HSC- Operations Key Terms

Based on the HSC Business Studies course syllabus and aided with the Jacaranda Business Studies in Action textbook

cost centres

particular areas, departments or sections of a business to which costs can be directly attributed

cost leadership

involves aiming to have the lowest or to be the most price-competitive in the market

customised goods

those that are varied according to the needs of customers. These goods are produced with a market focus rather than a production focus

interdependence

the mutual dependence that the key business functions have on one another

operations

the business processes that involve transformation or, more generally, ‘production’

product differentiation

distinguishing products (goods or services) in some way from those of competitors

profit centres

those aspects of a business that directly derive revenue and profits

profitability

the excess of revenue or income over expenses or costs

standardisation

refers to the making of products that are homogenous or identical

standardised goods

those that are mass produced, usually on an assembly line. Standardised goods are uniform in quality an meet a predetermined level of quality. These are generally produced with a production focus.

strategic

refers to the long-term, broad aims affecting all key business areas; that is, the strategic role of each business function involves the managers of each function contributing to the strategic direction or strategic of the business

carbon footprint

the amount of carbon produced and entering the environment from operations processes

compliance costs

the expenses associated with meeting the requirements of legal regulations, i.e. abiding by all laws

corporate social responsibility (CSR)

open and accountable business actions based on respect for people, community/society and the broader environment. It involves businesses doing more than just complying with the laws and regulations

cost-based competition

derived from determining breakeven point (the level at which the firm’s total revenue is exactly equal to its total costs) and applying strategies to create cost advantages over competitors

environmental sustainability (ecological sustainability)

to shape business operations around practices that consume resources today without compromising access to those resources for future generations

fiduciary

a person in a position of financial trust with respect to others’ money

fixed costs

costs that are not dependent on the level of operating activity in a business. Fixed costs do not change when the level of activity changes- they must be paid regardless of what happens in the business

gloablisation

refers to the removal of trade between nations. Globalisation is characterised by an increasing integration between national economies and a high degree of transfer of capital (facilities and/or machinery), labour, intellectual capital and ideas, financial resources and technology

offshore outsourcing

involves taking the activities to a provider in another country

onshore outsourcing

involves the use of domestic businesses as the outsourcing provider

outsourcing (or contracting out business functions)

involves the use of third-party specialist businesses; for example recruitment firms. it aims to take advantage of the specialist skills provided by them and to achieve a reduction in labour costs

precautionary principle

requires that, where environmental impacts are uncertain, a business undertakes actions that are most likely to cause the least environmental impact

quality

a specific reference to how well designed, well made and functional goods are, and the degree of competence with which services are organised and delivered

technology

the design, construction, and/or application of innovative devices, methods and machinery in operations processes

triple bottom line

refers to the financial profitability, social impact, and the environmental impact of a business

variable costs

cost that vary in direct relationship to the level of operating activity or production in a business. Such costs include labour costs and costs of energy.

bottleneck

an aspect of the transformation process that slows down the overall processing speed or creates an impediment, leading to a backlog of incompletely processed products

capital-labour substitution

machinery and technology displace people by doing the work they do

computer-aided design (CAD)

a computerised design tool that allows businesses to create product possibilities from a series of input parameters

computer-aided manufacturing (CAM)

software that controls manufacturing processes

control

occurs when KPI (key performance indicator) are assessed against predetermined targets and corrective action is taken if required

critical path analysis (CPA)

a scheduling method or technique that shows what tasks need to be done, how long they take and what order is necessary to complete those tasks

consumer relationship management (CRM)

the systems that businesses use to maintain customer contact

customer service

refers to how well a business meets and exceeds the expectations of customers in all aspects of its operations

facilities

the plant (factory or office) and machinery use in the operations processes

fixed position layout

an operational arrangement in which employees and equipment come to the product

gantt chart

a type of bar chart that shows both the scheduled and completed work over a period of time. it is often used in planning and tracking a project

improvement

refers to systematic reduction of inefficiencies and wastage, poor work processes and the elimination of any bottlenecks

information

the knowledge gained from research, investigation and instruction, which results in an increase in understanding

inputs

the resources used in the transformation process

intermediate goods

goods manufactured and used in further manufacturing or processing

key performance index (KPIs)

specific criteria used to measure the efficiency and effectiveness of the business’s performance

lead time

the time it takes for an order to be filled from the moment it is made

materials

the basic elements used in the production process, consisting of two types: raw materials and intermediate goods

mix flexibility

the mix of products made, or services delivered, through the information process

monitoring

the process of measuring actual performance against planned performance

outputs

the end result of the business efforts- the good. or service that is produced or delivered to the customer

process layout

the arrangement of machines so that the machines and equipment are grouped together by the function (or process) they perform

process production

deals with high-variety, low-volume production

product layout

layout in which the equipment arrangement relates to the sequence of tasks performed in manufacturing a product

product production (mass production)

production that is characterised by the manufacturing of a high volume of constant quality goods

project production

deals with layout requirements for large-scale, bulky activities such as the construction of bridges, ships, aircraft or buildings

raw materials

the essential substances in their unprocessed state

robotics

used in engineering and specialised areas of research as well as on assembly lines where a programmable machine capable of doing several different tasks is required.

scheduling

the length of time activities in the operations process

sequencing

the order in which activities in the operations process occur

skills audit

a formal process used to determine the present level of skilling and any skill shortfalls that need to be made up either through recruitment or training

task design

involves classifying job activities in ways that make it easy for an employee to successfully perform and complete the task

telecommute

to ‘commute’, or travel to work, electronically. This means that home or another location becomes the worksite and work is delivered via email or the internet

transformation

the conversion of inputs (resources) into outputs (goods and services)

transformed resources

those inputs that are changed or converted in the operations process

transforming resources

those input that carry out the transformation process

volume

refers to how much of a product is made

warranty

a promise made by a business that they will correct any defects in the goods they produce or services they deliver

workstations

the desk areas required by office workers, usually fitted with access to a computer monitor, keyboard, telephone, mouse and mouse pad, and storage, and close access to a printer and scanner

B2B

direct access from one business (the supplier) to another (the buyer), allowing the supplier to access the needs of the buyer and meet them in a timely manner

B2C

the selling of goods and services to consumers over the internet, with payment usually by credit card

continuous improvement

an ongoing commitment to improving a business’s goods or services

cost

as a performance objective, refers to the minimisation of expenses so that operations processes are conducted as cheaply as possible

customisation

refers to creation of individualised products to meet the specific needs of the customers

dependability

as a performance objective, refers to how consistent and reliable a business’s products are

distribution

the ways of getting the goods or services to the customer

e-commerce

the buying and selling of goods and services via the internet

e-procurement

the use of online systems to manage supply, which allows suppliers direct access to the business’s level of suppliers

established technology

technology that has been developed and is widely used and simply accepted without question

explicit service

the tangible aspect of the service being provided, such as the application of time, expertise, skill and effort

FIFO (first in, first out)

a method of pricing inventory that assumes that the first goods purchased are also the first goods sold and therefore the cost of each unit sold is the first cost recorded

flexibility

how quickly operations processes can adjust to hanges in the market

global sourcing

a broad term that refers to businesses purchasing supplies or services without being constrained by location. In the supply chain management activity, global sourcing means buying or sourcing from wherever the suppliers are that best meet the sourcing requirements

implicit service

is based on a feeling and is therefore intangible. The implicit aspects of a service are the psychological wellbeing- the feeling of being looked after- that comes with the provision of service

inertia

a psychological resistance to change

inventory or stock

the amount of raw materials, work-in-progress and finished goods that a business has on hand at any particular point in time

just-in-time (JIT)

an inventory management approach which ensures that the exact amount of materials inputs will arrive only as they are needed in the operation process

kaizen

Japanese for ‘improvement’. It emphasises continuous improvement in all areas of a business, from the way the CEO manages to the way assembly line workers perform their job

leading edge technology

the technology that is most advanced or innovative at any point in time

LIFO (last-in-first-out)

a method of pricing inventory that assumes that the last goods purchased are also the first goods sold and therefore the cost of each unit sold is the last cost recorded

logistics

a term broadly referring to distribution but includes transportation (including transportation modes), the use of storage, warehousing and the distribution centres, materials handling and packaging

mass customisation

a process that allows a standard, mass-produced item to be personally modified to specific customer requirements

performance objectives

goals that relate to particular aspects of the transformation processes

product utility

a usefulness and value that a product has from the consumer’s point of view

quality assurance (QA)

involves the use of a system to ensure that set standards are achieved in production

quality control (QC)

involves the use of inspections at various points in the production process to check for problems and defects

quality of comformance

the focus on how well the product meets the standard of a prescribed design with certain specification

quality management

those processes that a business undertakes to ensure consistency, reliability, safety and fitness of purpose of product

redundancy

occurs when a person’s job no longer exists, usually due to technological changes, an organisational restructure or a merger or acquisition

sourcing

the purchasing of inputs for the transformation process

speed

refers the time it takes for the production and the operations process to respond to changes in market demand

storage

involves finding a secure place to hold stock until it is required

supply chain managed (SCM)

involves, integrating and managing the flow of suppliers throughout the inputs, transformation processes (through input and value adding) and outputs in order to best meet the needs of customers