Please enable JavaScript.
Coggle requires JavaScript to display documents.
AL Chapter 16 - Operations strategy - Coggle Diagram
AL Chapter 16 - Operations strategy
Operational decisions
Operations decisions involve the allocation of people money and equipment
Business functions affecting what operations managers have to do
Marketing decisions affect sales and output
Finance affects investment
Numbers and skills of employees affect what is produced
Information technology and Artificial intelligence
Informational technology
Storing and retrieving and sending information
Improvements enable information to move between different parts of the business and between partners easier
Using CAD enables a business to develop models which saves time and money, increases flexibility
Using CAM enables high levels of accuracy and quality, but there is the initial costs and times required to train staff
Artificial intelligence
Involves computer systems to perform tasks usually needing a human
It can interpret data, detect flaws in products, anticipate sales, ensure a business can hold less inventory
Flexibility
Forms of flexibility
Volume flexibility
Meeting sudden changes in orders
Delivery time
Just In Time production methods enable a business to respond quickly and deliver quickly
Specification
Businesses can consumers increasingly demand products that differ slightly
Process innovation
Process innovation refers to new ways of doing things, like a new delivery method
Decreases costs, and matches products to customers needs more
Enterprise resource planning
Software integrating management information from all business functions into a single IT based system
Features of an ERP programme
EPR deals with supply chain management, production, customer relations management
Using ERP means that a business can see what was ordered, how many components, progress of an order, stock level...
Advantages
Reduces costs
Better communication
Quicker decision making
Disadvantages
Expensive
Time to train employees
Face resistance from departments reluctant to share information
How ERP improves business efficiency
Better inventory control
Allows the business to know what they hold, what is needed, and levels of unsold stock
More accurate costing and pricing
ERP contains information on all the information needed for production, the exact costs are known meaning that calculating profit making prices are easier
Higher capacity utilisation
Capacity utilisation = Current output / Maximum output X 100
ERP tells the business exactly what orders are confirmed, delivery times and resources needed
Faster responses to change
Any chances in orders, stocks, prices will be quickly picked up and decision made on these factors are quicker
Lean production
Lean production uses resources as efficiently as possible to achieve the desired quality of minimum waste
Lean production aims for zero delays, zero waste, zero inventory, zero accidents...
Leads to lower costs and lower waste, more employee involvement, improved cash flow, greater flexibility
Cell production
Divides the process into stages with a team who make their own decisions, each cell (team) is responsible for that process
Time based management
New products have to be developed over time, this method arranges for development processes to occur at the same time whenever possible
Kaisen
Occurs when there are continuous, regular, small improvements suggested by all employees as part of a culture improvement
Involves all workers being responsible, relies on taking responsibility, and the changes are ongoing
Quality circles
Quality circles are voluntary groups of employees who meet without managers to identify improvements
Benefits include being specific in the improvements made, employees may be motivated by being in involved and listened to
Just in time manufacturing
Uses as little inventory as possible, raw materials are ordered as required for production, work in progress is minimised by producing only for firm orders
Excellent relationships with suppliers because without the reliability then delays may cause financial impacts
A flexible workforce means that production can respond to a demand
Reliable employees, if strikes occur then the whole production stops, a business cannot supply customers sing inventories as none exist
Implications of adopting JIT
Low inventory holding costs, less working capital, and no overproduction
Time saved in moving supplies about, less waste, improved quality, lower costs
Waste management
Business can improve their efficiency by managing waste effectively
Reduce the amount of materials and energy used, reuse materials, recycle materials
Limitations of operational strategies
Lean production may not be easy becasue
Time and money in training
Opposition from staff not wanting to learn new skills
Difficult to find reliable suppliers
Makes businesses vulnerable to
Strikes by employees,
Delays from suppliers because there is no safety stock
Operations Planning
The need for operations planning
Operations is critical to the success of a business
Managers need to plan to ensure all sales targets are acheived, costs are minised, appropriate levels of inventory
Planning is required to look ahead to what is needed, communicate,
Network diagrams
Critical path analysis uses a network diagram of the activities needed to complete a project
The diagram identifies all of the activities in a project, the time they take and the order in which they must be completed
To construct a diagram you need to identify all project activities, which activities follow the other,
Main elements
Activities - Shown as a line, with duration and an arrow for direction
Nodes - Circles with earliest start time (EST) and Latest finish time (LST)
Dummy activities - when an activity cannot start until another has finished, duration is 0 and shown as a dotted line
Minimum project duration is the shortest possible time in which a project can be completed
Drawing the diagram
Start with a node
Each activity is a line, each one starting and ending at a node
Check for dummy activities
Show a finishing node to draw conclusions from
Using critical path analysis
Working from left to right, enter the ESTs, this will give the minimum project duration
Working from right to left, enter the latest finishing ties starting with the EST in the finishing node as the LFT at that point
The critical path
A sequence of activities that cannot be delayed without delaying the whole project
Calculation of total and free float
Total float is the maximum length of time an activity can be delayed without delaying the whole project
Total float = LFT - Duration - EST
Free float is the maximum length of time an activity can be delayed without delaying the next activity
Free Float = EST Next activity - Duration - EST
Critical path analysis as a management tool
CPA enables planning of complex projects with an indication of times by which activities must be completed and the importance of meeting those times.
Allows a business to calculate project duration, enables supply deliveries, resource planning
Shows when activities are scheduled, monitors progress, total and free float used to focus on activities
Limitations to critical path analysis
Critical path analysis relies on estimates, if these are inaccurate ten the EST and LST are wrong
Duration may be incorrect due to exaggeration
Shows the quickest way to complete a project, it may not be the right project to use
Project management
A project is a business scheme with a specific objective, timescale and budget
Contains many details of activities and tasks to be completed
Project failure
Project failure includes the project not being completed at all, or in time allowed, quality not up to standard, project costs are higher
Reasons
Changes in the business environment
Poor management or interference by others
Loss of focus on end goal
Cost overruns
Implications of project failure
Loss of reputation
Penalty payments
Loss of profits