Quality and Added Value

Question 1

what are the main characteristics of the modern business environment?

Answer 1

global (in many senses, customers/competitors/imports/exports/regulations)

customers more demanding with more choice than ever before

Question 2

how has the modern business environment changed business’ priorities?

Answer 2

companies need diverse product ranges that are tailorable, life cycle have reduced dramatically, everything needs to be done very quickly, employee empowerment on the rise

Question 3

what is value analysis?

Answer 3

taking critical look at each feature of a product, questioning its use and eliminating any unjustifiable features. use customer perspective!

form of cost reduction and process improvement. overall aim to reduce costs without increasing prices, compromising quality or usefulness of product

Question 4

what criteria must an activity meet to be value adding?

Answer 4

customer is willing to pay for output

activity physically changes output in some way

activity is performed correctly at first attempt.

Question 5

what are value enabling activities?

Answer 5

Those that are essential for value add activities to occur = value enabling activities and cannot be eliminated altogether. should be done simply and cost-effectively to allow resources to be focused as much as possible on value add.

Question 6

what are the steps for applying value analysis?

Answer 6

1. establish customer requirements - all elements in product must contribute to value.
2. investigate alternative solutions - consider and cost each
3. authorise best alternative
4. implement new alternative
5. evaluate proposal

Question 7

what are the uses of value analysis?

Answer 7

cost elimination

potential increase in sales

staff motivation - encourages them to put forward ideas for cost reduction

functional analysis

Question 8

what is Kaizen costing?

Answer 8

Targetcostingisaimedatreducingthecostsincurredbecauseofthewayaproduct isdesignedandoccursat theverystartoftheprocess. Kaizencostingisappliedduringthemanufacturingstageoftheproductslifecycle.Kaizencostingthereforefocusesonachievingcostreductionsthroughtheincreasedefficiencyoftheproductionprocess.Improvementistheaimandresponsibilityofeveryworkerineveryactivity,atalltimes.

Question 9

what is the main emphasis in Kaizen costing?

Answer 9

emphasises reducing variable costs below the cost level in the base period. target reduction rate = ratio of target reduction amount to cost base