Key terms

• E commerce 


  using the internet when buying/selling
• Automation 


  Using machines to carry out tasks without human input
• Logistics 


  Coordinating the movement and storage of goods & materials
• Outsourcing 


  Using external suppliers for certain business functions
• Supply chain 


  Network of suppliers, manufacturers & distributors
• Re order level 


  Inventory level that triggers a new order
• Lead time 


  Time between ordering & receiving stock
• Buffer stock 


  Minimum stock kept to avoid stockouts
• Inventory control 


  Managing stock levels efficiently
• Inventory 


  the raw materials, work in progress & finished goods held by a business
• Benchmarking 


  Comparing your processes with industry best practices
• Kaizen 


  Continuous improvements which includes small & regular changes
• Total quality management 


  Continuous improvement approach which involves all employees
• Quality assurance 


  Checking for defects throughout the production process
• Quality control 


  Checking defects at the end of the production process
• Quality


  The product or services ability to meet customer expectation & satisfaction
• Labour intensive 


  Production which relies more on workers than machines
• Capital intensive 


  Production which relies more on machinery than labour
• Just in time 


  Minimising inventory by receiving goods only as they’re needed
• Lean production 


  A method which focuses on reducing waste but improving efficiency & quality
• Diseconomies of scale

  average cost per unit increase as production increases
• Economies of scale

  as company produces more cost for each item goes down
• Efficiency 


  Producing more with the same or fewer resources
• Capacity utilisation 


  percentage of total capacity being used
• Capacity 


  Maximum output a business can produce
• Labour productivity 


  Output Per worker over a given period of time
• Added value


  Difference between selling price & cost of sale
• Dependability 


  being reliable & consistent in delivering goods & services
• Flexibility 


  Ability to adapt production to changes
• Speed of response 


  How quick a business can meet customer demand
• Inventory control chart 


  Tool used to track stock levels over time & help manage when to reorder inventory
• Time based management 


  Strategy focusing on reducing time in production process
• Simultaneous engineering 


  Developing products with all departments working together
• Cell production 


  Lean production method where production line is split into sled contained units responsible for specific tasks
• Mass customisation 


  producing goods on a large scale while still allowing for individual customer preference
• Supply chain management 


  coordination of all activities involved in sourcing, producing & delivering products to customers