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Intro to Entrepreneurship - Operations Management

by: Megan Angelo

Intro to Entrepreneurship - Operations Management ENTR-27056-003

Marketplace > Kent State University > Entrepreneurship > ENTR-27056-003 > Intro to Entrepreneurship Operations Management
Megan Angelo

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About this Document

Operations Management
Intro to Entrepreneurship
Kipp A. Krukowski (P)
Class Notes
Intro to Entrepreneurship - Operations Management
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This 5 page Class Notes was uploaded by Megan Angelo on Monday April 11, 2016. The Class Notes belongs to ENTR-27056-003 at Kent State University taught by Kipp A. Krukowski (P) in Spring 2016. Since its upload, it has received 24 views. For similar materials see Intro to Entrepreneurship in Entrepreneurship at Kent State University.


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Date Created: 04/11/16
Module 14 Operations Management Includes: • Purchasing • Inventory Management • Production • Distribution • Logistics The ability to innovate in the operation of a business can be a superior competitive advantage for any entrepreneurial company. • Example: Walmart. Theirs is not a new concept (low cost retailing). Why are they so successful? They are masters of operational efficiency. Entrepreneurial Advantage • The opportunity to set up things efficiently in the first place (instead of trying to change from old, out-of-date, inefficient processes to newer, more efficient processes). Issues to Consider: • Effective vendor relationships include trust and commitment, not uncertainty and dependence • Connectivity of the buyer-vendor relationship (i.e., computerized inventory and ordering; just-in-time delivery) • Importance of the vendor-customer relationship: Should a company buy from one vendor or multiple vendors? (Answer: Usually have one primary vendor and one or more backup vendors that use on an occasional basis to maintain the relationship.) Purchasing Questions to Ask • Can the vendor deliver enough of what is needed when it is needed? • Are the transportation costs higher if the vendor is farther away? • Do they offer any vendor services, like 24 hour access to a real, live, problem-solving person? • Do they offer comparative pricing alternatives, trade discounts, or quantity discounts? Inventory Management Questions to Ask • Can the vendor deliver enough of what is needed when it is needed? • Are the transportation costs higher if the vendor is farther away? • Do they offer any vendor services, like 24 hour access to a real, live, problem-solving person? • Do they offer comparative pricing alternatives, trade discounts, or quantity discounts? Inventory Management Important Issues • Quality of the Materials • Quantity ~ How much to order • Depends upon Customer Demand • Manufacturing Capability • Company’s Storage Capability • How Expensive is it to Hold Inventory? • Timing ~ When to order goes hand-in-hand with how much to order. • What is more expensive on a relative basis, the process of placing more frequent orders or holding more inventory? Managing Quality Testing for Quality • Develop a regular inspection process that takes place during several stages of the production process. A regular inspection process does not mean scheduled inspections; it means surprise inspections of a structured nature. Six Sigma • A quality initiative that Motorola (not GE) introduced in the 1980’s. It identifies the weaknesses in a company’s processes and then relies on statistical tools and processes to achieve measurable goals of fewer defects, increased productivity, reduced waste and superior products and processes. Benchmarking • Involves selecting critical criteria and comparing your company to other similar companies, based on these criteria, to see how effectively you are managing your operations. Continuous Improvement • A program that focuses on making continual incremental (pennies, millimeters and seconds) improvements in processes. ISO 9000 • An internationally recognized stamp of quality that can be achieved as a result of passing a certification process. Production and Scheduling Scheduling • Identify and describe each activity that must be completed to produce the product • Indicate the amount of time it takes to complete each activity, and in what order the activities must be completed Charting • GANTT Charts: simple, independent projects Gantt Chart Example Warranting the Product or Service • Demonstrates that the company stands behind what it produces (why) • Protects the company somewhat in that they have expressly indicated what they will and will not warranty, for how long (when) and how claims must be handled • Include as part of the warranty who will handle warranty claims (you, or a third party) • Best to handle warranty claims directly, at your facility, not an outside facility, if possible. (where) (quicker, easier, cheaper, better control) • For best protection, the customer should understand the warranty before or at the time of purchase (not after) (include with product quotes or at time of sale get customer acknowledgement, if possible) • Does warranty cover one, individual product (recommended) or a product line or multiple product lines? (what) Outsourcing to Reduce Costs Manufacturing overseas: In choosing whether or not to manufacture in a country where labor costs are low, consider • the weight of the product (shipping) • is yours an equipment- or manual-labor-intensive business? • is there reliable access to all resources needed? (this includes water and utilities) • is the country’s government stable? • always have local backup Lessons Learned from Outsourcing Overseas Start small and gradually build overseas capability • There will be problems in the beginning. Must have a company expert on site overseas • Communicating via fax and email is simply not enough. It is often best to use a combination of offshore and local firms to meet inventory needs • Gives the entrepreneur more control and more options. • Outsourced staff have a high turnover rate, so the entrepreneur needs to find a way to create a work culture that encourages outsourced staff to stay with the company long-term. • It is important to outsource only those tasks that have a high probability of going smoothly. Problematic projects are best handled domestically. Logistics • Definition: The management and control of the flow of goods and resources from the source of production to the marketplace • Fundamental part of supply chain management • Third party logistics providers can move packages by air, land, and sea • Logistics also includes inventory • Balancing raw material, work in progress, finished goods • Just-in-time systems: Producing (or ordering) the minimum number of units in the smallest possible quantity at the latest possible time • Solution to the challenge of logistics: Hire, contract with or partner with someone experienced in this area


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