Operations Management Strategies Flashcards

Question

How does each seperate performance objective allow buisnesses to achieve cost performance objective

Answer 1

* Achieving quality means business will reduce costs as it will not require a large budget to fix mistakes and resources will be used efficiently * Achieving speed will save the business time and therefore money * Being dependable also contributes to saving time and money through reduced errors in production (lean production) * Flexibility indirectly contributes to reducing costs by improving speed of responses

Answer 2

* Businesses achieving a competitive advantage * Role (Cost leadership and Product differentiation)

Answer 3

* Apple seeks to differentiate itself through quality * 2013 Apple CEO Tim Cook “we’re not about selling the most we’re about selling the best” * Apple must respond to changes in market demand quickly to remain competitive * Apple must maintain its high degree of quality à 2017 iPhone X release was delayed due to issues with OLED display

Answer 4

* NPD is the term used to describe the complete process of bringing a new product or service to market * This contributes to a business’s ability to grow and attain a competitive advantage

Answer 5

* Consumer approach * Technological approach

Answer 6

* Cosumer approach is whereby market research determines what consumers desire * which in turn determines what products are designed and developed

Answer 7

* technolgical approach to NPD is whereby innovations in technology enable new appealing products to be made which use advanced technologies giving products greater functionality

Answer 8

1. Market research/product concept 2. Product design and prototype development 3. Prototype testing and assesment 4. Product refinement and production process refined 5. Production and product launch

Answer 9

* Quality of the product (must meet customer expectations) * Supply chain management (new products may increase the number of suppliers, the timing of supplies needed and/or the volume of supplies) * Capacity management (is more machinery and labour required?) * Cost factors (what will be the cost of inputs, time and energy used in production of this new product)

Answer 10

* What the ‘explicit service’ will be, the tangible aspect of the service and, * What the ‘implicit service’ will be, the psychological, wellbeing factor (influence on customer choice)

Answer 11

* Innovation is important in smart-phone market * As such Apple spends large amounts on R&D * 2014 spent US $6 billion to US $13 billion in 2018 * Despite R&D, due to increasing competition in Chinese market Apple’s market share has declined in recent years

Answer 12

* A supply chain is the sequence of activities and organisation involved in producing a good or service: * Inputs to transformation process to outputs

Answer 13

* SCM is the efficient control of inputs as they move in a process from: * Supplier to manufacturer to wholesaler to retailer to consumer * In order to best meet the needs of customer’s

Answer 14

* Reduce inventory * Increase the speed of transactions * Increase revenue by satisfying customer demands more efficiently

Answer 15

* Strategic * Tactical * Operational

Answer 16

* 'Sourcing’ is also called ‘procurement’ or ‘purchasing’ and refers to the purchasing of inputs for the transformation process * Sources or ‘Inputs’ are drawn from a range of suppliers

Answer 17

* Consumer demand * Quality of inputs required * Flexibility and timeliness of supply * Cost of supplier

Answer 18

* Supplier rationalisation * Backwards vertical integration * Cost minimisation * Flexible or responsive supply chain processes

Answer 19

* Involves assessing number and diversity of suppliers * Business strategy behind this is to reduce the number of suppliers

Answer 20

* A ‘lean’ organisation is one that minimises costs and improve processes * i.e. They will not carry inventories (JIT approach) and aim to ‘make to order’ so they don’t incur unnecessary storage costs. * This requires a responsive supply chain

Answer 21

* Global sourcing refers to businesses purchasing supplies or services without being constrained by location.

Answer 22

Globalisation

Answer 23

* In the supply chain management activity, global sourcing means buying or sourcing from wherever the suppliers are that best meet the sourcing requirements.

Answer 24

* Lower cost * Better expertise * Access to new technology * Access to higher quality inputs

Answer 25

* May need to relocate aspects of operations * Increased cost of logistics * Storage and distribution * Managing different regulatory conditions between nations * Increased complexity of overall operations

Answer 26

* Border closures * Reduced trade between nations * Reduced demand from other countries

Answer 27

* Logistics is a term broadly referring to distribution but also includes: * Transportation (including modes of transport) * Use of storage, warehousing and distribution centres * Materials handling and packaging

Answer 28

* Distribution * Transportation * Storage, warehousing and distribution centres * Materials, handling and packaging

Answer 29

* Refers to ways of getting the goods to the customer * The different forms of physical distribution that a business may use (channel choice) include * Producer to wholesaler to retailer to consumer

Answer 30

* Transportation is the aspect of logistics concerned with the physical movement of inventories * The type of product and cost of transport will determine the mode of transport selected

Answer 31

* _Storage_ involves finding a secure place to hold stock until it is required * Storage for inventory is necessary when there are numerous outlets through which stock is sold and when demand is variable and needs a responsive supply chain * Storage may be short or long-term

Answer 32

* _Warehousing_ is the use of a facility for the storage, protection and later, distribution of stock

Answer 33

* Costs associated with warehousing are: the premises, insurance, security, moving stock, damage if not stored correctly

Answer 34

* Facilities that are strategically located to minimise time to supply stock to retail outlets and are often highly technologically advanced facilities

Answer 35

* Amazon utilises physical distribution centres through its fulfillment centres placed in strategic locations that utlilises robotics to get goods delivered as quickly as possible * Wadonga City Council developed freight distribution centre located off hume highway and close to major airports, ports and rail ways LOGIC * Wooloworths has built distribution centre within the centre

Answer 36

* Important aspect of logistics as there are particular standards and methods of operating which need to be applied for certain goods

Answer 37

* E-commerce involves the buying and selling of goods and services via the internet

Answer 38

* Increased access to important business information * Increased interconnected amongsts businesses domestically and globally

Answer 39

* _E-procurement_ is the use of on-line systems to manage supply, allowing suppliers direct access to the business’s level of supplies so that when stock falls to a pre- determined point, the supplier will supply without a formal request from the buyer. (B2B Business to Business)

Answer 40

* Greater availability of information * Speed * Time saving * Easier and cheaper access to global markets * Easier data management * Flexibility and ability to create broad networks

Answer 41

* Inputs for iPhone are sourced from a global web of suppliers, who deliver them to Apple production facilities such as Foxconn in China * Apple has 785 suppliers in 31 countries * Apple uses multiple suppliers for the same component to gain competitive advantage through encouraging competition between suppliers and hence lowering costs of components * Apple faced difficulties in supply chain in 2017 when iPhone X was delayed indefinitely due to issues with OLED display à manufacturing issues were worsened as Apple relied on one supplier for manufacturing of iPhone. * Finding different components for different iPhone models requires continuous planning, monitoring and control measures * Changes in demand in different models can lead to increases of inventory in certain models and shortages in others, iPhone X exceeded demand expectations whereas 8 and under performed * Apple has implemented inventory tracking technologies to reduce company’s number of warehouses and thus reduce costs

Answer 42

* Outsourcing involves the use of external providers to perform business activities. Also called ‘BUSINESS PROCESS OUTSOURCING’

Answer 43

* Operations (e.g. manufacturing, design, distribution) e.g. Apple and Foxconn * Human resources (e.g. employee renumeration, training, counselling) * Administrative work (e.g. data entry, back office work) * Information Technology (e.g. network outsourcing via remotely hosted software applications) * Finance and accounting (preparation of financial accounts, taxation etc) * Knowledge process outsourcing (e.g. outsourcing marketing, public relations) * Legal process outsourcing (e.g. Legal advice, drafting contracts, patents and trademarks etc)

Answer 44

This is when a business uses a wholly owned subsidiary to carry out a business process/function

Answer 45

* This is when a company uses a third party to outsource to. * Can be on-shore or off-shore.

Answer 46

* Simplification by reducing the number of activities performed within the business. * Capacity to focus on core business/competencies and therefore improve performance * Cost savings and efficiencies * Increased process capabilities due to access to improved technology * Human resource function of the business does not need to spend time and money meeting employees

Answer 47

* Access to cheaper labour * Regulatory differences * Skilled labour elsewhere (e.g. educated workers in India and The Philippines – Telstra has call centres in The Philippines as do the four major Australian banks)

Answer 48

* Business is now dependent on other businesses to supply components or raw materials * Loss of control of standards and information security, e.g. Too much lead in paint used in toys manufactured for Mattel * Payback periods: can take 2 or 3 years to make up the initial cost of organising outsourcing * Loss of control of standards and information security * Loss of jobs * Loss of corporate knowledge by reliance on outsourcing provider

Answer 49

* Outsourcing for Apple has resulted in lower costs through benefiting from cheaper labour and other companies such as Foxconn’s pre-established economies of scale * However, outsourcing has led to loss of quality control and they have become dependent on supplier, iPhone X delays due to issues with OLED display at manufacturing plant * Due to outsourcing globally has also been affected by US-China trade war along with border restriction due to COVID 19

Answer 50

* Use of technology can lead to competitive advantage

Answer 51

* ‘Leading edge’ technology is technology that is the most advanced or innovative at any point in time

Answer 52

* Use of leading-edge technology can help businesses to create products more quickly and to a higher standard, with less waste. * Lead to cost-leadership

Answer 53

* Established technology is the technology that has been developed and widely used and accepted without question

Answer 54

* Robotics for complex manufacturing (although there are new ‘leading edge’ robots too) * Computer-aided design (CAD) and computer-aided manufacturing (CAM) * Bar coding and point-of-sale data for inventory management

Answer 55

* Foxconn factory uses leading edge robotics * 2016 factory in China reduced workers of 110,000 to 50,000 through use of robotics * Hence reduced costs in long-term * However, robotics lacks flexibility of human labour that is needed for smart-phone market * Also, technology such as robotics involves a large capital outlay

Answer 56

* Inventory refers to the total stock of goods and materials held by a business at any point in time

Answer 57

* Unexpected increases in consumer demand can be met when there is stock available, (influence of variation in demand) * It reduces lead times between order and delivery if there are some stocks of finished goods (improves speed) * Some businesses maintain high levels of inventory in raw materials (inputs) to take advantage of discounts that apply to bulk purchases of inputs, (cost leadership) * Stocks are valued as an asset and are of value to the business, reflecting well on the balance sheet, (interdependence with finance)

Answer 58

* Many businesses view holding stock as a waste, Business trend is to hold as little stock as possible and to adopt a ‘make-to-order’ approach * The cost of holding stock can be as high as 30% of the value of the stock and include rent on warehouse, spoilage, insurance, theft and handling expenses (labour, transport etc) * The cost of obsolescence, stock is no longer able to be sold, e.g. perishable items or demand for product has decreased * High inventory levels place more layers of management (need inventory managers) between the customer and the product à higher costs reduced profits

Answer 59

* LIFO * FIFO

Answer 60

* JIT is an inventory management approach (not an inventory valuation method) * It ensures that the exact amount of material inputs will arrive only as they are needed in the operation process.

Answer 61

* Aims at overcoming the problem of end-of-period stock valuation, eliminating waste and making efficient use of time (aspect of lean production method)

Answer 62

* Very flexible operations function with flexible processing * Very high ability to respond quickly to changes in demand as well as reliable supplier deliveries

Answer 63

* Benefits is that business does not need to operate storage facilities or manage inventories due to the fact no stock or inputs will need to be stored

Answer 64

* Disadvantage is that if supplies are delayed the whole operation process may be delayed

Answer 65

* Quality Management refers to those processes that a business undertakes to ensure consistency, reliability, safety and fitness for purpose of the good or service

Answer 66

* Quality control * Quality assurance * Quality improvement

Answer 67

* QC is a review process whereby everything that is involved in production process is reviewed and then adapted

Answer 68

* _First step,_ set defined quality standards/parameters * _Second step,_ design a range of tests to assess the quality of processes against the standards * _Third step,_ carry out inspections and intervene where there are any shortfalls (i.e. take corrective action). à This might include an attribute inspection of goods or in a service business, an inspection of employee performance e.g. phone call recording, mystery shoppers

Answer 69

* QA involves the monitoring and evaluation of various processes of a project, service or facility to ensure that minimum levels of quality are being achieved in the production process

Answer 70

* QA is similar to QC but QA is process oriented while QC is output oriented

Answer 71

* International quality assurance standards have been exmaple such as the ISO 9000 certification * Purpose is to ensure businesses and consumers know that a component overseas is same quality as component manufactured internationally

Answer 72

* Continuous improvement is the belief that over time, processes will be made more efficient and effective, may be in the form of a monumental breakthrough due to innovation or may be gradual over time.

Answer 73

* QI is a process which aims to reduce the rate at which mistakes occur in the production process. * Leads to less defects and reduces waste, hence increases profits

Answer 74

* Through analysing what has happened in the operations processes and what actions will be taken to improve performance * The basis of successful improvements in quality is the inclusion of staff into improvement processes

Answer 75

* 2013 5 million iPhones had to be returned to Foxconn factory due to defects at a cost of $1.6 billion à attributed to lack of training in Foxconn factory

Answer 76

* External environment (economic conditions, legislative changes, social changes, technological breakthroughs) * Internal environment (new technology introduced, staff changes)

Answer 77

* Businesses must respond to changes in internal and external environment in order to maintain competitive advantage. * Many businesses struggle to do this due factors that make change difficult including financial and psychological

Answer 78

* Financial * Psychological/emotional

Answer 79

* Cost of purchasing equipment * Redundancy payouts * Retraining

Answer 80

* Introducing changes such as improved efficiency or new technology often creates surplus of workers * meaning workers are made redundant * Businesses may choose to defer changes to avoid large capital outlay associated with redundancy payouts

Answer 81

* Changes such as new systems and procedures along with flatter management structures create a need for staff retraining * Cost of retraining may be high, workers may be reluctant to retrain

Answer 82

* Many internal and external influences create a need for reorganising plant layout * Resistance is driven by cost, inconvenience, unavailability of appropriate space and the loss in production time

Answer 83

* Inertia is a term that describes a psychological resistance to change, caused by the fear of uncertainty or of the unknown * Particularly affects managers and employees if they fear their job prospects or career opportunities may be threatened or if they are intimidated by new technology

Answer 84

* Identify the source(s) of change and assess whether there is a need to accommodate change through adjustments to business processes * Setting SMART goals that aim to reduce resistance to change * Creating a culture of change, using ‘change agents’ (internal staff or external professionals), if staff are included in the process of change and goal setting, they will be more supportive. * Apply change models

Answer 85

* Creating a culture of change, involves use of change agents and effective teams * Positive leadership, Managers who acts as a leader and has high expectations of employee’s abilities to initiate and implement and change, leaders have open mind

Answer 86

* **G**lobal sourcing * **E**conomies of scale * **R**esearch and development * **S**canning and learning

Answer 87

* Global sourcing as an operations strategy involves not only sourcing supplies globally but also any business operations that gives the business cost advantages

Answer 88

Global web strategy

Answer 89

* global web refers to location of different parts of production process in different geographical areas

Answer 90

* Reason for use of global web is to reduce production costs

Answer 91

* Cost advantages * Access to new technologies * Advantages of expertise and labour specialisation * Access to other resources and the ability to operate over extended hours

Answer 92

* Possible increased cost of logistics * Managing different regulatory conditions between nations * Contractual concerns * Loss of control of quality

Answer 93

* EOS are cost advantages that can be gained by increasing the size, or scale, of production * As scale of production increases cost per unit falls as large fixed costs of production are spread over more output

Answer 94

* Reduced costs

Answer 95

* Economies of scale, becomes a global factor when businesses sell to global markets which necessitates making higher product volumes

Answer 96

* Marketing through global branding * HR through global training

Answer 97

* Scanning the global environment and learning from the best practice of businesses around the world

Answer 98

* Information gained from scanning and learning will assist managers in responding to challenges in the business environment, tactical and strategic planning

Answer 99

* Ad-hoc scanning * Scheduled scanning * Continuous scanning

Answer 100

* Research and development help businesses develop leading edge technologies and to create innovative products and solutions * R&D can lead to businesses gaining a competitive advantage

Answer 101

* The ability to establish R&D facilities in countries which have a reputation for outstanding educational facilities or SME’s * The cost of R&D is spread over a larger output.

Answer 102

* Apple achieves cost-savings from sourcing components from over 31 countries * Majority are from China to reduce cost of transporting * More affected by trade wars such as US-China and COVID 19 * Achieve economies of scale through use of skilled labour and greater production at facilities such as Foxconn * Apple attracts employees from around the globe and learns from expertise * Apple spends large amounts of R&D to compete on global market

Operations Management Strategies Flashcards

(126 cards)