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Unit 4 - Operations Management - Coggle Diagram
Unit 4 - Operations Management
4.4 Location and Competition
Optimal Location
"perfect" place for your business
choosing a place to host your business is important, this will define if people will have access to you and if you've access to them
Quantitative Factors
measured financial terms and have direct impact on costs
Types of quantitative factors
capital costs: cost to build, rent, security, land, etc
labor costs: how many people will work there?
transport costs: how close or far away are you from other parts of the supply chain?
market potential: is your location for your operations?
Qualitative factors
non-measurable factors that affect opportunities
Types of qualitative factors
infrastructure: what is the quality of the infrastructure of your location?
Labor supply: can you source your appropriate labor locally?
opportunities: can you expand further?
Ethics and triple bottom line: is your location safe? Are you being sustainable and ethical?
Market Pull
you also have to keep in mind what the market is asking for
restrictions
what do the local authorities have in relation to your location? What can't you do?
Location Management
Assessing core competences
assessing costs and resources
Increasing flexibility and focus
offshore, re shore, outsource or subcontract
Moving locations
Offshoring: moving part of your locations outside the country due to costs
Outsourcing: assigning a section of your business to another company
Subcontracting: paying a third-party to complete certain tasks in your business
4.5 Production Planning
To hold or not stock?
added costs + fixed assets
when items are in stock, they are part of your working capital
Obsolescence + security
longer your items stay in stock, they risk becoming obsolete or devalued
Lost opportunities
not holding stock might keep you from being able to fulfill unexpected orders
Special + Small orders
with no stock, special orders become more expensive
Stock Control Chart
lead time
time it takes from the day you reorder until stock out day
buffer stock
your "emergency" stock that's used right before stock out
economic order quantity
optimum quantity of stock to reorder taking into account delivery and stock-holding costs
Capacity Utilization Rate
Current output/maximum output x100
This measures how much you're making - full capacity, you are producing 100% of what you can.
Productivity Rate
output/input
this measures how efficient you are - labor productivity (how much is produced per worker) and capital productivity (how much you produce per dollar)
Make or Buy?
Cost to Make (CTM)
how much it will cost for you to make in-house a specific item
Cost to Buy (CTB)
how much it will cost for you to buy a specific item from a third party
4.6 Research and Development
Research and Development
deals with the development of new products and processes
importance of R&D
creation of added-vale
intellectual property rights
Publicity
competitive advantage
creation of high-tech jobs
high premium prices
attracting investment
customer loyalty
lower costs
Limitations of R&D
R&D does not always lead to successful products: although R&D might find great solutions to the questions, these solutions might not be marketable at all
ethical issues may arise with R&D: sometimes what you need to research might fall into gray areas, and the potential risk might be greater
R&D does not always lead to invention or discovery. It is also very expensive: means that not all that is invested will be returned to the company
Competitors might have a better R&D department than you: R&D complex and deals with several variables. There is a chance that others can do better than you and kill your opportunities
Types of Innovation
Paradigm: distinctive change that deals with changing the basis of how people think
position: change in the perception of the customer in relation to the company
process: change in the way things are done or manufactured
product: change in the product to make it more marketable or to extend its life
Types of creativity
adaptive
minor changes to the task at hand
you don't need to reinvent the wheel, just trying to generate better iterations of what you currently have
Innovative
full swing in another direction
you are actually reinventing the wheel, meaning you are coming up with a novel solution for the task at hand