Business sAC 4

Define Forecasting

Forecasting: is a materials planning tool that predicts customer demand for an upcoming period using past data and market trends.

Advantages of Forecasting

• Forecasting prevents the excessive ordering of materials that may go to waste if unneeded. This can help minimise the business's impact on the environment and improve its reputation.

• Can reduce the cost of storage as it prevents the need for a large space to store materials.

Disadvantages of Forecasting

• If a business is too reliant on forecasting, it may be unable to meet unexpected increases in customer demand.

• It can be time consuming to analyse historical data and market trends.

Define (MPS) Master Production Schedule

(Hint: Think OUTPUTS)

MPS: A plan that outlines what a business intends to produce, in specific quantities, within a set period of time.

Advantages of MPS

• Improves a business's reputation by having a reduced impact on the environment. A master production schedule prevents the business from producing an excessive amount of products, therefore reducing the amount of wastage.

• Can provide employees with a clear schedule of operations that includes the timeline and quantity of production targets.

Disdavntages of MPS

• It can be time consuming to map out details of production.

• Implementing and maintaining this plan can be expensive.

Define (MRP) Material Requirements Planning

MRP: is a process that itemises the types and quantities of materials required to meet production targets set out in the master production schedule.

Don't confuse MPS and MRP!

MRP is completed after the business has a clear understanding of the quantities to be produced and the time frame involved (i.e. after the MPS).

Advantages of MRP

• Materials requirement planning ensures a business only has the exact materials it needs, decreasing waste generated in production. This can help minimise the business's impact on the environment and improve its reputation.

• Accurate ordering of the quantities of materials required avoids excess storage and therefore reduces associated expenses.

Disadvantages of of Mrp

• It can be time consuming to constantly update the materials plan.

• Implementing and maintaining the materials plan can incur additional administrative and training costs.

Define Just in Time

JIT: a is an inventory control approach that delivers the correct type and quantity of materials as soon as they are needed for production. (No sooner, no later!)

Advantages of (JIT)

• Allows a business to switch to the production of a different product without wasting resources as there are minimal materials on hand to go through.

• Reduces storage costs and expenses associated with waste, meaning this money can be used in other areas of the business.

Disadvantages of Jit

• If suppliers are unreliable and fail to deliver the correct materials at the right time, production may be brought to a halt.

• Delivery costs may increase due to more frequent deliveries.

Define Quality Control

Quality Control ('check and reject') involves inspecting a product at various stages of the production process, to ensure it meets designated standards, and discarding those that are unsatisfactory.

Addvantages of QC

• Providing customers with consistently high-quality products, and minimising the number of faulty goods or services they receive, can improve a business's reputation.

• The strategy is relatively inexpensive to implement, as it is controlled internally by the business and no external parties are required to carry out the quality checks.

Disadvantages of QC

• This strategy does not (actively attempt to reduce the level of wastage produced in the operations system, which can negatively impact a business's reputation as it may be associated with harming the environment)

• It can be time consuming to identify and address the causes of errors in production.

Define Quality Assurance

Quality Assurance ('meeting certified standards'): involves a business achieving a certified standard of quality in its production after an independent body assesses its operations system.

Advantages of QA

• Quality assurance can (reduce the number of defective products produced, which can reduce the amount of waste generated in production). This can enhance a business's reputation as it is perceived to be environmentally friendly.

• Receiving external certification from an independent body can improve a business's competitiveness as customers are likely to have increased confidence in the business and its products.

Disadvantages of QA

• Completing documentation required for the external body to check the operations system can be time consuming

• It can be (expensive to organise an external body to assess the operations system of a business).

Define Total Quality Management

holistic approach whereby (all employees are committed to continuously improving the business's operations system to enhance quality for customers).

Advantages of TQM

• A business engaging in TQM can (minimise the amount of waste generated, improving its reputation, as customers perceive the business as having a positive environmental impact).

• Employees (may feel increasingly valued) if they are involved in the process of improving quality.

disadvantages of TQM

• Introducing TQM can be (costly for a business as employees may have to be trained so they can continuously identify methods to improve quality)

• Employees may feel confused about their role in improving quality if managers fail to communicate the TQM strategy clearly

QC & QA Similarities

• Both strategies (reduce the number of faulty products reaching customers).

• Both strategies require a good or service to meet set standards.

QC & QA Differences

• Quality control is (reactive as it identifies and eliminates errors after they occur). On the other hand, quality assurance is (proactive as it prevents errors from occurring).

Hint: Think of it as a Before and After

• Quality control does not involve external certification. In contrast, quality assurance involves a business receiving certification after it meets standards set by an external body

QC & TQM Similarities

• Both strategies can be implemented to see notable improvements in the quality of the final output.

• Both strategies are internally controlled and involve employees assessing quality

QC & TQM Differences

• Quality control focuses on setting predetermined standards of quality in the first stage of this strategy. TQM focuses on continuously developing and improving standards.

• Quality control is reactive as it identifies and eliminates errors after they occur. TQM is proactive as it aims to prevent errors from occurring.

QA & TQM Similarities

• Both strategies are proactive as they prevent errors from occurring.

• Both strategies improve the process of producing a good or service.

QA & TQM Differences

• Quality assurance focuses on (meeting set standards of quality to gain external certification), whereas TQM focuses on (internally developing and improving standards within the business).

• TQM does not involve external certification. However, quality assurance involves a business receiving certification after it meets standards set by an external body.

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Define Waste minimisation

Waste Minimisation is the process of (reducing the amount of unused material, time, or labour within a business to improve the efficiency and effectiveness of production).

TIMWOOD

Transport, Inventory, motion, waiting/time, overproduction, overprocessing & Defects

Define Reduce

Reduce is a waste minimisation strategy that aims to decrease the amount of resources, labour, or time discarded during production.

Define Reuse

Reuse is a waste minimisation strategy that aims to make use of items which would have otherwise been discarded.

Define Recycle

Recycle is a waste minimisation strategy that aims to transform items which would have otherwise been discarded.

Define Lean management

Lean management is the process of systematically reducing waste in all areas of a business's operations system whilst simultaneously improving customer value.

Lean Management Key Objectives (3)

Deliver Customer Value - identify value from the standpoint of the end customer

Eliminate waste - removes steps in the process which do not add value

Strive for continuous improvement - aim for zero defects

Define Pull

involves customers determining the number of products a business should produce for sale.

Define One piece flow

involves processing a product individually through a stage of production and passing it onto the next stage of production before processing the next product, continuing this process throughout all stage of production.

Define Takt

involves synchronising the steps of a business's operations system to meet customer demand. Takt is a German word meaning pace, rhythm or pulse.

Define Zero defects

involves a business preventing errors from occurring in the operations system by ensuring there is an ongoing attitude of maintaining a high standard of quality for the final output.

Advantages of Lean management

• Products can be produced at a faster rate when strategies such as takt and one-piece flow are introduced as they focus on continuous production.

• Employees may experience greater job satisfaction as they are actively involved in reducing waste in operations and positively impacting the environment.

Disadvantages of Lean management

• It may be time-consuming to train inexperienced employees and provide them with the knowledge to commit to lean production methods.

• It can be costly to implement lean management as implementing new policies, procedures, and training employees can come at a high expense.

What is one efficiency and one effectiveness benefit of the pull strategy?

Efficiency: reduces overproduction and waste of materials, time and labour → increases productivity.

Effectiveness: reduces discarded materials and expenses → helps achieve profit objective.

What is one efficiency and one effectiveness benefit of one-piece flow?

Efficiency: reduces errors by producing one unit at a time → increases productivity.

Effectiveness: produces higher-quality products faster → improves customer satisfaction and market share.

What is one efficiency and one effectiveness benefit of takt?

Efficiency: improves flow of materials and reduces wasted time → increases productivity.

Effectiveness: improves delivery speed → increases customer satisfaction, sales and profit.

What is one efficiency and one effectiveness benefit of zero defects?

Efficiency: minimises errors and discarded materials → increases productivity.

Effectiveness: continuous improvement and defect-free products → improves customer satisfaction and sales.

Define Corporate Social Responsibility

is the ethical conduct of a business beyond legal obligations, and the consideration of social, economic, and environmental impacts when making business decisions.

What are CSR considerations for inputs?

CSR considerations for inputs involve sourcing materials and resources in environmentally sustainable and ethical ways.

What are CSR considerations for processes?

CSR considerations for processes involve reducing waste and environmental harm during production.

What are CSR considerations for outputs?

CSR considerations for outputs involve ensuring products create customer value while minimising environmental damage and waste.

Define Global sourcing of inputs

involves a business acquiring raw materials and resources from overseas suppliers.

Advantages of Global sourcing of inputs

• Higher quality materials can be sourced by a business, allowing a product to better meet customer expectations.

• A business may be able to negotiate a lower price for its inputs as there is greater competition between overseas suppliers.

Disadvantages of global sourcing of inputs

• If a supplier does not treat its employees in an ethical manner, it may reflect badly on the business's reputation.

• Transporting inputs over large distances can increase a business's carbon footprint and may negatively impact its reputation.

Define Overseas manufacturing

involves a business producing goods outside of the country where its headquarters are located.

Advantages of Overseas manufacturing

• Cheaper labour costs can allow a business to lower its product prices, increasing customer satisfaction and sales.

• There is greater access to highly skilled employees who have expertise in production.

Disadvantages of Overseas manufacturing

• Poor corporate social responsibility practices in the country may reflect badly on the business

• Delivery is time-consuming compared to manufacturing goods in a domestic location

Define Global outsourcing

involves transferring specific business activities to an external business in an overseas country.

Advantages of Global outsourcing

• The quality of business activities can be improved as the external business may be experts in the area.

• The business has more time available to focus on its own areas of expertise, increasing its productivity

Disadvantages of Global outsourcing

• A business has reduced control over some of its activities as they have been transferred to an external business.

• Poor corporate social responsibility practices performed by the external business may reflect badly on the business's reputation.

Global sourcing of inputs & Overseas manufacturing similiarites

• Both have the potential to improve quality and reduce production costs.

• Products or raw materials and resources travel between countries during delivery.

Global sourcing of inputs & Overseas manufacturing Differences

• Global sourcing of inputs involves acquiring resources and raw materials from overseas suppliers for manufacturing in the business's main country of operation.

• Overseas manufacture involves a business's manufacturing phase occurring in a country outside of the business's main headquarters.

Global sourcing of inputs & global outsourcing similiairties

• Both allocate certain business tasks to external businesses.

• Both allow the business to reduce operational expenses.

Global sourcing of inputs & global outsourcing differences

• Global sourcing of inputs involves acquiring resources and raw materials from overseas suppliers for manufacturing in the business's main country of operation.

• Global outsourcing involves the completion of specific business activities, such as IT services, in a country outside of the business's main headquarters.

Overseas manufacturing & global outsourcing similairites

• Both involve the execution of business activities in a location away from the business's main headquarters.

• Both allow the business to reduce operational expenses.

Overseas manufacturing & global outsourcing differences

• A business retains full control of its operations when implementing manufacturing overseas.

• A business that implements global outsourcing retains little control over the transferred activities.

Define Operations management

Operations management involves coordinating and organising the activities involved in producing the goods or services that a business sells to customers.

Define Efficiency

Efficiency is how (productively) a business uses its (resources) when producing a good or service.

Define Productivity

Productivity is the (number of goods or services that are produced) compared to the (number of resources used) in the production process.

Define Effectiveness

Effectiveness is the extent to which a business achieves its stated objectives.

Explain the relationship between operations management and business objectives

Operations managers can contribute to the achievement of business objectives by (improving levels of efficiency and effectiveness) in a business's production process. Additionally, they are in charge of implementing strategies that (optimise operations, improve business performance, and achieve business objectives).

inputs

Inputs are the resources used by a business to produce goods and services.

e.g. labour resources (employees), raw materials (flour, iron), capital resource (equipment), time, information, etc

Processes

Processes are the actions performed by a business to transform inputs into outputs.

e.g. words ending in 'ing' - mixing, baking, computing, etc (although not limited to ing)

Outputs

Outputs are the final goods or services produced as a result of a business's operations system, that are delivered or provided to customers.

Manufacturing businesses

Manufacturing businesses use resources and raw materials to produce a finished physical good.

Service businesses

Service businesses provide intangible products, usually with the use of specialised expertise that are tailored to meet each individual.

Capital intensive

Capital intensive is when a business uses a (high degree of machinery and equipment) during its production process.

Labour intensive

Labour intensive is when a business uses a (high degree of employee involvement) during its production process.

Define Automated production lines

Automated production lines involve machinery and equipment that are arranged in a sequence, and the product is developed as it proceeds through each step.

Advantages of (APLS)

- Tasks can be performed much faster than human labour.

- Technology can complete tasks for extended periods of time, without the need for breaks, increasing productivity.

-The number of employees needed for production can be minimised, which can reduce a business's wage expenses.

Disadvantages of (APLS)

- breakdowns of (APLS) can halt production altogether and compromise productivity.

- There are high initial setup costs associated with purchasing and installing (APLS).

Define Robotics

Robotics are programmable machines that are capable of performing specified tasks

Advantages of Robotics

- Employees no longer need to complete dangerous tasks, improving workplace safety

- The number of employees needed for production can be minimised, which can reduce a business's wage expenses.

Disadvantages of Robotics

- The implementation of robotics may cause more employee redundancies

- There are high initial setup costs associated with purchasing, programming, and installing robotics.

Define Computer-aided design (CAD)

Computer-aided design (CAD) is digital design software that aids the (creation, modification, and optimisation) of a design and the design process.

Advantages of CAD

- CAD allows employees to generate advanced and complex designs, enabling a more innovative product design process.

- CAD software can speed up the product design process as designs can be created and modified faster.

Disadvantages of CAD

- The implementation of CAD may cause fewer employees needed in the design process of a product, which may result in redundancies.

- The implementation of CAD includes high initial setup costs

Define Computer-aided manufacturing (CAM)

Computer-aided manufacturing (CAM) techniques involve the use of software that (controls and directs production processes by coordinating machinery and equipment) through a computer.

Advantages of CAM

- Many employee roles can be removed, which reduces labour expenses.

- When employees no longer have to complete dangerous tasks, employee morale is positively increased.

Disadvantages of CAM

- Employees may be made redundant by this technology

- There may be expenses associated with training employees to use CAM software.

- There are high initial setup costs associated with purchasing and installing CAM software.

Define Artificial intelligence (AI)

Artificial intelligence (AI) involves using computerised systems to simulate human intelligence and mimic human behaviour.

Advantages of AI

- AI has the ability to provide prompt customer service 24/7, which can improve customer satisfaction and business's reputation.

- Tasks that would have previously required human labour can be removed, reducing wage expenses.

Disadvantages of AI

- There are high initial setup costs associated with purchasing and installing artificial intelligence.

- The business may develop a poor reputation if artificial intelligence makes numerous employees redundant.

Define Online services

Online services are services that are provided via the internet.

Advantages of Online Services

- Online services, such as booking platforms, can process bookings faster than employees.

- Online services, such as food ordering platforms, can process orders accurately and provide increased customer convenience, which may improve a business's reputation.

Disadvantages of Online Services

- If the platform providing the online service experiences technical difficulties it may disrupt the business's operations.

- The process of a business developing its own platform that provides online services may be time consuming.