busman: unit 3 AOS 3: operations management

Operations management

coordinating + organising the activities involved in producing goods or services that a business sells to customers.

• responsible for implementing strategies (eg. quality control) that improve the efficiency + effectiveness of a business’s operations system

Efficiency + effectiveness

Efficiency: how productively a business uses its resources when producing a good or service.

Effectiveness: extent to which a business achieves its stated objectives.

DIFFERENCE: efficiency focuses on how productive a business’s operations system is, whereas effectiveness analyses how well a business’s operations system achieves set objectives

relationship b/w operations management & business objectives

Implement technology = Reduces the number of employees required in the operations system → reduce expenses associated with labour, therefore increase profit.

Improve quality = improve levels of customer satisfaction → increase the business’s sales and revenue → Increased financial performance can assist the business in achieving its objectives (increase effectiveness, market share)

Inputs

resources used by a business to produce goods and services.

• labour resources (employees)

• raw materials, such as flour and iron

• capital resources, such as equipment and machinery

• time

• utilities, such as electricity, water, and gas

Processes

actions performed by a business to transform inputs into outputs.(JUST VERBS)
• designing
• baking
• computing

Outputs

final goods or services, produced as a result of a business’s operations system, that are delivered or provided to customers.

Operations manager: ensure that a business’s outputs meet customer expectations relating to the quality, price, and availability of the product.

Manufacturing businesses

use resources + raw materials to produce a finished physical good.

• process that is capital intensive (machinery)

• production+consumption = occur separate times

• low degree of customer contact

• tangible

• outputs stored as inventory

• produce standardised goods through mass production

Service businesses

provide intangible products, usually with the use of specialised expertise.

• labour intensive

• production + consumption = occur simultaneously.

• high degree of customer contact

• intangible

• cannot be stored as inventory

• tailored to fulfil cust needs

Similarities of manufacturing + service business

• aim to produce high-quality outputs at low costs

• deal w suppliers when managing operations

• utilise technology in operation systems

• optimise efficiency and effectiveness in operations