Unit 4 - Operations Management - all key terms

operational objectives

specific, focused targets of the operations management function within an organisation

operations management

The management of systems or processes that create goods and/or provide services

Unit costs (average costs)

Total costs of production / number of units of output produced

quality

those features of a product or service that allow it to satisfy (or delight) customers

speed of response

The time taken for a customer requirement to be fulfilled.

flexibility of production

the ability to change or adapt production to meet new demand levels or customer requirements

Environmental objectives

Objectives relating to an organisation's use of resources and degree of environmental impact

Added value

the difference between the cost of purchasing raw materials and the price the finished goods are sold for

customer satisfaction survey

A series of questions that ask customers to provide their perception of the support services being offered.

Customer Complaints

indicate whether or not customers are satisfied with the performance of the organisation

Punctuality Formula

deliveries on time / total deliveries

Product Flexibility

-Easily switch production from one item to another

-Easily customize product/service to meet specific requirements of a customer

volume flexibility

the ability to produce whatever volume the customer needs

mix flexibility

the ability to produce a wide range of products or services

Delivery flexibility

Being able to adapt quickly to changes in the timing and volume of deliveries to customers.

Suppliers

companies that provide material, human, financial, and informational resources to other companies

Labour productivity formula

Output / number of employees

capacity

the maximum amount that can be produced

Capacity utilisation

Actual level of output / maximum possible output x 100

Efficiency

using resources in such a way as to maximize the production of goods and services

factors of production

land, labor, capital, entrepreneurship

economies of scale

factors that cause a producer's average cost per unit to fall as scale of production rises

capital intensive

using more capital than labor in the production process

Labour intensive production

Production methods that make more use of labour relative to machinery

excess (spare) capacity

capacity not being used

Capacity shortage

When the demand for a business's products exceeds production capacity.

rationalisation

A process by which a firm improves its efficiency by cutting the scale of its operations

Lean production

an approach to production that emphasizes the elimination of waste in all aspects of production processes

Time-based management

an approach that recognises the importance of time and seeks to reduce the level of 'unproductive' time within an organisation

Reduced lead times

reducing the time taken between an order being received and the final product being delivered to, or provided for, the customer

Just-in-time (JIT)

An inventory-management approach in which supplies arrive just when needed for production or resale

flexible production

relates to a production process that can be easily changed

Technology

the application of science for practical purposes

automation

The use of technology to ease human labor or to extend the mental or physical capabilities of humans.

production planning

managers determine how goods will be produced, where production will take place, and how manufacturing facilities will be laid out

Robotics

Technology dealing with the design, construction, and operation of robots in automation.

stock control

The processes and controls used by a business to ensure that it has sufficient (but not too much) stock for its purposes

CAD

Computer Aided Design

CAM

Computer Aided Manufacturing

Brand Reputation

How a brand is perceived in the marketplace.

scrap rate

percent of bad items that cannot be sold

Quality System

The approach used by an organisation to achieve quality. Most quality systems can be classified as either quality control or quality assurance

quality control

A system that uses inspection as a way of finding any faults in the good or service being provided

Quality Assurance

A system that aims to achieve or improve quality by organising every process to get the product 'right first time' and prevent mistakes ever happening

Total Quality Management (TQM)

the philosophy that everyone in the organization is concerned about quality, throughout all of the firm's activities, to better serve customer needs

Kaizen

a policy of implementing small, incremental improvements in quality over time to achieve continual improvements in the product or service

collaborative customisation

businesses work closely with individual customers to develop a product that suits the individual customers precise needs

matching demand with supply

the process of achieving full capacity utilisation to achieve maximum efficiency

Managing Demand

the use of the marketing mix to influence demand

managing supply

adjusting the level of production capacity using produce to order, temporary staffing or outsourcing

produce to order

a business only manufacturers a product once it has been ordered

Part-time workers

people who usually work less than 35 hours a week

temporary workers

Workers who have no permanent contract of employment with a business and so tend to work only for a short period of time for an employer

Outsourcing

A decision by a corporation to turn over much of the responsibility for production to independent suppliers.

Subcontracting

an agreement in which a corporation contracts with other (usually smaller) firms to provide specialized components, products, or services to the larger corporation

Offshoring

the relocation of business processes and services to a lower-cost foreign location particularly white-collar, technical, professional, and clerical services

Re-shoring

the reversal of offshore outsourcing, i.e. the transfer of business operations back to its country of origin

raw materials

the basic material from which a product is made.

Work in Progress (WIP)

A type of inventory that represents items or materials that are in the process of being manufactured.

finished goods

units of product that have been completed but not yet sold to customers

Inventory control chart

A diagram that is used to register levels of stock/inventory over a period of time.

Buffer stock level

The lowest amount of stock to be kept by a business

lead time

time interval between ordering and receiving the order

Re-order level

The amount of stock held by a business at which an order for new stock is placed with suppliers

Re-order quantity

The amount of stock ordered when an order is placed

inventory wastage

a measure of the loss of inventory within a business

obsolescence

situation in which older products and processes become out-of-date

Inventory rotation

using old inventory before new inventory to make sure that inventory wastage is kept to a minimum

supplier

A business which sells (or supplies) products to another business.

payment terms

specific information about how payment will take place

Sale or Return

Buyer has the option to return the goods

Viking

Volume is King approach to stock management

supply chain

the connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function

Supply Chain Management

managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers

Just in case (JIC)

a lower risk inventory management systems where higher stock levels are held if is a production problem or an unexpected upsurge in demand.

Andon

Japanese term for a signaling system announcing problems encountered and assistance requested, often implemented as sets of lights or pull cords over workstations.