Y1 BUSINESS RECAP - OPERATIONS MANAGING INVENTORY AND SUPPLY CHAIN 1

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  • Managing inventory and supply chains: inventory and objectives
    • Inventory = stock held by the business
      • materials and supplies needed for production
      • semi finished items
      • finished products ready for distribution or sale
    • speed of response
      • how fast the product/ service is delivered. e.g. how long the AA take arriving to a breakdown.
        • can be a way of being more competitive
        • save time through simultaneous jobs etc.
    • dependability
      • the time it takes for the product to go from production to finishing/sale
        • more important in some industries, compared to others. may involve new processes, investment or training
    • flexibility
      • e.g. made to order food in Subway/ personalised trainers on Nike
        • BMW claim no two minis are the same = individual needs of customers met
    • influences on amount of inventory
      • holding inventory uses resources. managers on a warehouse may need to space/ measures to prevent theft and damage.
      • opportunity cost = money invested in producing products that could of been used for something else.
        • e.g. £000s of thousands invested in car show rooms > managers want fast turnover
      • May go out of date and become worthless if held for too long.
    • Measuring inventory
      • managers want to measure how much of an item is held at anytime
        • technology has made this more efficient
      • ensures enough inventory is held so sales and production can continue - but costly if too much is inventory held
    • mass customisation
      • can be expensive and make processes difficult for business like car manufacturers
      • delivering goods/services modified to the customers needs. personalisation + flexibility

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