BUSINESS UNIT 3 AOS3

Operation Management

Operation Management

Involves coordinating and organizing the activities involved in producing the goods/services that a business sells a customers

Efficiency

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

Effectiveness

Effectiveness is the extent to which a business achieves its stated objectives.

Relationship between Operations and Objectives

1. A business may be able to make a profit by IMPLEMENTING MORE TECH. Which reduces the number of employees needed to run the business ultimately lowering labour costs.

A business may be able to fulfil a social need BY RECYCLING WASTE PRODUCTS. By business reducing the amount of waste, its products can fulfil the social need for environmental preservation. (Increases business rep)

Inputs (1)

Are the resources used by a business to provide goods or services?

Operation managers a responsible for sourcing inputs that allow a business to produce the highest quality of products for the lowest cost.

Examples of Inputs

- labour resources

- raw materials

- equipment and machinery

- time

- electricity

- information

Processes (2)

are the actions performed by a business to transform inputs into outputs

Examples of Processes

- Mixing

- Designing

- Baking

- Computing

- Assembling

- Constructing

Outputs (3)

are the final goods or services produced as a result of a business's operations system which are delivered or provided to customers

YAKULT OPERATION SYSTEM ELEMENTS

Inputs: skim milk powder, Sugars(Sucrose, Dextrose), Flavoring, Water, Plastics, Machinery, and Employees. (SS

Processes: Fermenting Milk Solutions, Homogenizing the Milk, Blending the Milk, Filling Bottles, Sealing Bottles.

Outputs: The output is 65ML bottles of Yakult Original and Yakult Little, Packaged in packs of 5-10 and wrapped in Polyethylene film.

Manufacturing Business:

A business that uses resources and raw materials to produce a finished physical good.

Characteristics of a Manufacturing Business

1. Production Process: tend to have highly automated processes that are capital intensive (More machines/Equipment)

2. Customer Contact: Manufacturing businesses often have a low degree of customer contact during production as they are both separated.

3. Tangibility: The outputs produced by a manufacturing business are tangible (Can be touched)

Service Business:

These are businesses that provide intangible products, through the use of specialized expertise.

Characteristics of a Service Business

1. Production Process: Tend to have a production process that is more labor intensive (Use of more employees)

2. Customer Contact: A high degree of customer contact production occurs simultaneously with the consumption

Similarties between Manufacturing / Services Businesses

1. Both service and manufacturing businesses aim to optimise their operations to produce high-quality outputs at a low cost of production.

2. Both service and manufacturing businesses can utilise forms of technology in their operations systems.

Automated Production Line (1)

Involves machinery and equipment arranged in sequential order, where the product is developed through each step.

APL Impact

Efficiency: APL performs at a faster speed compared to people. Which reduced the time taken to produce outputs.

Effectiveness: APL performs tasks with higher precision which decreases human errors during production; decreasing error ultimately enhances product quality.

Advantages of APL

1. Technology can complete tasks for extended periods of time, without the need for breaks, increasing productivity.

2. Technology can complete tasks precisely and accurately to ensure products are consistently produced at a high standard. (Improve business rep).

Disadvantages of APL

1. A business may develop a poor reputation if it implements technology that makes employees redundant.

2. expensive / time consuming

Robotics (2)

Are programmable machines that are capable of performing specified tasks.

Robotics Impact

Efficiency: Robotics can perform tasks with high levels of accuracy. This can reduce the amount of time/resources wasted in production.

Effectiveness: Robotics can perform tasks with high levels of precision, minimising the number of errors that occur during production. (Increase sales/satisfaction)

Advantages of Robotics

1. The number of employees needed for production can be minimized, which can reduce a business's wage expenses.

2. Robotic technology can complete tasks for extended periods of time, without the need for breaks.

Disadvantages of Robotics

1. A business may develop a poor reputation if it implements robotic technology that makes employees redundant.

2. There are high initial setup costs associated with purchasing, programming, and installing robotics.

Computer-aided design (3)

is digital design software that aids the creation, modification, and optimisation of a design and the design process

CAD Impact

1. Efficiency: CAD can reduce the time and labour needed to design a product, allowing resources to be used more optimally and productively

2. Effectiveness: Through CAD a business can develop various prototypes and choose the best design to produce. Having the best option, it increases the quality of the design.

Advantages of CAD

1. CAD allows employees to generate advanced sophisticated and innovative product design. (Competitive advantage)

2. CAD software can speed up the product design process as designs can be created and modified faster.

Disadvantages of CAD

1. A business can develop a poor reputation if the CAD software makes numerous employees redundant.

2. There are high initial setup costs associated with purchasing and installing CAD software.

Forecasting (1)

Is a material planning tool that predicts customers' demand for an upcoming period using past data and marketing trends.

Forecasting Impact

Efficiency: Forecasting decreases the likelihood of ordering and storing excessive amounts of materials which reduces wastage, increases optimism

Effectiveness: Forecasting allows a business's ability to meet exact customer demand, which can increase customer satisfaction sales.

Advantages of Forecasting

1. A business having informed decisions about the number of materials needed, can improve a business's ability to meet CD

2. Forecasting can reduce the cost of storage as it prevents the need for a large space to store materials.

Disadvantages of Forecasting

1. It can be time consuming to analyze historical data and market trends.

2. Businesses may need to hire forecasting specialists, which increases training and wage costs.

Master Production Schedule (MPS) (2)

Is a plan that outlines what a business intends to produce, in specific qualities within a set period of time.

MPS Impact

Efficiency: Prevents a business from producing an excessive amount of products. (Lowers Waste)

Effectiveness: A business is more likely to produce the correct quantity of products. (Increases Market Share)

Advantages of MPS

1. Can provide employees with a clear schedule of operations that includes the timeline and quantity of production targets.

2. By determining specific details about how production will occur, it is less likely production will be brought to a halt and time is wasted due to an organization error.

Disadvantages of MPS

1. It can be time consuming to map out details of production.

2. Implementing and maintaining this plan can be expensive.

Just in Time (3)

Just in Time (JIT) is an inventory control approach that delivers the correct type and quantity of materials as soon as they are needed for production.

JIT Impact

Efficiency: Holding minimal stock which can free up areas in the workspace. (Increases production)

Effectiveness: A reduction in idle stock can reduce expenses associated with waste removal.

Advantages of JIT

1, JIT eliminates idle stock, therefore limiting the amount of stock wasted from expiry or damage in storage.

2. Reduces storage costs and expenses associated with waste removal, meaning this money can be used in other areas of the business.

Disadvantages of JIT

1. A business may fail to meet customer demand from a lack of reserves stock which may cause damage to a business's reputation.

2. Delivery costs may increase due to more frequent deliveries.

quality Control (1) REACTIVE

involves inspecting a product at various stages of the production process, to ensure it meets standards, and discarding those that are unsatisfactory.

Quality Control Impact

Efficiency: Identifying and fixing the cause of an error prevents the error from reoccurring, which results in less waste being produced during production,

Effectiveness: Removing damaged products prevents customers from receiving faulty goods or services (Increases sales/MS)

Advantage of QC

1. By a business constantly providing customers with high-quality products and removing faulty goods/services can improve the business rep.

2. The strategy is relatively inexpensive to implement, as it is controlled internally by the business and no external parties are required to carry out the quality checks.

Disadvantages of QC

1. It can be time-consuming to identify and address the causes of errors in production.

2. Unless every product is inspected, damaged goods may still reach a customer. (Lowering business reps, decreases sales)

Yakult QC

1. Yakult undertakes processes such as Sampling, Testing, and inspecting final products to ensure there are no errors.

2. Yakult examines microbicidal quantity, composition/taste of Probiotic milk, and randomly inspects incorrect printing, sealing of life and marketing.

3. Yakult examines 100-200 bottles per day.

Quality Assurance (2) - PROACTIVE

Involves a business achieving a certified standard of quality in its production process after an independent body assesses its OS.

QA Impact

Efficiency: Preventing errors before products are produced decreases waste. (Allows business to optimize resources)

Effectiveness: Customers are more inclined to purchase from a business with certified quality standards. (Increases sales, Increases profits)

Advantages of QA

1. Gaining external certification can be harnessed as a marketing tool by the business, allowing it to increase sales.

2. External certification associated with workplace standards and improve the safety of the workplace for employees.

Disadvantages of QA

1. Completing the required documentation for the external body to check the operations system can be time-consuming.

2. It can be expensive to organize an external body to assess the operations system of a business.

yakult- quality assurance

1. Yakult has gained endorsements from "'Hazard Analysis and Critical Control Points" (HACCP)

2. HACCP checks biological, chemical, and physical hazards

3. To maintain HACCP standards, Yakult imposed processes like wearing hair/beard nets

Quality Control and Assurance (Similarities)

Similarities

1. Both strategies reduce the number of faulty products reaching customers.

2. Both strategies require a good or service to meet set standards.

Quality Control and Assurance (Difference)

Difference

1. Quality control is reactive as it identifies and eliminates errors after they occur. On the other hand, quality assurance is proactive as it prevents errors from occurring.

2. Quality control does not involve external certification. In contrast, quality assurance involves a business receiving certification after it meets standards set by an external body.

Waste Minimization

Waste minimisation is the process of reducing the amount of unused material, time, or labour within a business.

Types of Waste

1. TIME can be wasted by transporting resources

2. PRODUCTS can be wasted when they are defective and cannot be sold

3. LABOUR can be wasted when employees have little or no work to complete during production.

Waste Minimization impact

Efficiency: By minimizing the amount of time wasted in operations a business produces goods and services at a quicker rate, increasing efficiency.

Effectiveness: Reducing the amount of waste produced ultimately reduces the costs associated with waste removal. Increases in profits/money can be used in other aspects of the business.

Reduce (1)

Is a waste minimization strategy that aims to decrease the amount of resources, labour, or time discarded during production.

Yakult Reduce Strategy

1. reduces the time spent manually processing data through the use of specialized software

Reuse (2)

reuse is a waste minimisation strategy that aims to make use of items that would have otherwise been discarded.

Yakult Reuse Strategy

Yakult has implemented technology to help facilitate the reuse of water during the production process.

Recycle (3)

Recycle is a waste minimization strategy that aims to transform items which would have otherwise been discarded.

Yakult Recycle Strategy

1. Yakult recycles any bottles that are discarded during the production process so that plastic can be reutilized to make furniture legs.

Lean management

Lean management is the process of systematically reducing waste in all areas of a business's operations system whilst simultaneously improving customer value.

Pull strategy (1)

involves customers determining the number of products a business should produce for sale.

Efficiency: Can reduce overproduction and lower the wasted material, time, and labour. (Increases productivity)

Effectiveness: Minimise the amount of discarded materials/resources, which can reduce expenses (Increase profits).

One Piece Flow (2)

a single product moving through all stages of production one at a time

Efficiency: Reduces errors which cause products to be discarded

Effectiveness: The number of errors is reduced which improves quality and satisfies customers

Takt Strategy (3)

involves synchronising the steps of a business's

operations system to meet customer demand.

Efficiency: The minimising of delays optimally uses time and labour resources

Effectiveness: The continuous flow in its operations processes keeps up with customer demand as it rises and falls

Zero Defect (4)

involves a business preventing errors from occurring in the operations system by ensuring there is an ongoing attitude of maintaining a high standard of quality for the final output.

Efficiency: Minimising errors can reduce the waste of materials (Increases productivity)

Effectiveness: Removing errors can lead to an improvement of products which can lead to high-quality products, (Improves satisfaction)

Discuss Lean Management

A

1. The quality of a business's products can improve, leading to greater customer satisfaction and sales.

2. A businesses reputation may improve if it consistently reduces and manages waste. as it benefits the environment.

D

1. It maybe time-consuming for a business to train employees to learn lean production methods.

2. It maybe costly to implement Lean management polices and producers.

Chapter 3I - CSR IN OPERATION

is the ethical conduct of a business beyond legal obligations, and the consideration of social, economic, and environmental impacts when making business decisions.

CSR considerations for inputs

When sourcing inputs, a business must consider how to improve its environmental sustainability: ensuring that natural resources are not permanently depleted or damaged.

1. sourcing inputs locally, rather than from overseas suppliers, to reduce transport emissions and minimise the business's carbon footprint.

2. purchasing energy-efficient machinery for production

CSR considerations for processes

Many processes use large amounts of energy and use excess inputs that create waste. By implementing CSR in processes, a business can become more efficient and effective by reducing waste and improving its reputation

1. Implementing technology to be more precise and reduce waste

2. Develop methods to recycle or reuse excess materials

CSR considerations for outputs

It is socially responsible for businesses to produce g/s that do not harm the greater community.

1. Developing environmentally friendly products

2. Delivering in bulk to reduce carbon emissions from travel

YAKULT CSR OPERATIONS

Yakult CSR for Inputs

1. 99% of resources are sourced locally (improves local living standards/economy)

2. Keeping employees even after the robotic arm introduction (training them in other areas)

3. Straws removed in 2020

Yakult CSR for term-78 processes

1. Use green energy - fewer Co2 emissions during manufacturing

2. waste management (water treatment onsite, 1% waste)

Yakult CSR for Outputs

1. Recyclable packaging - Yakult bottles

2. Ink is biodegradable

3. Healthy for society

Global sourcing of inputs

involves a business acquiring raw materials and resources from overseas suppliers.

Factors to consider

the price of products in different countries

Yakult Global sourcing of Inputs

Yakult implements global sourcing of inputs with their Shirota Strain bacteria and polystyrene pellets for bottles sourced from Japan.

Advantages and disadvantages of global sourcing of inputs

AD

1. A business may be able to negotiate a lower price for its inputs as there is greater competition between overseas suppliers.

2. A business is able to source high-quality materials if it is not available in their country.

DA

1. It may be difficult to communicate with suppliers due to language barriers,(Miscommunication)

2. Delivery may be time-consuming depending on where the supplies are being sent from.

Overseas manufacture

involves a business producing goods or services outside of the country where its headquarters are located.

A business may utilise overseas manufacturing to produce goods in greater quantities for a lower price

Yakult Overseas Maufracture

Yakult utilizes overseas manufacturer with the specialized machinery and Shirota Strain bacteria produced in Japan by the

company.

Advantages and disadvantages of overseas manufacture

AD

1. There is greater access to highly skilled employees who have expertise in production

2. It can increase employment rates for overseas countries

DA

1. Delivery is time-consuming compared to manufacturing goods in a domestic location.

2. Local employees may lose their jobs if a business moves its manufacturing overseas.

Global outsourcing

Global outsourcing involves transferring specific business activities to an external business in an overseas country.

By implementing global outsourcing, a business gains access to a large number of external businesses worldwide that can provide a higher quality of work

Advantages and disadvantages of global outsourcing

AD

1. Productivity may increase as the external business has the expertise to complete specified tasks more efficiently.

2. A business is able to decrease labour costs, as global outsourcing reduces the need for local employees

DA

1. It may be difficult to communicate with external, overseas businesses due to language barriers.

2. Local employees from the business's main operating country are likely to lose their jobs.