Improving Flexibility Flashcards
What are some flexibility targets?
-operational target: be able to adapt to all market conditions and customer requirements
- product flexibility, switch production from one item to another
- volume flexibility, change levels of output
- mix flexibility, can produce wide range of items
- delivery flexibility, can adapt to different times of delivery
Why improve flexibility?
- can adapt to changes in demand
- can add value to final product
- can increase speed of response
- seen as more dependable and reliable
- it can improve customer satisfaction
- can potentially reduce costs
How can you improve flexibility?
-key way of doing so is to manage customer demand or manage the business’ supply
How can a business manage demand in different situations?
- when there is capacity left, demand, marketing mix and capacity utilisation allow us to understand what can be done to increase demand
- when there is excess demand they can reduce demand by raising prices or increase supply even more
How can a business manage supply?
-business always wants to sell more so they’ll likely increase supply when demand is excess
-increasing capacity is expensive, time consuming and if demand falls, can leave them
With even more excess capacity
-flexible, temporary solutions are needed
Methods of managing supply
- producing to order
- mass customisation
- use of temporary/ part time employees
- outsourcing
- supply chain management
What is PTO?
- business are assumed to BTS (build to stock), make things and keep them until they’re sold
- produce to order (PTO) is an alternative approach, product is only manufactured when an order is made
- PTO usually sees creation of bespoke products individually created for the customer
- a modular approach is taken, basics of product are fixed then some elements are customised for customer
What are advantages of PTO?
- supply customers exactly what they want
- less costs spent on raw materials that aren’t needed
- not wasting money on stock that doesn’t sell
- can add value, so higher price charged
- easier to plan production process, no specific targets that have to be met
- no time pressure like JIT
What are some disadvantages of PTO
- no consistency of production as it can fluctuate over time between when busy and not
- increased unit costs due to poor capacity utilisation and no economies of scale
- need for increased flexibility means suppliers and employees need to be flexible to
Is PTO worthwhile?
- if customers will wait for custom product then yes
- if part can be modular to reduce costs and time then yes
- if holding large levels of inventory is expensive then yes
What is mass customisation?
- taking PTO a step further is mass customisation
- this involves making a bespoke individualised item for different customers but on a mass level
What are the four faces of mass customisation?
- adaptive customisers offer one standard, but customisable product that is designed so that users can alter it themselves
- cosmetic customisers present a standard product differently to different customers
- transparent customisers provide individual customers with unique goods without them knowing it’s specifically for them
- collaborative customisers work with customers to provide product that meets their precise needs
What are benefits of mass customisation?
- can better target individuals or specific market segments
- can turn wider mass markets into niche ones
- allows a competitive advantage to be created as customisation is a USP
- added value
- increased customer satisfaction and feelings of value for money
What are drawbacks of mass customisation?
- rejected customised products cannot be reused
- more complex systems needed for ordering, producing
- further increased flexibility from producers is needed
Use of part time and temporary workers?
- can increase capacity but not employing them so that it’s not a permanent increase bc demand increase is only temporary
- have to work less than 30 hours to be part time
Advantages of part time workers?
- Lower costs, reduces break even point
- more flexible, part times can work overtime if there is sufficient work to do
- potentially more motivating and less stressful
- can recruit wider fans of skills for same employment cost
- easier to recruit people who don’t want to work part time
Disadvantages of part time workers?
- higher costs on training
- less opportunity for training and promotion
- harder to communicate if they’re at the business less
Why would a business employ temporary workers?
- useful if business has seasonal peaks and troughs in workload
- enable a business to fill short term gaps, illness/maternity
- often not directly employed by the business
- temping agency can then bill the business whom receives the temps service
Advantages of temporary workers?
- v flexible
- ideal for specific jobs, tasks and projects
- can always persuade high quality temp to join permanently
Disadvantages of temporary workers?
- higher cost/hour, terms are often charged out by an agency at a rate that is more than Normal employees would be paid
- less likely to know and understand the business
- potentially less motivated and productive
What is outsourcing?
-getting another company to do part of the production process for you
This can be:
- using services of professionals like management consultants, accountants
- catering in the business
- subcontracting elements of work out, electrician in house build
- recruitment of staff
Advantages of outsourcing?
- can react quick to demand w/out permanently increasing capacity
- specialist companies can provide higher quality product
- business can then focus on what it’s good at
- reduced operational and recruitment costs
Disadvantages of outsourcing?
- quality of final product isn’t completely determined by business
- outsourced producer will charge higher prices
- might slow down production process
What is a supply chain?
- a system in place that facilitates the delivery of a product from a businesses’ supplier to customer
- the whole process of turning inputs into outputs
- raw materials –>supplier –>manufacturing –>distribution –>customer –> consumer
