Making Operational Decisions To Improve Performance Flashcards
(23 cards)
Dependability
Refers to the quality of the product/service and whether it is reliable and trustworthy.
Flexibility
Whether the business can offer a variety of products.
Mass customisation
- Means that a business can produce bespoke products on a massive scale with rapid low-cost production methods
- In car assembly plants every car that is made is to customer specifications, such as cars in different colours
- mass customisation was started by Nike in 1999 making customised trainers.
How to match supply with demand
- Outsourcing
- temporary or part time workers
- producing to order
Outsourcing
Where a business functions, such as pay roll, is contracted out to a third-party business. This third - party business may/may not be located abroad. Marketing research, legal work, accountancy, or HR can be carried out by outsourced companies. An archetypical example is a call centre in India.
Advantages of moving to a call centre in India
- India is a hub of talent, skilled call centre professionals who can provide efficient services at a fraction of the un cost.
- the time zone in India is different to western countries making companies to offer quality services on a 24/7 basis.
- vast majority of the Indian population speaks English and also speak other languages like French, German, and Spanish.
- India has a growing pool of technical talent, making it an ideal location to outsource.
Disadvantages of moving to an Indian call centre
- Risk of losing sensitive data and loss of confidentiality
- losing management control of business functions means that businesses may no longer be able to control operations
- problems with quality can arise if the outsourcing provider doesn’t have a proper process or is inexperienced in an outsourcing relationship.
- may work with other companies so not 100% of their time and attention resulting in delays.
Outsourcing production
Sending some of the production to other companiesto complete e.g. Motor manufacturers now outsource not only parts but complete assemblies like steering. 20% of Europe’s cars are sub- assembled in Eastern Europe
The use of temporary employees
Key to efficient inventory management is to be flexible enough with staff to meet change in demand - some changes can be planned for and are expected eg Christmas some changes are unexpected and so having a flexible workforce is key to managing demand.
Part time workers
Someone who works less than 35 hours a week-they should get the same benefits as a full time worker on a “pro rata” basis. Examples: delivery driver, shop worker, graphic designer
Producing to order definition
An approach to production where the production of the items begins only after a customer order is received. Examples: restaurant, deli
Producing to order
When “one off” product is produced for a customer. higher prices can be charged for these bespoke items. Business can gain a competitive advantage by offering this as a unique selling point. Hard to plan production with any certainty if orders keep changing, candepend on business capacity.
Stock definition
Stock represents the raw materials, work-in-progress and finished goods held by a firm to enable production and meet customer demand. The three main types of stock: raw materials, work in progress, and finished goods
Why would a business hold stock
- Enable production to take place
- satisfy customer demand
- precaution against delay from suppliers
- allow efficient production
- allow for seasonal changes
- provide a buffer between production processes
Problems of holding inventory
- Storage costs
- cost of waste products
- cost of damaged products
Main influence on the amount of stock held
- Need to salsify demand
- need to manage working capital (money used for day-day expenses)
- risk of loosing value
Inventory control diagrams
Maximum stock levels
Order quantity
Re-order level
Minimum stock level
Buffer stock
Lead time
- Highest quantity of stock a business can hold, determined by storage capacity and demand forecasting.
- The amount of stock ordered at one time
- stock level at which a new order should be placed to replenish inventory before it runs out
- lowest acceptable stock level
- extra stock held to account for unexpected demand or delivery delays
- time taken between placing and receiving the stock
Buffer stock advantages
- Holding a buffer means that a business can easily respond to changes in consumer demand and improves their flexibility.
- holding a buffer means that if the suppliers cannot deliver on time that production will not be affected.
Buffer stock disadvantages
- The cost of storage is high, a business will need to pay for premises, staff and security of the inventory
- this can sie up the working capital of a business.
Supply chain
A system of businesses, people, activities, information, and resources involved in moving a product or service from supplier from supplier to customer.
Choosing suppliers depends on
Prices, payment term, quality, capacity, reliability, flexibility, good service, effective communication, and financial security.
Effective supply chain management
- Efficient supply chain management will seek to get the right goodsto the business at the right price.
Value of efficient supply chain management
- Efficient supply chain management can result in helping the business to be more competitive through having lower costs but better quality products.
- they can supply a larger range of products
- The can ethically source with integrity giving them a unique selling point
- they can make sure customers get product availability which will improve customer loyalty and repeat business.
