Operations management
Involves the management of the production/transformation process to ensure that the best product or service is created
Business Inputs
Labor, Capital, Enterprise, Land
Business Outputs
The final goods or service that is created
Triple bottom line
When a business considers all Economic, Social, and Environmental responsibilities when managing their operations
Production methods
Job/customised , mass , batch (cell)
Job/customised production
The production of unique items that are tailor made to the needs of individual customers
Features of job/customized production
Skilled labour and slow method
Benefits of job/customized
Built exactly for the needs of customers = higher selling price
More motivated workers
Limitations of job/customized
Small scale of output = high average costs
Cash flow problems
Mass production
Highly automated assembly of products
Features of mass production
Capital intensive because of more machinery
Massive economies of scale
Benefits of mass production
Capital intensive = high productivity, low average cost, low selling price
Less skilled workers = lower wages
Automated process = less probability of error
Limitations of mass production
Massive set up costs
Labour is unmotivated
Least flexible production method
Batch production
Producing items in identical groups
Features of batch production
Producing large quantities
A range of products to be produced
Benefits of batch production
Variety of products = can meet different target markets
Production is flexible
One machine, more products = less investment and set costs
Capital intensive
Limitations of batch production
Storage costs can be high
Low motivation
High productivity costs
Unsuitable for tailored products
Cell production
Employees work in teams and take joint responisbility
Benefits of cell production
Teamwork
Low labour turnover
High motivation
Multi-skilled labour
Limitations of cell production
Investments in staff training
Factories to be redesigned
Lower productivity than mass
Efficiency
How well the products are produced
Higher quality, speed, results, and lower costs
Waste
How bad the products are produced
TIM WOOD (Time, Inventory, Motion, Waiting, Over-processing, Over-production, Defects)
More efficiency equals...
Less waste
Lean production
Umbrella term for techniques that aim at reducing waste. Aim is to produce high quality products with minimal resources
Kaizen
Regular, scheduled meetings, where staff are invited to say their opininons
Just-in-time
JIT production aims to minimise costs by reducing or eliminating stock held by a firm. It works by placing smaller regular orders that are delivered just in time
Kanban
Regulates the supply of components through a card system
Andon
Notification system that alerts workers to potential problems in the manufacturing process
Cradle to cradle manufacturing
C2C is a model of designing and creating to minimise the negative effects on environment and stakeholders - focus on sustainability
Technical cycle (C2C)
Raw materials - production - product - use - return - diassembly - REPEAT
Quality control
Occurs at the end. Products are checked to assess if they meet an agreed criteria based on physical dimensions, etc and work withing tolerances (usually ±1% from desired result)
Quality assurance
Quality assurance systems attempt to overcome problems by involving all staff in the quality process
Quality improvement
If they adapt a quality improvement policy, they'll see improvement as a continuous process in which it is always possible to improve product quality
Total quality management
Every employee is responsible for manufacturing the overall quality
Quality circles
A group of employees that meets regularly to discuss potential improvements to product quality
Benchmarking
Comparing your company to others and learn from them
Factors that affect location
Labor costs, land costs, external economies of scale, transportation and infrastructure, government assistance, international factors, company history
Outsourcing
Paying an outside company to carry out a task that may have traditionally been seen as an internal business function
Subcontractor
An external company/individual that carries out the task that was outsourced
Insourcing
Ending contracts with subcontractors to carry out tasks that were outsourced before internally
Offshoring
Relocation of a business to another country
Supply chain management
Managing the flow of supplies through the sourcing of inputs, transformation processes, and delivery of outputs
Just-in-case
Just in case stock control involves holding relatively large levels of buffer stocks so that a business can continue to operate when faced with an unforeseen event
Stock control charts
Graphs to monitor and analyze stock levels. They record when stock is delivered and sold
Cost to buy
CTB = price x quantity
Cost to make
CTM = fixed costs + (variable costs x quantity)