Term
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Definition
| The processes used to create and deliver a good or service (value) to customers. |
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Term
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Definition
| The planning and control of a conversion process that includes turning inputs into outputs (products and/or services) that customers desire. |
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Term
| Questions that can help you to identify operations factors that will impact firm performance and to recognize adjustments that need to be made. |
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Definition
*How much flexibility is required to satisfy customers over time?
*What is customer demand today? For the future? Can facilities and equipment keep up with demand?
*What options are available for satisfying customers?
*What skills or capabilities set the business apart from its competitors such that the business can best take advantage of these distinctive features in the market?
*Does the competitive environment require certain capabilities that the enterprise lacks? |
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Term
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Definition
*Inputs- can include money, raw materials, labor, equipment, information, and energy—all of which are combined in varying proportions, depending on the nature of the finished product or service.
*Process- may be described as a conversion process
*Outputs- are the products and/or services that a business provides to its customers. |
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Term
| Difference between Products and services |
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Definition
*Products are tangible, services are intangible.
*Manufacturing can produce goods for inventory; service operations cannot store or bank services.
*Productivity and quality are more easily measured in manufacturing than service operations.
*Quality is more difficult and control to establish in service than manufacturing operations. |
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Term
| Types of Manufacturing Operations |
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Definition
*Job shop – for short productions runs of small quantities (ex. Car parts) in batches moving from location to location
*Project manufacturing – create unique, but similar products (site built homes and seating for stadiums)
*Repetitive manufacturing – long production runs of high-volume, standardized products (mass production, assembly line) (smart phones, apparel)
*Continuous manufacturing – repetitive manufacturing with output that resembles a product stream instead of individual products (electric dam, purification, petroleum products)
*Flexible manufacturing – involve computer-controlled equipment that can turn out products in smaller or more flexible quantities (machine automation) (ex. Manufacturing different sizes) |
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Term
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Definition
*Capacity limits business’s ability to meet demand
*Capacity determines start-up (fixed) costs
*Ability to adjust capacity differs among businesses |
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Term
| In manufacturing, production planning and scheduling procedures are designed to? |
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Definition
*Involves attempting to achieve the orderly, sequential flow of products or services to market.
*Is critical in service industry operations
*Demand management strategies - incorporates demand management strategies to stimulate customer demand when it is normally low. |
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Term
| Objectives of Inventory Management |
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Definition
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Term
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Definition
•Storage (land and buildings, as well as shelving and organization systems)
• Theft, weathering, spoilage, and obsolescence
• Cost of capital (from tying up cash in inventory that could be better used elsewhere)
• Transaction costs (from ordering, receiving, inspecting, transporting, and distributing inventory)
• Insurance and security
• Disposal costs (of inventory that cannot be sold) |
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Term
| Economic order quantity (EOQ) |
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Definition
The quantity to purchase in order to minimise total inventory costs.
Total inventory costs=Total carrying costs+ Total ordering costs |
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Term
| Quality as a Competitive tool |
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Definition
Quality may be defined as the characteristics of a product or service that determine its
ability to satisfy stated and implied needs |
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Term
ABC Inventory Classification
(Classifying items in inventory by relative value): |
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Definition
*Category A (close/continuous control)
-High-value or critical production component items
*Category B (moderate control)
-Less costly, secondary importance items
*Category C (periodic control)
-Low-cost and noncritical items |
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Term
| Just-In-Time Inventory (JIT) System |
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Definition
*A demand (pull) method of reducing inventory level to an absolute minimum.
-New inventory items arrive at the same time that the last inventory item is placed in service.
*JIT promotes:
-Closer coordination with suppliers
-Consistent quality production
-Lower safety stock levels |
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Term
| Inventory Recordkeeping Systems |
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Definition
*Physical Inventory System
-Provides for periodic counting of items in inventory.
*Cycle Counting
-Counts different segments of the physical inventory at different times during the year.
*Perpetual Inventory
-Keeps a running record of inventory that does not require a physical count except to ensure the accuracy of the system.
*Two-bin Inventory System
-A method of inventory control based on use of two containers for each item in inventory: one to meet current demand and the other to meet future demand. |
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Term
| Total Quality Management (TQM) |
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Definition
| An all-encompassing management approach to providing superior, high-quality products and services. |
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Term
| Tools and Techniques of TQM |
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Definition
*Employee Participation
-Employee performance is a critical quality variable.
-The implementation of work teams and empowerment of employees to build workplace involvement.
*Quality circle
-A group of employees who meet regularly to discuss quality-related problems. |
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Term
| Essential Features of Successful Quality Management |
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Definition
*Customer Driven
*Culture of Continuous Improvement
*Organizational Commitment |
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Term
| The Customer Focus of Quality Management |
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Definition
Customer Expectations
*Quality is the extent to which a product or service satisfies customer’s needs and expectations.
-Product quality
-Service quality
-Product and service quality combinations
Customer Feedback
*Customers are the eyes and ears of the business for quality matters. |
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Term
| 'The Basic Seven' Quality Tools |
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Definition
*Cause and effect – identifies potential causes for an effect or problem while sorting them into categories
*Check sheet – structured, prepared from for collecting an analysing data
*Control chart – transforms data into graphs to determine whether a process errs and can be corrected
*Histogram – graph that shows how often different value in a set of data occurs
*Pareto chart – bar graphs that reveal which causes are significant separating the ‘vital few’ from useful many
*Scatter diagram – graphs different sets of variables, allowing a search for quality relationships or patterns
*Flow chart – visually represents the series of steps required to complete an operation |
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Term
| Quality Assurance Using Inspection versus Poka-Yoke |
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Definition
*The Inspection Process
-The examination of a product to determine whether it meets quality standards.
-Occurs after the fact—the defective good has already been produced.
*Poka-Yoke
-A proactive approach to quality management that seeks to mistake-proof a business’s operations, thus avoiding problems and waste before they can occur. |
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Term
| Statistical Methods of Quality Control |
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Definition
*Acceptance Sampling
-The use of a random, representative portion to determine the acceptability of an entire lot.
*Attributes
-Product or service parameters that can be counted as being present or absent.
*Variables
-Measured parameters that fall on a continuum, such as weight or length.
*Statistical Process Control
-The use of statistical methods to assess quality during the operations process.
*Control Chart
-A graphic illustration of the limits used in statistical process control. |
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Term
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Definition
*The standards governing international certification of a business’s quality management procedures.
-Documents compliance of the business’s operations with its quality management procedures.
-Serves as an indicator of supplier reliability to its customers. |
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Term
| Opportunities for Small Service Companies |
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Definition
*Providing an excellent combination of tangible products and intangible services.
*Providing personalised, high contact services.
*Providing service quality without regard to the profitability of the customer.
*Developing good measures to control service quality. |
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Term
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Definition
*The process of obtaining materials, equipment, and services from outside.
*The Importance of Purchasing
The process of acquiring quality raw material inputs affects:
-The timely and consistent production of quality products.
-Retailer sales of finished products to customers.
-The costs of products, their profitability and their selling prices. |
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Term
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Definition
*A business’s choice between producing and purchasing component parts for its products.
*Reasons for making:
• More complete utilization of plant capacity permits more economical production.
• Supplies are assured, with fewer delays caused by design changes or difficulties with outside suppliers.
• A secret design may be protected.
• Expenses are reduced by an amount equivalent to transportation costs and the outside supplier’s selling expense and profit.
• Closer coordination and control of the total production process may facilitate operations scheduling and control.
• Parts produced internally may be of higher quality than those available from outside suppliers
*Reasons for Buying:
• An outside supplier’s part may be cheaper because the supplier specializes in the production of that particular part.
• Additional space, equipment, personnel skills, and working capital are not needed.
• Less-diversified managerial experience and skills are required.
• Greater flexibility is provided, especially in the manufacture of a seasonal item.
• In-plant operations can concentrate on the firm’s specialty—finished products and services.
• The risk of equipment obsolescence is transferred to outsiders. |
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Term
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Definition
| Contracting with a third party to take on and manage one or more of a business’s functions that are outside the business’s area of competitive advantage. |
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Term
| Cooperative Purchasing Organisation (COOP) |
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Definition
*Small businesses combine demand for products or services to negotiate as a group with suppliers.
-Benefits: increased buying power, more access to resources and information
-Small businesses save on inputs by using the Internet to seek out the lowest cost suppliers. |
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Term
Diversifying sources of supply
Reasons for having a sole supplier: |
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Definition
*Outstanding supplier quality
*Quantity discounts for volume purchases
*Single orders too small to divide among suppliers
*Quality of supplier-customer relationship |
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Term
Diversifying sources of supply (cont.)
Reasons for having multiple suppliers: |
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Definition
*Choice of best quality, price and service
*Supplier competes for business
*Insurance against input interruptions |
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Term
| Measuring Supplier Performance |
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Definition
SCOR Model Supplier Attributes (these factors help when selecting a supplier)
*Reliability – does supplier provide what you need and fill orders accurately?
*Responsiveness – does supplier deliver inputs when needed?
*Agility – does supplier respond quickly to changes in your order?
*Cost – does supplier help you control your cost of goods sold, your total supply chain costs and warranty/returns?
*Asset efficiency – does supplier help you improve efficiencies by shortening the cash cycle, inventory holding |
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Term
| Building Good Relationships with Suppliers |
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Definition
• Pay bills promptly.
• Give sales representatives a timely and courteous hearing.
• Minimize abrupt cancellation of orders merely to gain a temporary advantage.
• Avoid attempts to browbeat a supplier into special concessions or unusual discounts.
• Cooperate with the supplier by making suggestions for product improvements and/or cost reductions, whenever possible.
• Provide courteous, reasonable explanations when rejecting bids, and make fair adjustments in the case of disputes |
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Term
| Forming Strategic Alliances with Suppliers |
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Definition
*Involves close coordination of buyers and sellers to:
-Reduce product introduction lead time
-Improve product quality
-Engage in joint problem solving
-Make joint adjustments to market conditions
-Involve the supplier early in product development |
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Term
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Definition
*Associative forecasting
-Considers a variety of variables to determine expected sales. |
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Term
| Using Information Systems |
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Definition
| Increases operational efficiencies by reducing inventory management, ordering, payment collection and personnel costs. |
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Term
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Definition
*Emphasizes efficiency by eliminating waste in a business’s operations—using minimum resources to satisfy the greatest customer wants and needs.
-Defects are costly because they must be repaired or scrapped.
-Overproduction must be stored and may never be sold.
-Transportation is minimised by locating close to suppliers and customers.
-Waiting can be wasteful because resources are idle.
-Inventory above the minimum is unproductive and costly.
-Motion by product, people, or machinery can be wasteful.
-Processing itself is wasteful if it is not productive. |
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Term
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Definition
| An approach that recognises the interdependence of assets and activities and manages them to optimise the entire business’s performance. |
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Term
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Definition
| Any point in the operations process where limited capacity reduces the production capability of an entire chain of activities. |
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Term
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Definition
| The most restrictive of bottlenecks, determining the capacity of the entire system |
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Term
| Avoiding Bottlenecks and Constraints |
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Definition
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