide necessary funds for improved production
Marketing
- Operations set limits
- Marketing set goals
HR
- Operations should avoid HR issues (like excessive overtime)
- HR should hire the right staff for maximum efficiency and effectiveness

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12
Q

Globalisation

A

Removal of trade barriers between nations, causing increased integration between national economies and a high degree of capital, labour, ideas, finance and technology
- SCM has been greatly impacted as businesses now have global supply chains

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13
Q

Technology (influence)

A 
Design, construction and/or application of innovative devices, methods and machinery upon operations processes. Can assist both administration and transformation.
Benefits of:
- Speed
- Quality
- Consumer satisfaction
- Lower cost per unit
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14
Q

Quality expectations

A

Standard of quality that products should be produced at

  • For goods, quality of design, make and functionality
  • For services, degree of competence
  • Force businesses to follow excellence standards when packaging
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15
Q

Cost-based competition

A

From deriving the BE point, businesses look to create cost advantages over their competitors
- Done by looking at where fixed and variable costs can be reduced to increase efficiency and profits

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16
Q

Government policies

A

Subject to change depending on who is ruling, new laws and taxes can influence operations
- Impacted by trade agreements, like ChAFTA, and government investment/specialisation incentives

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17
Q

Legal regulation

A 
Certain laws can influence operations, including:
- WHS Laws
- Environmental protection laws
- Consumer laws
Breaches can result in fines
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18
Q

Environmental sustainablity

A

Responsibility to act within the environment’s best interests in order to keep a high standard of health and wellbeing along with increased social profile and ability to continue these in the future

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19
Q

Corporate Social Responsibility

A

Open and accountable business actions based on respect for people, community/society and broader environment. Means businesses must:

  • Act fairly and in good faith
  • Observe the law
  • Protect the environment
  • Contribute to charity
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20
Q

Legal compliance vs ethical responsibility

A

Legal compliance means to merely comply with the law and not breach any legislation or the business could get punished as breaches lead to financial penalties and reputational harm.
Ethical responsibility means to act within the best interests of society and the environment and, whilst no punishment would be received for not doing it if the business is legally compliant, acting ethically responsible can boost the business’s reputation and lead to growth as a result

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21
Q

Inputs

A

Resources used in the transformation process

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22
Q

Labour

A

Mental and physical human effort put into the operations process

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23
Q

Energy

A

The fuel that powers input transport to the business, the machinery and equipment used in transformation and the distribution of goods to consumers

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24
Q

Raw materials

A

Basic components of manufactured goods, including intermediate goods.
- Also called “direct materials”

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25
Q

Machinery and technology

A

Machinery used to process raw materials as well as to design and make products.

  • When integrated with technology, it can improve efficiency and reduce waste
  • Capital-labour substitution is when people are replaced by machinery
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26
Q

Transformed resources

A

Inputs changed or converted in the operations process. Including:

  • Materials
  • Information
  • Customers
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27
Q

Transforming resources

A

Inputs that carry out the process. Includes:

  • Human resources
  • Facilities
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28
Q

Transformation

A

Conversion of inputs into outputs.

- Influenced by the 4 Vs

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29
Q

Volume

A

How much needs to be made

  • Higher volume usually leads to more standardisation
  • Lower volume usually leads to more customisation
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30
Q

Variety

A

The mix or range of outputs produced

- More variety leads to more complex transformation

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31
Q

Variation

A

How processes respond to demand changes, such as seasonal variations

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32
Q

Visibility

A

How much of the process the customer sees/experiences

  • Services tend to have higher visibility
  • Manufactured goods have lower visibility
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33
Q

Sequencing and scheduling

A

Order in which activities occur and the length of time activities take to be completed

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34
Q

Gantt chart

A

Type of bar chart that shows the scheduled and completed work over a time period

  • Forces a manager to plan steps needed to complete a task, specifying time required
  • Makes it easy to monitor actual progress against the plan
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35
Q

Critical path analysis

A

Shows what tasks need to be done, how long each takes and the necessary order of completion.

  • The critical path is the shortest path to complete all necessary tasks
  • Some tasks can be completed simultaneously
  • Enables a manager to see what needs to be done and allows the timing of tasks to be considered
  • Gives direction and organisation as a business can see the order tasks need to be done in
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36
Q

Competitive advantage

A

Factors that give a business the edge over its competitors. Can arise from areas such as:

  • Quality
  • Dependability/consistency
  • Flexibility/convenience
  • Customer service
  • Variety
  • Innovation
  • Reduced costs
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37
Q

Technology (process)

A

Allows for increased efficiency and reduced costs

  • For goods it can shorten processes and reduce waste throughout production
  • For services it is used in office and communications technology, which has allowed for globalisation
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38
Q

Robotics

A 
Use of programmable machinery capable of doing several tasks
\+ High quality outputs
\+ High consistency levels
\+ Improved efficiency
\+ Minimised waste
– Short-term job loss
– Lack of customisation
– High short-term costs
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39
Q

CAD/CAM

A 
Computer Aided Design/Manufacturing
Computer drawing and adjusting of 3D designs
\+ Shorter time
\+ Automatic calculations
\+ Higher consistency
– Lower quality individual products
– High start-up/equipment costs
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40
Q

Office technology

A

Use of technology to allow for virtual employment outside the physical office
+ Accessible from anywhere
+ Less commute
+ Less floor space
+ Perform multiple jobs simultaneously
– Can lead to burnout as employees always feel on

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41
Q

Task design

A

Classifying job activities in ways that make it easy for an employee to successfully perform and complete a task. Involves determining:

  • Number of staff needed
  • Skills required
  • Training/retaining required
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42
Q

Skills audit

A

Used to determine if existing employees have necessary sills to carry out the task or if the business needs it train/retrain/acquire new staff

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43
Q

Process layout

A

Arrangement of machinery so that machines and equipment are grouped together by the function they perform

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44
Q

Process production

A

Different sequences for different products

  • Best suited to high variety, low volume production
  • Services (like hospitals)
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45
Q

Product production

A

Uses product layout, where the arrangement relates to the sequence of tasks

  • Best suited to high volume, low variety tasks
  • Assembly line manufacturing (like cars)
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46
Q

Project production

A

Uses fixed position layout, where the manufactured object is located
- Best used for large scale activities (like construction)

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47
Q

Hot desking

A 
No set desks for employees
\+ Encourages collaboration
\+ Less floor space required
– Time wasted choosing and unpacking
– Employees don't like the insecurity of not having a set desk
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48
Q

Monitoring

A

Measuring actual performance against planned performance through KPIs

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49
Q

Key Performance Indicator

A

Quantifiable performance measure for a specific objective. Typical ones include:

  • Lead times
  • Process flow rates
  • Direct/indirect cost analysis
  • Defect rates
  • Repair rates
  • Warranty claims
  • Capacity and volume rates
  • IT and maintenance costs
  • Inventory turnover rates
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50
Q

Control

A

Corrective action taken if a discrepancy is detected in monitoring

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51
Q

Improvement

A

Systematic reduction of inefficiencies and wastage, poor work processes and the elimination of bottlenecks

52
Q

Output

A

End result of the business efforts

53
Q

Product

A

The good made or service provided to the consumer

54
Q

Customer service

A

How customers are treated and supported when purchasing the product

  • Aims to meet an exceed a customer’s experience in all operational aspects
  • Attempts to entice new customers back and increase repeat customers
  • Customer dissatisfaction can force a partial or full operations review
55
Q

Warranty

A

Promise made that defects in a business’s products will be corrected within a time period
- Less warranty claims means better product quality

56
Q

Performance objectives

A

Goals that relate to particular aspects of transformation, allowing the business to become more:

  • Efficient
  • Productive
  • Profitable
57
Q

Quality (performance objective)

A
  • Quality of design - Producers can design goods to consumer standards when they understand their
    preferences
  • Quality of conformance - Ability of the manufacturer to meet expectations consistently
  • Quality of a service - Requires reliability, timeliness and responsiveness
58
Q

Speed

A

Time it takes for production to respond to market demand changes

  • Requires changes in input levels and processing times
  • Goals include reduced wait times, shorter lead times and faster processing times
  • Bottleneck reduction and smooth internal communications are required
59
Q

Dependability

A

How consistent and reliable a product is

  • Highly durable products are dependable
  • If consistent and predictable, perishable products can be dependable
  • Can be measured in complaints received for services and warranty claims for goods
60
Q

Flexibility

A

How quickly operations adjust to market changes

  • Can be caused by capacity pressure
  • Faster processing times lead to greater flexibility
  • For goods, achieved by new tech, increased variety and altered design
  • For services, achieved by increased number of providers, skill level and improved tech
61
Q

Customisation

A

Creation of individualise products to meet the specific needs of customers
- Many modern products opt for mass customisation - mass-produced item to be modified to suit individual
requirements
- Costs more than mass-production so only easily adaptable products usually customise (unless
customisation is the business model)

62
Q

Cost

A

Minimisation of expenses to conduct operations as cheaply as possible
- Often determine price
- Can be achieved through more efficient tech, minimised wastage, better input use, lower supplier, holding
and movement costs and efficient distribution methods

63
Q

Product design

A

The design, development, launch and sale of new products enabling a business to grow and attain a competitive advantage. Important considerations include:

  • Quality
  • SCM
  • Capacity
  • Cost
64
Q

Consumer approach

A

Market research identifies customer preference and determines which products are designed and deliviered

65
Q

Technological innovation

A

New products are sold with advanced tech due to greater functionality

66
Q

Service design

A

Starts with consumer needs
- Can be customised (hairdresser) or standardised (fast food cashier)
Considerations include:
- What the explicit service will be
- What the implicit service will be
- Goods required with service delivery
- Cost determination after factoring in expenses

67
Q

Reasons for new products

A
  • Product mix is declining or maturing
  • Possess resources to drive innovation and gain competitive advantage
  • Under pressure from low-cost rivals - respond with hard to imitate innovations
  • High-risk appetite to be first mover in category
68
Q

Supply chain management

A

Integration and management of the flow of supplies throughout the inputs, transformation process and outputs in order to best meet the needs of customers. Uses include:

  • High variety and volume of material inputs (high COGS)
  • Trouble obtaining inputs
  • Complex supply chain (high admin costs)
  • High transportation costs
69
Q

Sourcing

A

Purchasing of inputs for transformation, also called procurement or purchasing. Factors influencing choice include:

  • Flexibility
  • Timeliness of supply
  • Input quality
  • Consumer demand
  • Supplier cost
70
Q

Global sourcing (SCM)

A

Sourcing without location constraints from international firms
- Can be more cost effective

71
Q

Making vs buying inputs

A 
Making:
- Lower costs when economies of scale achieved
- More control
- Protect tech advantages
- Respond to changes faster
- Protect corporate secrets
Buying
- Lower costs by selecting cheapest supplier
- Specialists can produce better inputs
- Only requires small quantities
- Can cancel orders
- No factory costs
72
Q

Supplier rationalisation

A

Assessing the number and diversity supplies to reduce to the least amount necessary

  • Less contracting and input duplication
  • Improved timeliness
  • Reduced waste
  • Lower costs through bulk buying
73
Q

Vertical integration

A

Purchasing suppliers through mergers or acquisitions

  • Guarantees supply for transformation
  • Must be cost and time assessed
74
Q

Cost minimisation

A

Use of offshore markets, increasing access to low-cost inputs
- Also applicable to lean production

75
Q

E-commerce

A

Buying and selling via the internet

76
Q

E-procurement

A

Allows suppliers direct access to a business’s supply level, allowing them to supply without formal request

  • Enabled by business-to-business (B2B) which allows the supplier to assess the buyer’s needs and meet them effectively
  • Business-to-consumer (B2C) allows businesses to sell directly to consumers
  • Specialist sites exist as third parties so accurate stock levels can be presented
77
Q

Logistics

A

Generally refers to distribution, including:

  • Transportation
  • Use of storage, warehousing and distribution centres
  • Materials handling and packaging
78
Q

Distribution

A

Concerned with physical inventory movement and ways of getting products to customers
- Product type and transportation cost affect transportation mode choice

79
Q

Storage centres

A

Involves finding a secure place to hold stock until required

  • Necessary when numerous sale outlets exist and demand is variable
  • Can have particular protective characteristics
80
Q

Warehousing

A

Use of a facility for stock storage, protection and distribution. Associated costs include:
- Premises
- Stock insurance and security
- Stock stacking and moving
Can save costs if used well and useful for durable items that may need short notice transportation

81
Q

Distribution centres

A
  • Intended for short term usage
  • Strategically located near retail outlets to reduce lead times
  • Can be co-located with transportation hubs
82
Q

Materials handling and packaging

A

Requires application of particular standards and methods as products can be dangerous or delicate

83
Q

Cross-docking

A

Direct transfer of products from inbound trucks to outbound trucks without storage in between
- Saves on storage costs

84
Q

Outsourcing

A

Contracting out of a business’s functions to a third party. Can be on-shore or off-shore. Types include:

  • Business process outsourcing (BPO)
    • Operations
    • HR
    • IT
    • Admin work
  • Finance and accounting outsourcing (FAO)
  • Knowledge process outsourcing (KPO)
  • Legal process outsourcing (LPO)
85
Q

Reasons for outsourcing

A
  • Inefficient internal functions

- Seek to drive down costs and can afford the backlash to do so

86
Q

Considerations and options when outsourcing

A 
Considerations
- Whether its cheaper
- Favoured geographical location
- Choice of outsourcee
- Contract terms
Options
- Shared services centre
- Fee-for-service arrangement
- Joint ventures
- "Build-operate-transfer" use - outsourcee builds and operates the project for a period of time before 
  transferring ownership to the outsourcer
87
Q

Advantages of outsourcing

A
  • Saving in capital outlay (factory space and machinery)
  • Saving in labour
  • Increased dependability (multiple suppliers ensures security)
  • Cost savings
  • Higher level skills access
  • Increased flexibility
  • Management savings
88
Q

Disadvantages of outsourcing

A
  • Dependency (SCM failures can cause major issues)
  • Control loss
  • Data security loss (potential leakage)
  • False economy (costs warrant constant review)
  • Redundancy costs
  • Industrial problems
  • Image damage
89
Q

Technology (strategy)

A

The equipment and knowledge that is available to help businesses perform certain functions or make products. Considerations include:

  • Speed of change taking place in area of tech
  • Tech competitors use
  • Implementation costs
  • Ease of integration into existing operations
  • Finances available for a tech change
  • Time taken to introduce new tech
  • Whether staff need to be retrained or made redundant
90
Q

Leading edge technology

A

Technology which is the most advanced of its kind, said to be at the “cutting edge”
- A business can potentially gain a competitive advantage by using it should the tech live up to the promise
since they’re at the forefront of innovation
- Risky as tech is unproven, meaning no guarantee it will be beneficial

91
Q

Established technology

A

Technology which has been developed and widely used across the board without question
- A business should use these as they are functionally sound and uphold basic productivity and speed
standards
- A business could be left behind if they do not use it

92
Q

Uses of technology as a strategy

A
  • When competitors heavily invest in technological innovations
  • When internal tech is dated, inefficient and costly
  • When a firm seems to obtain a long-term competitive advantage through advanced productive capacity
  • Businesses must integrate both technology types to gain efficiencies, productivity and improved operations
    capacity
93
Q

Inventory

A

Amount of raw materials, work-in-progress and finished goods a business has on hand at any particular point in time

94
Q

Stock

A

Yet to be sold products either in partial or full transformation

95
Q

Holding stock (+ and –)

A

+ Meeting unexpected demand increases
+ Stock being ready to use or sell
+ Bulk buying cost savings
+ Reduced lead time between order and delivery
+ Stock is ordered to move regularly, reducing the pressure on a business to have higher cash amounts
available, creating cash flow advantages
+ Inputs and components are able to be used as spare parts if needed
– Working capital is tied up in stock
– Expenses include warehousing, storage, insurance, storage, theft and security
– Risk of becoming obsolete or spoiled
– Invested capital, labour and energy cannot be used elsewhere as it is being used to hold the stock

96
Q

Just-in-time

A 
Inventory management approach which ensures that the exact amount of material inputs will arrive only as they are needed in the operations process
- Can be used in conjunction with FIFO and LIFO
\+ Reduced costs of storage and security
\+ Increased working capital liquidity
\+ Reduced chances of obsolescence
\+ Reduced chances of spoilage
\+ Less warehouse space necessary
\+ Increased flexibility
– May experience a stock-out
– SCM issues disrupt entire schedule
97
Q

LIFO (management)

A

Inventory management system where the most recent stock purchased is the first used, whether into production or sold
- Useful for goods with no use-by date (like machinery parts)
+ Most recently produced products are sold to customers
– Higher obsolescence and spoilage chances

98
Q

FIFO (management)

A

Inventory management system where the oldest stock purchased is the first used
- More appropriate for perishable items (like food and drink)
+ Lower spoilage and obsolescence chances
– Customers may not want the older product

99
Q

Inventory valuation

A

Inventory must be valued for the balance sheet (current assets) and income statement (COGS)

100
Q

FIFO (valuation)

A

First goods purchased are first goods sold, meaning costs of each unit sold is first cost of production
- May understate costs and overstate gross profit, increasing taxes

101
Q

LIFO (valuation)

A

Assumes that last goods purchased are first goods sold, meaning costs of each unit sold is last cost of production

  • May overstate costs and understate gross profit, lowering taxes
  • Illegal under Australian Accounting Standards and forbidden by the ATO
102
Q

WAC

A

Uses average production cost to calculate inventory value

103
Q

Quality management

A

Processes that a business undertakes to ensure consistency, reliability, safety and fitness of purpose of product

104
Q

Quality control

A

Use of inspections and various points in the production process to check for problems or defects. Done through:

  • Feedforward controls
  • Concurrent controls
  • Feedback controls
  • Goods businesses tend to undergo attribute inspection, where a good’s attributes are individually tested
  • Services businesses tend to undergo employee performance inspections
105
Q

Quality assurance

A

Use of a system to ensure that set standards are achieved in production
- Achieved through taking measurements and assessing them against pre-determined quality standards,
aiming for products to be fit for purpose and right first time
- ISO set standards which businesses can voluntarily comply with to enhance competitiveness

106
Q

Quality improvement

A

Continuous improvement and TQM

107
Q

Continuous improvement

A

Ongoing commitment to improving a business’s products

  • Staff encouraged to show initiative
  • Leads to efficiency and effectiveness growths
  • Likely to obtain competitive advantage as a result
108
Q

Total quality management

A

Ongoing, business-wide commitment to excellence that is applied to every aspect of a business’s operations

  • Much more holistic - every staff member is responsible for quality
  • Requires benchmarking, employee empowerment, customer focus and continuous improvement
109
Q

World’s best practice

A

Highest standards and practices achieved anywhere in the world

110
Q

Quality legislation

A
  • Competition and Consumer Act 2010 (Cwlth) - Products must be of acceptable quality for sale
  • Fair Trading Act 1987 (NSW) - Similar function
111
Q

Resistance to change

A

Reasons include:

  • Purchasing new equipment
  • Redundancy payments
  • Retraining
  • Reorganising plant layout
  • Inertia
112
Q

Driving forces

A

Forces that help promote change and encourage progress

113
Q

Restraining forces

A

Forces that make change harder and counteract the driving forces

114
Q

Purchasing new equipment

A
  • Capital cost which can be quite high
  • Must be compared to leasing, which is less upfront but can be more long-term
  • Can lead to improved processing flexibility and speeds, shorter lead times, more consistency, higher overall
    quality, reduced wastage and equipment failure losses
115
Q

Redundancy payments

A

Caused by loss of work arising from job positions no longer necessary.

  • Payouts depend on length of employment, pay level, unused leave amount and outstanding wages
  • Can accumulate to a high cost
  • Typically capital-labour substitution
116
Q

Retraining

A

Arises from change that causes an internal hierarchy reorganisation or tech acquisition

  • Job roles may change requiring employees to acquire new skills
  • Tech acquisition causes staff to be trained or retrained
  • Can be done on or off the job
117
Q

Reorganising plant layout

A

Major changes, like system re-engineering, can require extensive reorganisation. High costs arise, such as from:

  • Transportation, placement and powering of new plant
  • Downtime when transferring and testing new tech
  • Productivity loss as staff orientate themselves with new tech, processes and arrangements
118
Q

Inertia

A

Psychological resistance to change. presenting uncertainty and fear
- Employees may feel threatened due to potential job/career opportunity loss and overwhelming new
equipment
- Can also cause financial effects

119
Q

Force-field analysis

A

Suggests there is a state of imbalance between the driving and restraining forces in a business environment and that these forces must be identified to develop strategies to overcome change resistance

120
Q

Unfreeze/change/refreeze model

A

Multi-step process allowing for large-scale change with minimal disruption

  1. Unfreeze - Assure staff that changes will be beneficial and worthwhile
  2. Change - Implement all planned changes
  3. Refreeze - Ensure that the changes have settled in and that there is stability for a few years after
121
Q

Change agents

A

Individual/group who inspire and influence a culture of change. Generally are:

  • Positive
  • Encouraging
  • Relatable
  • Understanding
  • Collaborative
  • Good at communicating
122
Q

Management consultants

A 
Specialists with wide industry experience and knowledge across business who assess issues and develop strategies to overcome them
- Aware of industry's best practice
- Institute of Management Consultants
Areas of expertise include:
- Industrial relations
- Marketing and product promotion
- Recruitments and retrenchments
- Business establishment
- Technical requirements
123
Q

Global sourcing (global factors)

A 
Strategy of acquiring inputs from overseas
\+ Lower costs
\+ Improve quality
\+ Greater production variety
– Fluctuations in prices
– Quality issues
– Increased lead times
124
Q

Economies of scale

A

Reduction of production costs per-unit as fixed costs are spread over more units

  • May also occur due to increased purchasing power leading to bulk buying discounts
  • Increased specialisation can lead to cost benefits
  • Global marketing can also increase production levels and greaten economies of scale
125
Q

Research and development

A

Systemic work undertaken to improve or create new products and production processes or to extend product life cycles
- Global co-ordination can maximise specialist skills of workforces in different nations and bring together different perspectives

126
Q

Scanning and learning

A

Systematic process of acquiring information about changes and trends in external conditions and using them to make operations decisions

  • Scanning - acquisition of info
  • Learning - implementation
  • Reactive globally but can be proactive domestically if applied efficiently

Business Studies (9 decks)

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