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Topic 6 - The Internal Audit (Part 2) (Implication of Various Strategies…
Topic 6 - The
Internal Audit
(Part 2)
Basic Functions Decision
Within Production / Operation
1. Process
Include choice of technology, facility layout, process flow analysis, line balancing, etc
2. Capacity
Decision includes forecasting, facilities planning,capacity planning, and queuing planning
3. Inventory
Involving managing raw material of material, Work in Process, and finished goods
Consider what to order, when to order, how to order and materials handling
4. Workforce
Involve managing skilled, unskilled, clerical and managerial process
Care for job design, work measurement, work standard , motivation techniques
5. Quality
Aimed to produce high quality goods and services
Care for quality control, sampling, texting, quality assurance and cost control
Implication of Various Strategies on
Production / Operations
1. Become a Low - Cost
Provider
Create high barriers to entry
Create larger market
Require longer production runs and fewer product changer
2. Become High - Quality
Provider
Require more quality assurance efforts
Require more expensive equipment
Require highly skilled workers and higher wages
3. Provide Great
Customer Service
Require more service people, service parts and equipment
Require rapid response to customer needs of changes in customer tastes
Require a higher inventory investment
4. Be the First to Introduce
New Products
Has higher research and development costs
Has higher retraining and tooling costs
5. Become Highly
Automated
Require higher capital investment
Reduce flexibility
May affect labour relation
Make maintenance more crucial
6. Minimise
Layoffs
Help to attract and retain highly skilled employees
Management Information
System
Receive raw material from external and internal evaluation of an organisation
Improve the performance of an enterprise by improving the quality of managerial decisions
Collect, code, store, systhesise, and present information
Benchmarking
Analytical tool used to determine whether a firm's value chain activities are competitive
Entail measuring cost of VCA across an industry to determine "Best Practice"
Value Chain
Analysis (VCA)
Process of a firm determines the costs association with organisation activities from purchasing raw material to manufacturing products
Aim to identify where low - cost advantage or disadvantage exist anywhere along the VCA from raw material to customer service activities
The Internal Factor
Evaluation (IFE) Matrix
List key internal factors as identified in the internal audit process
Assign a weight from 0.0 (Not Important) to 1.0 (All Important) to each factor
Assign a 6 to 4 rating to each factor, which indicates whether a strength or weakness
Multiply each factor's weight - rate to determine a weighted score
Sum the weighted score for each variable - determine total weighted score for organisation