IB BM - Unit 5 Operations Management

Job production (same as one-off production)

Customising an individual production from start to finish. It is one-off, built to order, and bespoke.

Batch production

Producing batches of identical products that use the same machinery. (e.g. can customise colours and etc. for each batch)

Mass/Flow production

Producing large amounts of standardised products continuously

Mass customisation

Allows customers to customise batch/flow produced products (e.g. airpods or apple pens with names on them)

Lean production

Production methods that aim to reduce waste

Kaizen (continuous improvement)

The process of making small, incremental improvements to various production processes in order to achieve greater efficiency

JIT stock control

Inventory management system based on stocks being delivered as when they are needed in the production process

JIC

The traditional stock control system that maintains large amounts of stock in case there are supply or demand fluctuations

Cradle to Cradle (C2C)

There is no such thing as waste. Things called “waste” are put back into production systems”. Always find a use for the “waste”

Cradle to Grave (C2G)

Describes a product's entire life cycle, from raw material extraction (cradle) through manufacturing, use, and final disposal (grave)

Quality control (QC)

Process of taking samples to test, to ensure the entire batch meets the quality requirements. It is done at the end of the process

Quality Assurance (QA)

Process where each person does their part of the job and checks the quality of their own work. It is done right the first time

Quality circles

A small group of employees who meet regularly to examine issues relating to the quality of output and make recommendations for improvement

Benchmarking

Business compares its products, operations, and performance with others in the same industry

Total Quality Management (TQM)

Philosophy and process that requires the dedication of everyone in an organisation to commit to achieving quality standards

Quantitative reasons for a specific location for a product

• Availability, sustainability, and cost of land

• Availability, quality, and cost of labour

• Proximity to the market (customers)

• Proximity and access to raw materials

• Government incentives and regulations

• Feasibility of e-commerce

Qualitative reasons for a specific location of production

• Management preferences

• Local knowledge

• Infrastructure

• Political stability

• Government restrictions and regulations

• Ethical issues

• Comparative shopping (clustering)

Outsourcing/subcontracting

Practice of transferring internal business activities (such as perform tasks, manage operations, or create goods) to an external organisation to reduce costs and increase productivity

Offshoring

The practice of basing some of a company's processes or services overseas, so as to take advantage of lower costs.

Insourcing

The practice of using an organization's own personnel or other resources to accomplish a task that was previously outsourced.

Reshoring

The practice of transferring a business operation that was moved overseas back to the country from which it was originally relocated.

Break even

When a business reaches a point where their profits are equal to their costs.

Stockpiling

Holding too much stock

Stockouts

Holding not enough stock

Capacity utilisation

Measures how much of a company's total productive potential is actually being used

Defect rate

A quality metric showing the percentage of products, services, or work units that fail to meet standards

Productivity

Measures the ability of a firm to use its available resources to produce goods and services