Operations Flashcards

Question

What are the advantages of centralised storage?

Answer 1

Specialist staff are employed, which improves the speed of stock handling and security. Centralised warehouses can store huge amounts of stock, benefiting from economies of scale. The same procedures for issuing inventory are used across the organisation, improving consistency. It may be cheaper to store inventory in one large warehouse than the total cost of many smaller on-site storerooms. Centralised warehouses are often located close to infrastructure e.g. motorway networks or rail cargo terminals.

Answer 2

Inventory has to be delivered to each division or department, causing delays. Specialist staff need to be employed, increasing wage costs. Specialist equipment needs to be purchased and maintained. Inventory usage levels and needs are unclear, as divisions need to communicate with the warehouse. The use of centralised warehousing has declined due to more efficient inventory systems such as JIT, sourcing directly from the supplier.

Answer 3

Decentralised storage involves storing inventory in many different locations in smaller warehouses or store rooms. Each branch or department is responsible for ordering and maintaining its inventory e.g. a retail outlets stockroom

Answer 4

Inventory is always close at hand when needed for production or to sell to customers. Smaller, more local warehouses are more responsive to local needs. Inventory usage reflects production as it is stored locally. Smaller amounts of inventory reduce the likelihood of experiencing the negative consequences of overstocking.

Answer 5

Can lead to wastage or theft of stock as security tends to be poorer than in centralised storage facilities. Lack of specialist staff can lead to inventory control being inefficient. Each division may handle inventory differently, leading to inconsistency and problems being more difficult to identify for senior management. Smaller amounts of inventory result in negative consequences of understocking.

Answer 6

Is the process of dealing with the whole order from start to finish The main functions of a logistics manager is to organise and plan: - Purchasing - Warehousing/storage - Inventory management - Distribution–road, rail, air or sea? Ensures that the right goods are in the right place in the right quantities at the right time to be sold.

Answer 7

Planning inventory required using production and sales budgets. Organising the resources needed for logistics, including warehouse equipment and staff. Commanding warehouse staff to carry out tasks. Co-ordinating the supply chain, channels and methods of distribution so that deliveries are made on time. Controlling the quality, quantity, cost and efficiency of the movement and storage of inventory. Delegating inventory procedures to decentralised warehouses. Motivating other members of their team.

Answer 8

Cheaper than other methods such as planes because... Delivery can be quicker than other methods because... Customer receives product right to their door Refrigerated vehicles can be used to transport perishable goods Can depart at any time 24 hours

Answer 9

It is not suitable for all products – large items Not as environmentally friendly as other methods – carbon emissions Traffic congestion can cause delays Restrictions to the number of hours a lorry driver can work Petrol prices increases makes this more expensive

Answer 10

Large products can be transported easily be freight No traffic to get stuck in It is often faster than by road It is more environmentally friendly than road

Answer 11

There may not be a train station nearby so deliveries can be restricted Rail services can be disrupted – technical difficulties or rail track issues It is not suitable in rural areas with no rail network Specialist rail-freight terminals are required

Answer 12

Products can be transported across the world quickly Ideal for long distance and more remote locations

Answer 13

Very costly in comparison to other methods Large items cannot be transported easily The airport is not the final destination so often still requires road transport for the final delivery Not environmentally friendly

Answer 14

Large items can be transported worldwide Less expensive than air for large loads Good for items that have a long shelf life

Answer 15

Slower method than others meaning longer delivery times The dock is not the final destination so could incur road haulage costs

Answer 16

The product being sold - if the product is flowers it needs to be a fast method with appropriate facility to transport flowers. The finance available within the organisation - if there is limited finance available then this will affect the choice of channels. The image of the product - if the image is of a high quality product this will affect the channel that the organisation chooses. The reliability of the other companies in the chain. Legal restrictions. Where the product is in the life cycle. The organisation's own distribution capabilities. Durability of the product.

Answer 17

This is where a business uses a larger proportion of human input than machinery in the production process. Suitable where the product require craftsmanship or special expertise. Suitable where the production process requires flexibility and the ability to think/problem solve. Most common in job production

Answer 18

Some workers are highly skilled or offer expert craftsmanship Lower start-up costs as there is no need to buy expensive machinery. One off products can easily be produced Employees can use their own initiative and creativity when required.

Answer 19

Recruitment, training and wage costs can be high Accuracy of work can vary from one person to another. High risk of human error resulting in waste and faulty products Labour might only be suitable for small scale production, can’t mass produce Staff illness or absence can impact production and orders might not be made.

Answer 20

This is where the production process relies more on machinery and equipment relative to human input. Suitable where the cost of machinery is cheap compared to labour. Capital Intensive production can use either automation or mechanisation. Suitable for repetitive processes where a standard product is being produced (FLOW PRODUCTION) - Large scale production is required - High and consistent quality is required - The product is more easily produced by machines than labour

Answer 21

Machinery can operate 24/7 so production can keep going 24/7 Machines are more efficient and produce products quicker than human workforce Quality and accuracy will be standardised as it is programmed into the machine Can produce a high volume of products.

Answer 22

Expensive to set-up and maintain. Production time is lost if machines break down. Worker motivation is low if doing repetitive tasks. Individual customer specifications cannot be met as machines only produce standard products

Answer 23

Niche market can be created and higher prices charged because the product is made by skilled workers. E.g. Chanel, Louis Vuitton They are experienced and can spot mistakes quickly. They pay attention to detail. Machines are expensive and money need to purchase and maintain them. Skilled workers can adapt to changing needs of customers. Personal touch – customers like to deal with people and talk to them rather than machines.

Answer 24

Skilled workers take their time – machines are faster. Skilled workers are expensive to pay. Mistakes made by skilled workers can be costly. They cannot work long hours – machines 24/7 Workers need motivated and supervised Machines do not get sick or need time off. Workers need safe and fair working conditions. Skilled workers need higher wages then semi- skilled machine operators.

Answer 25

Automation refers to production being fully automatic - involves the use of computer aided manufacture (CAM) to control fully automated assembly lines which use robotics.

Answer 26

Products are produced in exactly the same way every time, improving consistency. Robots don’t take breaks, holidays or get sick so can work 24/7 Robots can do jobs that are dangerous for humanstodo Accuracy is far greater because there is no human error, which limits waste Fewer employees are needed as automation doesn’t require human control, which reduces wage costs.

Answer 27

Huge investment is needed to automate a production line. If it breaks down is it costly to fix, can waste materials and stops production No flexibility as machinery can only do what it is programmed to do Causes unemployment to increase – bad reputation and bad for the economy Replacing labour with robotics will demotivate retained employees Absence of “human touch” can lead to lack of creativity and personality in the products produced.

Answer 28

Mechanisation refers to labour and machines working together to produce products e.g. a machinist operating a sewing machine in a textile factory.

Answer 29

Machinery improves the accuracy of work as human error is reduced, and completes difficult work for employees Using machinery can speed up production Unlike automation a human element exists in mechanisation, improving creativity

Answer 30

Initial set up costs are high The machines and equipment cant be used without humans, so liable to some human error Production can’t be 24/7 as humans require breaks etc Initial training of the workforce is expensive and will also require training when machinery is upgraded If machinery breaks down workers may be idle while it is being repaired.

Answer 31

Use of high quality material Highly skilled/trained staff - High standard of workmanship Physical appearance in comparison with its marketing description Works well and meets customers needs and wants Is durable and reliable

Answer 32

Poor quality goods can result in customers returning their purchases, causing a loss in sales and increase in complaints. Extremely low quality can result in products not meeting safety standards, which can lead to bad PR. Being associated with quality production can attract high quality staff. The highest quality goods can be sold for premium prices – increase in profits Customers are more likely to make repeat purchases - loyal customers A good reputation is gained, which will encourage new customers – business growth Customers are less likely to buy from competition – increased market share Wastage is reduced

Answer 33

High Quality Raw Materials * Trained Employees * Maintaining Equipment * Quality Control Quality Assurance Quality Improvement Quality Circle Benchmarking Mystery Shoppers *High quality inputs

Answer 34

Using high quality raw materials - The business uses quality inputs to ensure quality outputs - High quality raw materials are expensive to buy which decreases profits and may be a put off for customers

Answer 35

Having highly trained staff – making sure all employees are well trained is essential - Less errors will be made as employees know what they are doing! - Less wastage!! - Improves the image and reputation as customers are happy with the products and service they have received. - Reduces the risk of accidents happening - Very costly and time consuming to put staff through training - Output and production can cel lost whole employees are being trained

Answer 36

Ensuring that machinery/equipment is up-to-date - Fully maintained so that it is working to its best at all times

Answer 37

The most basic method of ensuring quality. Raw materials or finished goods are inspected to check that they are of an acceptable standard. Products are inspected and checked at the START and END of the production process. Trained ‘inspectors’arespeciallytrainedtotesteachproductorasamplefromabatchtodetect a faulty product before it reaches the customer.

Answer 38

Faulty products are detected before they reach the customer The company is more likely to develop a good reputation if the quality of its products is consistently high

Answer 39

Trained testers are required to carry out quality control, this costs time and money Can create a lot of waste as the quality of goods is not checked until they are made, and have to be thrown away or reworked if they do not meet the quality standards, costing time and money.

Answer 40

This is a method of prevention, where product quality is checked at various stages of the production process (not every stage!!!) All staff have the responsibility for checking that the products meet the agreed standard of quality. For example, a Quality Assurance Manager might check the raw materials, inspect the machinery, speak to employees, sample work in progress and inspect finished goods.

Answer 41

Prevents defects from occurring in the product as early as possible which reduces waste and decreases costs spent on discarded materials. Easier to identify where there are faults in the production process. Staff motivation is improved because workers have more ownership of their work. Workers are encouraged to take pride in their own work

Answer 42

Involves regular quality control inspections that test and monitor the quality, from the design stage through to manufacture so time consuming process which slows down production. Can increase the cost of production e.g. paying QA manager wages.

Answer 43

A group of workers (that can include managers) meet at regular intervals, to discuss how to improve methods of production or solve problems. Suggestions are passed to management for further discussion and may be implemented.

Answer 44

Employees will be motivated as they have a say in decision making. Management get well-informed suggestions from the workers who actually produce the products.

Answer 45

Employees meet during paid company time, meaning production time is lost. Employees are often trained to join a quality circle, costing the business even more time and money.

Answer 46

Benchmarking uses a standard set by an established quality leader to discover the best methods of production. A business compares its quality standards to the market leader (the best) in their industry. The business will then aim for these quality standards (best practice) with its own products to an equal standard or if possible, to exceed!!!!!

Answer 47

If successful, the product will be as good as the best on the market. Studying how competitors produce their products can identify how money savings can be made. Studying competitors can identify opportunities for other functions such as marketing or operations to be improved.

Answer 48

What is best for one organisation might not be suitable for another, due to internal constraints Benchmarking can reveal the standards the organisations should strive for, but it doesn't give you the full story behind how they reached those standards themselves – it can be difficult to gain information about other organisations’ quality methods.

Answer 49

Holistic approach to ensuring quality products – incorporates a variety of methods including quality assurance, quality improvement and quality circles. Quality is the responsibility of every employee. Each part of the production process must meet a defined standard before being passed to the next stage or colleague. Employees treat each other as “internal customers” and every employee sets out to satisfy the customer. Focus on “getting it right first time” – zero errors. This is a lengthy process involving extensive staff re-training. Organisations which prove the carry out quality management can be awarded the ISO 9001 quality standard.

Answer 50

The commitment to setting quality standards should be part of the organisations culture. Continued improvement is important (Kaizen) and employees are encouraged to suggest ways to improve. The aim is to GET THE PRODUCT RIGHT FIRST TIME WITH ZERO DEFECTS. Ongoing staff training is held to ensure that staff are highly skilled. All staff are made aware of the clearly defined quality policy and work processes are scrutinised. Method of prevention.

Answer 51

Should result in zero errors, which will reduce waste. Staff are motivated as they are constantly consulted on quality. The business will gain a reputation for high quality products which will increase customer confidence and market share. A culture of teamwork is established, as everyone works together to improve.

Answer 52

Substantial staff training to ensure no mistakes are made, will increase costs and result in lost work time. Needs the commitment of all staff, which could require a stricter selection process. Processes need to be continually monitored and compared to policies and procedures, which can be time consuming.

Answer 53

People are employed, often through an agency, to purchase products, ask questions, register complaints or behave in a certain way, and then provide feedback to the business about the experiences they had. This is where the organisation employs trained shoppers to anonymously evaluate: Customer experience Operational efficiency Employee integrity Use of merchandising Quality of the product

Answer 54

The mystery shopper is not employed by or directly connected to the business, so no bias is shown. Valuable feedback, which may be lost when a customer chooses simply not to buy a product, is gathered when a product is below standard or unsatisfactory. The mystery shopper can suggest improvements that ensure a better match between the experience the customer actually has and the one the business intends them to have. Dissatisfied customers are likely to share their poor experiences with others, whereas the mystery shopper is not permitted to do this.

Answer 55

Staff may resent a mystery shopper evaluating them, if they are aware of it, and may take the feedback personally. The mystery shopper’s feedback may not be fully representative of the business as a whole as it provides a limited evaluation i.e. one day, one branch, one customer service assistant etc. Allowances have to be made for human error in judgements. Mystery shoppers are people who have feelings and opinions, which may cloud their judgement from time to time. Businesses need to pay mystery shoppers, often though an agency, which increases costs.

Answer 56

A quality standard or symbol proves that a product has met an agreed industry standard. For example, hotels that meet standards to achieve a “star” rating. Examples of quality standard logos: - BSI Kitemark - CE Mark - Royal Warrant - Investors in People – staff training

Answer 57

Prove to customers that a product has met an agreed standard. Customers will have confidence in purchasing the product and may repeat purchase. Higher prices can be charged as the product is of high quality. Can be used as a promotional tool to gain a competitive edge.

Answer 58

Time consuming processes need to be completed to achieve the award. Agreed standards need to be maintained at all times. If any award is removed it would give the organisation a poor reputation. Annual checks and audits by awarding bodies can disrupt production.

Answer 59

BSI (British Standards Institution) certification is internationally recognised as demonstrating to customers, competitors, suppliers, staff and investors that the business is committed to being the best it can be. The BSI Kitemark is awarded to products that meet a certain safety, quality or security standard. The BSI Kite Mark is respected throughout the world. If a product being tested meet British Standards, the manufacturer is issued with a licence, allowing the use of the Kite Mark.

Answer 60

This mark shows that a product meets European Union (EU) safety, health or environmental standards which allows businesses to gain fast and easy access to the European markets. CE Marking by manufacturers can offer customers a measure of reassurance about the quality and safety of their products. The ‘CE’ mark on a product means that a manufacturer claims that it conforms to minimum legal requirements – for instance, in respect of health and safety – as laid down by EU regulators. If products don’t meet the minimum standard they risk having products removed from retailers throughout Europe.

Answer 61

Some British firms gain a ‘Royal Warrant’, which allows them to state that they are endorsed by Royal Appointment to His Majesty the King, to the Duke of Edinburgh or to the Prince of Wales. This accreditation will be proudly displayed on the product packaging and on the firm’s correspondence and marketing literature.

Answer 62

Investors in People is a standard for people management, offering accreditation to organisations that adhere to the Investors in People Standard.

Answer 63

Abusing cheap labour Use of child labour Violation of worker rights Disregard for H&S standards - Not having good working conditions, training, safety equipment Not paying living wages Low farm standards Testing on animals Using animal’s for products – eg fur jackets

Answer 64

A business cannot claim to be ethical if the suppliers of raw materials are adopting unethical practices. Business must make sure their supply chain is ethical before they can claim their whole business has ethical practices. This is why choosing a supplier is important and business will review / audit suppliers before choosing them. Examples: – Use of child labour – Violation of worker rights – Disregard for H&S standards

Answer 65

Awards may be granted, which can be used for promotional purposes. Improved business image which leads to increased brand awareness. Can choose from a wider pool of investors because ethical investors will show interest. Increased demand from ethically motivated consumers which will increase sales. Improved recruitment and retention from employees because they share the same values.

Answer 66

Cost of sourcing materials from ethical suppliers can be higher which may lead to a higher price being charged. Extra costs in terms of staff training to ensure staff comply with ethical policies, which will decrease profit. Ethical standards vary between countries which can make it difficult to strictly enforce, especially for MNCs. Audits are needed to ensure standards are met and maintained. Decision making may be more complex and time consuming as some solutions may not be appropriate.

Answer 67

The Ethical Trading Initiative is an alliance of companies, trade unions and NGOs that promotes respect for workers’ rights around the world. Its vision is a world where all workers are free from exploitation and discrimination, and enjoy conditions of freedom, security and equity.

Answer 68

Refers to the duty that a business has to act in a way that protects the environment. Businesses are under pressure to be seen to be looking after the planet. Many Government organisations will only work with a business that is environmentally responsible. Some investors will only invest if a business is environmentally responsible. It enhances the image of the organisation which can increase customer loyalty.

Answer 69

Laws are in place to control: – Emissions to the air – Storage and disposal of waste – Emissions to the water supply – Nuisances, e.g. noise, odour, fumes, pollution, accumulation of rubbish etc.

Answer 70

Minimise wastage by ensuring all employees are trained. Recycle by encouraging staff to use coloured bins. Minimise packaging by using only what is required. Prevent pollution by disposing of chemicals in a responsible way. Be sustainable by using bio-degradable raw materials or 'planting a tree'.

Answer 71

Organisations have a legal responsibility to store, transport and dispose of waste without harming the environment. They must comply with the following duty of care: - Segregate waste appropriately e.g. keeping apart chemicals that may react - Store waste appropriately e.g. securing waste - Transport waste appropriately and securely

Answer 72

Recycling - This is when a business is taking used materials such as glass, paper, metal and plastic recycling them. Businesses can then process them into new products.

Answer 73

Ways that packaging could be environmentally friendly include: - Being reusable i.e. being used again in its current format, eg Lush and Alien perfume - Being recyclable i.e. can be easily recycled into something else, saving the use of fresh raw materials e.g. lush recycle their plastic containers into scarves, glass can be recycled into loft insulation - Being biodegradable i.e. packaging can break, down more easily, e.g. plastic bottle caps take 400 years to decompose!!

Answer 74

This is the impact that using fossil fuels has on the environment. Organisations need to prove their commitment to reducing their carbon footprint by e.g. Using alternative sources of renewable energy Using low emissions vehicles or EVs for deliveries and company cars Using more environmentally friendly methods of distribution

Answer 75

Ensuring that the raw materials used for a business activity are not being depleted. Ways that organisations can prove their commitment: Replanting raw materials that are used in production e.g. velvet toilet rolls replace three trees for every one that it uses Reusing or recycling materials to be used in production Using resources responsibly e.g. sustainable fishing limits Utilising renewable energies

Answer 76

Looking after the environment will help to sustain the organisation’s activities for the future. Having a positive effect on the environment will help the organisation to gain a positive reputation. Reducing energy usage can reduce running costs. Reducing packaging can reduce production costs. Income can be generated from recycling equipment and materials. Preventative measures will cost less than having to clean up the damage. Awards can be granted which can be used for promotional purposes. Competitive edge.

Answer 77

Investment in environmentally friendly measures will be expensive in the short term e.g. installing solar panels. Most environmentally friendly procedures rely on the natural environment, which may not be sufficient e.g. lack of wind or solar energy Eco-friendly materials may be more expensive to produce. Staff will have to be retrained in new practices which is time consuming. A higher price may have to be charged which may put some customers off.

Answer 78

Businesses are awarded the Fairtrade mark on their products which can appeal to customer. Businesses that are fair trade have a positive impact on the producers of the raw materials. An enhanced public image as being seen as being ethical will attract customers away from less ethical competitors. Charge higher prices. Increased sales , e.g. Free Poll - 96% of consumers are prepared to pay more for Fair Trade products.

Answer 79

Losing the Fairtrade mark after gaining one will result in bad publicity. Products are often more expensive – some customers might resent paying this higher price. Paying suppliers a fair wage, therefore a higher wage in comparison to non Fairtrade suppliers, this will increase expenses so decrease overall profit.

Answer 80

Websites can be used to research suppliers prices and compare prices. Websites can be used to purchase raw materials from suppliers. Emails can be sent to suppliers to ask questions regarding inventory. Emails can be sent to suppliers to ask questions regarding stock or to confirm an order has been received and to let the customer know about the progress and status of the order (e.g. when it has been dispatched). Deliveries can be tracked and traced via the websites of logistical companies.

Answer 81

Record suppliers information. Record inventory items. Create reports showing information about inventory. Reports can be generated on stock information Storage of large quantities of information easily done

Answer 82

Where computers are used in inventory control and new inventory can be ordered automatically. When the inventory level reaches the re-order level, an order for more of that product is automatically produced and then sent to the supplier.

Answer 83

Automatically reorders inventory when it is required. Help management make decisions regarding which products should be discontinued. A inventory count by hand is no longer required - (saving time and wages and reducing human error).

Answer 84

Expensive to purchase and maintain equipment. Staff require training. It can take time to programme machinery.

Answer 85

This is where manufacturing processes are automated e.g. by use of robotic technology or equipment that is controlled by a computer. Machinery and other equipment are regulated by a computer which is programmed to control and co-ordinate each stage of the production process. Instructions fed into the computer can be changed quickly at short notice (useful in Batch Production). CAM is used extensively in the electronics industry.

Answer 86

It allows for precision and accuracy in the manufacturing process, meaning less wastage as human error is eliminated. Reduces the number of staff required, therefore less wages to pay. Production can occur 24/7. Machines will work at a programmed pace, therefore speed of production will be more predictable.

Answer 87

Computer software is used to assist in the creation, modification and analysis of a product during the design process. The product can be built and tested virtually to ensure it meets the needs of the customer and the business. CAD is used in industries such as car design, shipbuilding, architecture and engineering.

Answer 88

Reduces the cost of creating and then modifying a prototype. Drawings can be done in 2D/3D, allowing actually images of what the final product will look like, making it easier for the business to make decisions. (E.g. a new building) Professional results can be obtained very quickly If a change is made to a particular aspect of the drawing, all other aspects can automatically be updated. Can be run on PCs and Laptops, specialised computers aren’t needed.

Answer 89

Many retail outlets use EPOS at their checkouts. The EPOS system is controlled by a computer system which allows a detailed receipt to be given to the customer. When a sale is made at the till and a barcode is scanned, the inventory records are automatically updated. This means that inventory control then know when inventory needs to be replaced. It can be more efficient as some systems automatically reorder the item which has just been purchased. This improves inventory availability for customers.

Answer 90

Valuable market research data can be collected about the type of products that are popular or unpopular. The business can track how sensitive customers are to changes in selling prices. As well as printing out a receipt for the customer, special offers and coupons can also be produced. Highlights regional variations in stock for head office. Allows for decisions on slow-moving stock or best sellers to be made quickly.

Answer 91

This system is also controlled by computer software. Stock levels are fed into the system (Max Stock, Min Stock, Re-Order Level and Re-Order Quantity), as well as information about preferred suppliers for re-ordering stock. Stock is bar-coded and scanned on receipt and issue (EPOS). When the system detects that the Re-Order Level has been reached, it will automatically generate a Purchase Order for new stock. This should mean that stock never runs out, making the business run more efficiently. Useful for business’ that rely heavily on the use of raw materials, parts and components. It can be complex to identify different parts and stock via numbers and codes. Barcodes or QR codes can make this process more straightforward. Both QR codes and barcodes store information about an item or product in a machine-readable format that can be easily scanned with a barcode scanner or, more recently, many smartphones (when equipped with a barcode-scanning app or QR code reader).

Answer 92

Inventory management is easier with these as information can be scanned and processed quickly and easily You can also use your smart phones and do not need to purchase specific scanners

Answer 93

You need the technology to keep this going. You can loose the expertise if employees rely on codes rather than knowledge of the individual part or raw material being used.

Answer 94

Robotic Process Automation (RPA) refers to software that can be easily programmed to do basic tasks across applications just as human workers do. They can also perform more dangerous tasks with precision and accuracy. Furthermore they can be programmed to complete highly skilled and technical tasks.

Answer 95

Allow formula to be used which perform calculations quicker and less mistakes are made. Can create graphs to show stock information

Answer 96

Computerised systems track where inventory is to allow inventory to be found quickly Machinery is used to move inventory around large warehouses

Operations Flashcards

(121 cards)