Vocabulary
the ratio of outputs to inputs during
production (e.g. output per worker per time period).
productivity
an outward-looking approach that bases product decisions on consumer demand, as established by market research
customer (or market) orientation
current output level
________________ X 100
maximum output level
rate of capacity utilisation
Opportunity cost
Storage costs
Risk of wastage and obsolescence
Costs of holding inventory
the 4 types of production methods
job / batch / flow / mass customisation
this exists when the current levels of output are less than the full-capacity output of a business; also known as spare capacity
excess capacity
Questionnaire
Interview
Observation
Test marketing
Focus groups
Sources of primary research
Increased flexibility and Improved company focus
but...
Customer resistance and Corporate social Responsibility (CSR)
adv/disadv of outsourcing
Buffer inventories
Maximum inventory level
Re-order quantity
Lead time
Re-order level
Parts of the inventory control chart
- reducing production costs through increased efficiency
- producing quality goods that meet customer expectations
- ensuring production is flexible so that changing consumer tastes can be satisfied
the intangible capital of a business that includes human capital (well-trained and skilled employees), structural capital (databases and information systems) and relational capital (good links with suppliers and customers).
intellectual capital
Increasing competition
Technological advancement
New opportunities for growth
Risk diversification
Reasons for new product development or the importance of product development
Use subcontractors or outsourcing of supplies, components or even finished goods
Invest capital in the expansion of production facilities
ways to deal with capacity shortage
Inventories could lose value if fashion or technology changes while they are being held.
disadvantages / drawbacks of JIC inventory management
Input -> production process -> output
transformational process
a form of outsourcing that uses specialist contractors to take responsibility for certain business functions, such as human resources and finance
business process outsourcing (BPO)
Introduction
Growth
Maturity (saturation)
Decline
Lifecycle of a product or product life stages
Adopting a more flexible production system, allowing other products to be made that could be sold at other times of the year. This needs a flexible workforce and production resources
short-term excess capacity utilisation
The greater flexibility needed for JIT leads to quicker response times to changes in consumer demand or tastes
The multi-skilled and adaptable staff required for JIT to work may gain improved motivation.
Advantages / Benefits of JIT inventory management
- Improve the training of employees to raise skill levels
- Improve worker motivation
- Purchase technologically advanced equipment
- More effective management
raising productivity or ways to raise productivity
reducing capacity by closing factories/
production units
rationalisation
price offers
loyalty reward programmes
money-off coupons
point-of-sale displays in shops
sales promotion methods or types of sales promotion
Redundancy payments might have to be paid
Workers may worry about job security
Industrial action may be a risk
disadvantages of rationalisation
Improves customer service
Reduces operating costs
Improves profitability
Benefits or importance of supply chain management
__________ is important because it determines the average cost of production. ___________ is important because it means customers’ needs are being met
Efficiency / Effectiveness