business u3aos3- operations management

define operations management

the management of resources to achieve an efficient and effective output of goods and services

define operations

the process of changing or transforming inputs to outputs

relationship between operations and business objectives

Without a good/service, a business has nothing to sell to consumers and therefore no way of making money. If operations are not performed effectively and efficiently, objectives are unlikely to be achieved.

what are the 3 elements of an operations system

inputs, processes and outputs

what are inputs and give examples

The resources used in the production process of a good/service.

these may include materials (ingredients, bricks, wood, etc), capital equipment (machinery, forks, etc), human resources (staff, people to produce output), information (knowledge and skill like recipe books) and time

what are processes

the transformation stage that turns the inputs into outputs

what are outputs and give examples

the finished product or service that is offered to customers (a clay brick from brick manufacturer, a chocolate cake from a recipe, etc)

what are some key characteristics of operations management within a manufacturing business

• produces tangible goods that can be stored,

• low level of customer interaction (customer not present during production),

• consumption after production,

• often more capital/machine intensive (chocolate, cars, furniture)

what are some key characteristics of operations management within a service business

• produce intangible services that cannot be stores,

• high level of customer interaction,

• consumption and production closely linked,

• often more labour intensive (health care, hair dressing)

define efficiency

Efficiency refers to how well a business uses resources.

define effectiveness

Effectiveness is the degree to which a business has achieved its stated objectives.

what are the 6 different types of technological developments

Artificial Intelligence (AI), automated production lines (APL), Computer-aided Design (CAD), Robotics, Computer-aided manufacturing (CAM) and Online Services

what is an automated production line

Automated production lines are systems where machines are arranged in sequence to perform production tasks with minimal human input.

how to APL's improve efficiency and Effectiveness

Effectiveness: Better quality and accuracy, Fewer defects/wastage

Efficiency: Lower labour costs, Less time per unit,

advantages of APL's

-can increase the speed in which products are made

-saves money in the long run due to reduced wage costs

-accuracy and consistency of machinery means reduction in wastage, reducing costs and environmental impacts

disadvantages of APL's

-high initial cost to implement, -ongoing maintenance costs are high

-time-consuming to set up which may interrupt production

-may be a loss of jobs

what is robotics

involves programmable machines that perform repetitive or complex production tasks automatically.

how to robotics improve efficiency and effectiveness

Efficiency:

-increased productivity as they can operate continuously without breaks, increasing volume of outputs using fewer human resources which lowers costs.

-resource optimisation which reduces operational costs and wastage.

Effectiveness:

-quality enhancement as there is precision in assembly, inspection and testing.

-improved safety and robots take over dangerous tasks reducing risk of accidents.

advantages of robotics

-free up employees from repetitive tasks so they can be utilized for more complex jobs

-decreases labour costs, robots can work longer without the need for a break

-improved safety as they take over dangerous tasks

disadvantages of robotics

-Loss of jobs and unemployment may occur

-Training costs for employees learning to use robots, and programming them.

what is computer aided design (CAD)

A software system that enables a product to be created in digital form, modified, analysed and tested before it is put into production.

how does CAD improve efficiency and effectiveness

efficiency:

-improved materials management as businesses can predict the exact number of materials required to produce a product, reducing wastage

-reduction in prototype development as physical prototypes are not needed

effectiveness:

-enhanced creativity by allowing more complex and innovative products to be developed

-improved visualisation as CAD provides a realistic view of the final product enabling better feedback and decision-making

advantages of CAD

-adjustment to designs can easily be made if they're made digitally using CAD

-visual is usually 3D providing a realistic view of the end product helping others provide feedback and adjustments being made easily

disadvantages of CAD

-Software can be expensive

-Trained staff are needed to use the software

what is Computer-aided manufacturing (CAM)

The use of software and computer controlled machinery to manufacture products.

how does CAM improve efficiency and effectiveness

efficiency: -improves speed of production

-reduces wastage as there is high precision in production

-optimising resources and therefore operational costs are reduced

effectiveness: Greater design accuracy: CAD allows precise measurements and detailed designs, reducing errors.

• Improved product quality: Designs can be tested and modified before production, helping ensure the final product meets required standards.

advantages of CAM

-Higher quality and consistency meaning accuracy of end products

-flexibility as design can be altered without need to manually reprogram machines

disadvantages of CAM

-computer errors can occur, slowing down production

-training employees is expensive, -initial set up cost can be expensive

what is Artificial Intelligence

Refers to systems or machines that mimic human intelligence to perform tasks that are traditionally done by humans.

how can AI be applied in operations

-supply chain management, predicting demand to improve inventory management and identifying potential disruptions.

-quality control by detecting defects or anomalies in the processes

how AI improves efficiency and effectiveness

efficiency:

-process optimisation, AI can analyse vast datasets to optimise production, schedules, supply chain and resource allocation, leading to fewer resources being used

-predictive maintenance, AI can predict equipment failures before they occur, reducing downtime and maintenance costs

-automation of repetitive tasks, increases the overall productivity of other staff

effectiveness:-quality, AI systems can detect defects and inconsistencies in products, ensuring high standards of quality

-customisation, enables businesses to offer customised and personalised products and services by analysing customer data and preferences

-reduced labour costs, AI can replace some human labour for some tasks, leading to reduced costs in human resources, improving profits

advantages of AI

-speeds up processes within operations

-improves management of materials

-can perform more repetitive tasks allowing employees to take on more complex tasks

disadvantages of AI

-Initial cost of implementing AI can be very high

-The program can make errors as it relies of human data that is being implemented

-Possibility of job losses.

what is online services

are the use of technology to allow businesses to connect with their customers in some way over an internet connection.

what are the 5 types of online services

Examples:

Websites & mobile applications 

Software as a Service (SaaS)

Online education

Cloud computing

Social media

advantages of online services

-ability to meet increased customer demand as the online services allows more customers to access the products without significantly increasing costs

-reduction in costs as reduction in need for labour or facilities

disadvantages of online services

- investment in cyber security is high

- sale of tangible goods increases environmental costs due to transport

define materials management

the planning, organising and controlling of a business's supplies. The aim is to ensure that businesses have the right type of materials in the right quantities and at the right time

what are the 3 types of materials that need to be managed by a business

-raw materials; winemaker stores grapes to make wine

-work in progress/unfinished goods; storing the wine in barrels

-finished goods (not yet delivered); cartons of wine bottles

why is holding an excessive amount of stock costly

• stock takes up warehouse space

• Unused stock cannot be profited on.

what are the 4 materials management strategies

forecasting, master production schedule, materials requirement planning, just in time

what is forecasting

involves predicting future demand for products based on historical data, market trends and seasonal variations

advantages of forecasting

Sets realistic goals: Forecasts can help businesses establish achievable sales, revenue and production targets.

Improves planning: Helps a business prepare for future demand, allowing it to plan production, staffing and inventory.

disadvantages of forecasting

Can be costly and time-consuming: Collecting data and employing experts to analyse it can require significant time and financial resources.

Based on assumptions: Forecasts often rely on past data and assumptions that future conditions will be similar, which may not occur.

what is a master production schedule (MPS)

details what is to be produced, the quantities of each product to be produced and when they are going to be produced. Outlines the type and number of employees required

advantages of MPS

-can assist with ensuring there are no 'out of stock' periods

-clear plan is provided on how many employees are required and on which days.

disadvantages of MPS

- Using software for MPS can come at significant costs to the business

- Number of products required to be produced in the MPS is often forecast which can be inaccurate and not as flexible to unexpected demand changes

what is materials requirement planning (MRP)

inventory control system that provides an itemised list of materials needed to meet production targets

advantages of MRP

-ensures there are enough materials on hand to meet the production numbers in the MPS

-leads to a continuous flow in production to ensure there are no stops to wait for materials to arrive

disadvantages of MRP

-heavy reliance on accurate data to ensure there are correct materials available

-lacks flexibility to meet a large spike or drop in customer demand

what is Just in Time (JiT)

Where materials are delivered just as they are needed in the production process. Materials are therefore no longer stored for extended periods of time

advantages of JiT

-minimises the amount of idle inventory, reducing the amount of money tied up in materials

-allows continuous flow of production

disadvantages of JiT

- Can be difficult to meet an unexpected spike in demand as there is not enough materials on hand

- increased transportation costs as materials are arriving more frequently

define quality

the standard of excellence of a good or service and their fitness for a stated purpose

what characteristics may a quality product/service have

reliability, durability, smart design features, consistency, speed of delivery, back up services, pleasing appearance

what are the 3 quality improvement strategies

-quality control

-quality assurance

-total quality control

define quality control

Quality control involves checks for defects by performing inspections at various points in the production process to check for defects in the product.

advantages of quality control

-ensures products meet the desired standards before making it to the customer

-identifies errors early so they can be rectified quickly

disadvantages of quality control

-can slow down production if checks occur at regular intervals

-may be expensive if extra employees need to be employees to perform the checks

define quality assurance

system where the business meets a set of predetermined quality standards often set by an independent body

advantages of quality assurance

-improved quality of the end product

-reduces the chance of errors actually occurring leading to greater efficiency

disadvantages of quality assurance

-can be costly to obtain the certification

-takes time to train the employees in the new standards

define total quality management (TQM)

an ongoing, business-wide commitment to excellence that is applied to every aspect of the business's operation. Shares responsibility for quality among all members of the business.

what are the 3 principles behind TQM

Continuous improvement- the belief that no process is ever perfect and things can always be improved.

Customer focus- the entire focus is on the end customer. Improving quality by viewing the product and process through the customer's perspective

Employee empowerment- employees are given responsibility to improve the quality of the business. they meet in small groups known as quality circles to discuss ways to improve quality of the final product

advantages of TQM

- Motivation/Empowered employees therefore improving morale within business

- Reduces wastage and costs

disadvantages of TQM

-employees may become too focussed on improving quality rather than performing work

-can be difficult to gain a business-wide commitment from all employees

-quality circles can be time consuming

define waste minimisation

the process of reducing the amount of unused material, time or labour within a business during its operations

what are the 7 types of waste a business should look to eliminate (hint: TIMWOOD)

Transport, Inventory, Motion, Wait times, Overproduction, Over-processing, Defects

what are some negative effects of waste

-money is wasted on raw materials

-impact on the environment can lead to legal action against the business and negative public perception

what are the 3 strategies to reduce waste

reduce, reuse, recycle

define reduce and give example

decreasing the amount of resources, labour or time discarded during production.

eg. adjusting the number of goods produced each month based on predicted customer demand

define reuse and give example

making use of items that would have otherwise been discarded, either for the same purpose or a different one.

eg. reusing functional parts of defective objects

define recycle and give example

A series of steps that takes a used resource and processes it and manufactures it into a new product. That allow for specific resources to be recycled, such as:

-glass, metals, plastics, paper, batteries, natural waste

advantages of waste minimisation strategies

-Businesses can achieve sustainability objectives, improving effectiveness

-'reuse' involves fewer resources being discarded, improving efficiency, improving profits and greater sustainability

disadvantages of waste minimisation strategies

-reusing certain items may pose certain health and safety risks

-recycling process can be energising and resource-intensive

define lean management

Lean production minimises business waste while improving the value to the end consumer, by applying the pull, one-piece flow, takt, zero defects strategy.

define pull (lean management)

This is where customer demand dictates the rate at which goods or services are produced.

define one piece flow

Involves moving products or materials through the production process one piece at a time, rather than in batches.

define takt

Refers to a consistent, continuous rhythm in production, which is synchronized to meet customer demand.

define zero defects

Preventing errors before they happen by building high-quality processes, so outputs are consistently produced right the first time.

how does lean management improve efficiency

-reduction of waste

-improved productivity

-faster turnaround

advantages of lean management

-reduction of waste

-improved productivity

-continuous improvement

disadvantages of lean management

-significant training to implement training, which is time-consuming and costly

-pressure on employees to continuously improve, potentially causing burnout/overwork

define corporate social responsibility (CSR)

the continuing commitment of a business to go above and beyond its legal obligations to operate in a manner that addresses the wellbeing of employees, customers, the community and the environment

what are the 3 key aspects of CSR implementation into operations

-the environmental sustainability of inputs

-the amount of waste generated from processes

-the production of outputs

how to ensure the environmental sustainability of inputs (CSR)

●Sourcing locally to reduce the carbon footprint and transport costs

●Using renewable energy to power the facility to reduce carbon emissions and minimise energy usage

how to ensure there is little waste generated from processes (CSR)

implementing waste minimisation strategies by making the most efficient use of resources available.

Using technology that perform tasks in a precise and consistent manner to reduce amount of defective products

how to ensure high quality production of outputs

●Packaging decisions that minimise the impact on the environment, such as recyclable or biodegradable materials.

●Providing clear labelling on a product about appropriate methods of disposal.

what are the 3 global considerations for operations management

-global sourcing of inputs

-overseas manufacturing

-global outsourcing

what is global outsourcing of inputs

Definition: Global sourcing of inputs involves a business acquiring raw materials and resources from overseas suppliers.

advantages of global sourcing of inputs

-Access to cheaper materials

-Greater supplier choice

disadvantages of global sourcing of inputs

Transport delays

Ethical concerns

what is overseas manufacturing

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

advantages of overseas manufacturing

-access to cheaper labour rates

-increased production capacity

disadvantages of overseas manufacturing

-Quality control issues

-communtation barriers

what is global outsourcing

Definition: involves transferring specific business activities to an external business in an overseas country.

what are some tasks that businesses regularly globally outsource

manufacturing, software development, social media marketing, call centres, finance, data entry

advantages of global outsourcing

- Improved quality because of access to expert knowledge

- Outsourced provider specialises in tasks, resulting in faster production so production is quicker

disadvantages of global outsourcing

- could be difficult to maintain quality standards, the potential for security issues/breakdown in communication

- communication issues could lead to customer service problems (language barriers)

what is the difference between global outsourcing and overseas manufacturing

Definitions: global outsourcing is where a business gets a completely different business to undertake operations for them, whereas overseas manufacturing is getting their own company in different countries to undertake business actions.

eg.Yakult making their product in Australia and other countries in franchises is overseas manufacturing as it is still Yakult making them, but not overseas manufacturing as a separate business is not completing operations for them.

Whereas Apple getting Foxconn to make iPhones in China is overseas manufacture and global outsourcing.