Business Operations

Operations

Refers to business processes that involve transformation

Manufacturing & Service Sector

Manufacturing Sector

• Processes involved in turning raw materials & resources into outputs of finished goods or products, e.g., steel into cars

Services Sector

• Processes involved in carrying out the service, e.g., cutting hair

Strategic Role of Operations Management

Design, create, and implement a system of production that continually aims to lower costs, ensure quality, and maximise productivity and profitability. 

• Cost Leadership

• Good/Service Differentiation

Cost Leadership

The business aims to have the lowest possible costs or most price-competitive in the market

• eg, Economies of Scale

Good/Service Differentiating

Make products stand out compared to other customers by appearing more attractive and unique

Goods: Features & Quality

Service: Time, expertise, qualifications, materials used.

Goods & Services in Different Industries (C-SPIN) (CS)

Goods in Different Industries

- Standardised, e.g, pencils, cleaning products

- Customised, e.g, jackets, cars, iPhone, eyewear

- Perishable, e.g, milk, flowers

- Non-Perishable, e.g, chairs, table

- Intermediate (semi-finished goods), e.g, glass

Services in Different Industries

- Standardised, e.g, fast food services, first aid programs

- Customised, e.g, hairdressing

Operations Influences (George Tried Quitting Caffeine, Got Literally Exhausted)

• - Globalisation

  - Technology

  - Quality Expectations

  - Cost-Based competition

  - Government Policy

  - Legal Regulations

  - Environmental Sustainability

• Corporate Social Responsibility (PPP)

Globalisation

Process of increasing interconnectedness & integration between countries, economies, cultures & societies

• Supply Chains & Sourcing

Technology

Use of innovative devices, methods, and machinery during operational processes.

• Administrative Level

• Processing Level

Administrative & Processing Level

Administrative Level (Running Business)

- Assists with organisation, planning, and decision making, e.g, scheduling tools, office technologies, word processing

Processing Level (Making Products)

- Assists with the transformation of inputs into finished goods or services, e.g. Robotics, CAD, CAM

Quality Expectations

Goods: how well they are designed and made, and how functional they are. 

• Quality of Design, Fitness for Purpose, Durability

Services: the overall level of competence with which they are organised and delivered.

• Level of Customisation, Reliability of Service Provider, Professionalism

Cost-Based Competition

Cost-based competition is derived from determining break-even point and then applying strategies to create cost advantages over competitors.

• Can be done by reducing costs as prices cannot keep increasing

Government Policies

Methods used by the government that encourage the operations to be more innovative and competitive, eg, removal of tariffs

Legal Regulations

Rules business must comply with, at the risk of penalties

•  e.g, Workplace Health & Safety

• Pollution Control Laws

• Food Safety & Standards Law

Environment Sustainability

Practices that consume resources today without compromising access to those

resources for future generations

• Sustainable use of renewables

• Reduction of non-renewables

• Application of the precautionary principle

Corporate Social Responsibility (PPP)

Open and accountable business actions based on:

• Economic Responsibility (Profit) 

• Social Responsibility (People)

• Environmental Responsibility (Planet)

Operational Processes

Inputs

Transformation Processes

Outputs

Inputs

• transformed resources (materials, information, customers) 

• transforming resources (human resources, facilities) 

Transformation Processes

• the influence of volume, variety, variation in demand and visibility (customer contact)

• sequencing and scheduling - gantt charts, critical path analysis 

• technology, task design and process layout 

• monitoring, control and improvement

Outputs

Customer Service

Warranties

Operations Strategies (POGOSQUINT)

• performance objectives

• outsourcing

• global factors

• overcoming resistance to change

• supply chain management

• quality management 

• inventory management

• new product or service design and development 

• technology

Performance Objectives (QSDFCC)

Quality

Speed

Dependability

Flexibility

Customisation

Cost

Outsourcing

Involves the use of external providers to perform business performance/activity

Global Factors (REGS)

Global Sourcing

Refers to businesses purchasing supplies or services without being constrained by location.

Economies of Scale

Cost advantages gained by producing on a larger scale (lower costs per unit) 

Scanning and Learning

Continuously observing the global business environment + adopting and adapting best practices, innovations, new knowledge, and methods to improve a firm’s own operations, 

Research and Development

Involves businesses investing in researching new ideas and developing new products, processes, and technologies

Overcoming Resistance to Change

Financial Costs

Purchasing new equipment

Redundancy payments

Retraining

Reorganising plant layout

Inertia 

Supply Chain Management

Global Sourcing

Businesses purchasing supplies or services without being constrained by location.

E-Commerce

Buying and selling goods & services via the internet

Logistics

Distribution of getting goods & services to customers

Quality Management

Processes that a business undertakes to ensure output is consistent, reliable, and fit for purpose.

• Quality Control

• Quality Assurance

Inventory Management  

Inventory refers to the amount of raw materials, work-in-progress and finished goods that a business has on hand at any point in time

• FIFO

• LIFO

• JIT

New Product or Service Design & Development

Product Design & Development

• Consumer Approach

• Technological Innovation

Technology

• Leading Edge Technology

• Established Technology