Managing Inventory and Supply Chains

Flashcards covering concepts related to managing inventory, supply chains, product quality, handling faulty goods, and approaches to balancing demand and supply.

How can higher consumer perceived value from better quality products lead to increased profitability?

By enabling higher prices, gaining a competitive advantage, and encouraging repeat purchases from loyal customers.

What are the cost-related benefits for a business that produces better quality products?

Less returns, less waste, lower costs, and reduced defects.

What is a primary reason for customers returning faulty goods?

The product isn't fit for purpose, leading to customer dissatisfaction.

How can staffing issues contribute to an increase in returned faulty goods?

New staff with inadequate training.

What production-related issues can lead to an increase in faulty goods?

A faulty production line or a generally poor quality product.

How can supply chain problems lead to more returned faulty goods?

Issues with raw materials or a lack of systematic checks in the distribution system.

What is the main principle of "producing to order"?

Producing only what corresponds to the customer's request, often using a pre-determined design.

What is meant by "mass customization"?

An approach that ranges from unique, tailored products to goods modified to meet specific customer requirements.

Explain what "Build-to-order" production entails.

There is a fixed basic product that can be customized with various features, such as body style or engine size.

What are key approaches a business can use to manage demand-side production?

Producing to order, using temporary/part-time employees, and outsourcing.

Describe the "core capacity" approach to balancing demand and supply.

Establishing a consistent level of production (core capacity) supported by a flexible structure to react quickly to changes in demand.

What is an advantage of producing to order related to customer satisfaction and competitive advantage?

The ability to supply products to exact customer specifications, which may give a competitive advantage.

How does producing to order typically reduce costs for a business?

By reducing the need to hold large buffer stocks of finished goods.

What is a potential financial benefit of producing to order directly impacting cash flow?

Payments are often received upfront.

How does producing to order benefit staff and product quality?

It allows staff to focus on quality, which reduces waste and defects.

Which fast-food chain famously used "produce to order" to allow customization, formerly with the slogan "Have it your way"?

Burger King.