BUSMAN 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

define business objectives

Business objectives are clear, measurable goals a business sets to achieve success , such as increasing profit, expanding market share, or improving customer satisfaction.

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 (e.g. a clay brick from brick manufacturer)

distinguish between inputs and processes

- inputs are what goes into a system or process, whereas processes are the actions or transformations performed on those inputs

-inputs could be data, information, resources or materials whereas processes are the steps or operations that act upon them

distinguish between inputs and outputs

-Inputs are the resources used in the production process, while outputs are the final goods or services produced and delivered to customers.

-Inputs can include information, time, and human effort used in operations, while outputs can involve customer satisfaction, service quality, or business reputation.

distinguish between processes and outputs

-Processes aim to add value by transforming inputs, whereas outputs represent what the business delivers to customers or stakeholders.

-Processes are ongoing activities or tasks within the business, while outputs are the end results of those activities.

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)

distinguish between manufacturing and service businesses

- manufacturing businesses product tangible goods that can be stored whereas service businesses produce intangible services that cannot be stored

-manufacturing businesses have a low level of customer interaction whereas service businesses have a high level of customer interaction

-manufacturing businesses are more capital/machine intensive whereas service businesses are more labour intentsive

what is meant by 'combination of goods and services businesses'?

businesses that provide a combination of goods and services, some with a high goods content and some with a low goods content

combination of goods and services: high goods content

-new car with a service warranty

-meal at a resturaunt with a service component

combination of goods and services: low goods content

- medical treatment

-financial advice

-massage

Define manufacturing business

transforms inputs into a tangible output

Define service business

transforms its inputs into services that are intangible

define efficiency

how well a business uses its resources

define effectiveness

the degree to which a business has achieved its stated objectives

how can technological advancements be used in operations management?

-to improve quality, productivity, accuracy and safety

-it helps businesses gain a competitive advantage

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)

-Online Services

what is an automated production line (APL)

is where equipment and machines are arranged in a sequence with components added to the good as it proceeds through each step, and controlled by computer systems to perform tasks automatically, replacing human effort

how do APL's improve effectiveness

-improve quality and therefore customer satisfaction -customisation of products as machines can change quickly to meet changing market demand

-reduce labour costs

-meet market demand as they can operate around the clock and speed up production

how to APL's improve efficiency

-speed of production increased as machines can work consistently without the need for breaks

-reduction in human error which reduces wastage and product reworking

-consistent operation as machines can work for extended hours without a drop in performance, unlike humans

-resource optimisation as APL's use materials and energy more efficiently reducing wastage and operational costs

advantages of APL's

-can increase the speed in which products are made

-machinery is more accurate than humans

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

-machinery can work longer hours without breaks

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

disadvantages of APL's

-high initial cost to implement

-time-consuming to set up which may interrupt production

-ongoing maintenance costs are high

-machinery may break down, halting production

-may be a loss of jobs

what is robotics

programmable machines that can operate tasks automatically

how to robotics improve efficiency

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

-precision and consistency and therefore wastage

-increased speed by streamlining processes and completing tasks faster than manually

-resource optimisation which reduces operational costs and wastage

how robotics improve effectiveness

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

-adaptability to market needs as programmes can be adjusted to cater to the changing marker demands

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

-reduced operation costs and it uses fewer resources

advantages of robotics

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

-decreases labour costs

-improved safety as they take over dangerous tasks

-greater accuracy and consistency, improving quality

-robots can work longer without the need for a break

disadvantages of robotics

-Initial cost can be high for some robots

-Loss of jobs and unemployment may occur

-Impacts production while introducing robots

-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, analyzed and tested before it is put in production

how does CAD improve efficiency

-streamlines design processes as it allows for rapid alterations to designs without the need to start all over again, reducing time involved in the design phase

-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

how CAD improves effectiveness

• Enhances creativity by enabling more complex, innovative designs

• Improves visualisation with realistic product views for better feedback and decisions

• Allows detailed analysis and testing to fix design flaws before production, improving quality

• Increases market responsiveness by enabling quick design changes to meet customer needs

advantages of CAD

-allows design processes to be completed quicker

-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

-work is more prone to be hacked potentially requiring significant investment into cyber security

what is Computer-aided manufacturing (CAM)

the use of software and computer-controlled machinery to manufacture products

how does CAM improve efficiency

-improves speed of production

-reduces wastage as there is high precision in production

-optimising resources and therefore operational costs are reduced

how does CAM improve effectiveness

-consistent product quality as CAM provides consistent, repeatable and reliable production processes leading to improved reputation and customer satisfaction

-customisation and flexibility which enables businesses to respond effectively to specific market trends and customer needs

advantages of CAM

-Higher quality and consistency meaning accuracy of end products

-improves efficiency by producing products quickly

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

-Cheaper manufacture

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

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: predicts demand to improve inventory management and identify potential disruptions

-process automation by streamlining repetitive tasks which frees up employees to focus on higher value work

-quality control by detecting defects or anomalies in the processes

-customer services as chatbots and virtual assistants can handle customer inquiries, providing 24/7 support

how AI improves efficiency

-process optimisation, 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

how AI improves 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

-enhanced customer experience, AI tools like chatbots and recommendation systems can significantly improve customer service and satisfaction, building stronger customer relationships

-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

-reduction of human error

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

-AI can detect potential security threats and prove additional security precautions

-improves management of materials

disadvantages of AI

-Initial cost of implementing AI can be very high

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

-Possibility of job losses.

what is online services

the use of technology to allow business' to connect with their customers in some way over an internet connection eg. website, mobile apps, social media

what are the 5 types of online services

websites/mobile applications, software as a service, online education, cloud computing, social media

how does online services improve efficiency?

automation: online bookings,order processing, chatbots etc. all reduce manual labour and save time

24/7 availability: websites operate continuously without staff

how does online services improve effectiveness?

customer engagement:social media can build relationships with customers, helping to increase loyalty among brands and consumers and brand trust

wider reach: online presence expands market access beyond local limits

real time feedback: businesses can adapt quickly based on customer reviews or trends

advantages of online services

-increased speed of the service being delivered

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

-increased convenience for customers

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

disadvantages of online services

-investment in cyber security is high

-The initial cost to set up is expensive

-computer/internet may fail, making it challenging to serve customers

-ongoing maintenance costs are expensive

-sale of tangible goods, infrastructure needs to be established to ensure products can be delivered

-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

-financial resources that are tied up in stock cannot be used for other, more productive purposes eg. purchasing more sophisticated machinery

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

-Ensures that a business isn't underproducing due to lack of materials so that it can continue without needing to wait for materials to arrive, improving effectiveness as they can meet customer demand

-Ensures that a business does not find itself underproducing and waiting for materials

-helps prevent overstocking of materials, improving efficiency as materials are not idle for long periods of time. Reducing wastage as items aren't disregarded

how does forecasting improve efficiency?

-inventory management: accurate forecasts prevents overstocking or understocking, reducing spoilage and storage costs

-budget allocation: predicting future trends allows businesses to allocate resources wisely, avoiding unneccessary spending

how does forecasting improve effectiveness?

-strategic decision making: forecasts support long-term planning such as launching new products at the right time

-meeting customer demand: anticipating trends ensures product/service availability, boosting customer satisfaction.

disadvantages of forecasting

-many variables can affect sales and so forecasting may not always be accurate due to internal/external factors

-forecasts are based on past data which can change from year to year, meaning business may under or over produce

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

how does MPS improve efficiency?

-streamlined production: mps coordinates production activities to avoid delays and idle time

-inventory control: it prevents overproduction & excess inventory, saving storage and material costs

how does MPS improve efectivness?

-meets customer deadlines: accurate scheduling ensures products are ready on time, improving customer satisfaction

-aligns with demand forecasts: MPS links production to real market needs, reducing shortages or missed opportunities

advantages of MPS

-business can determine its ideal level of materials required to meet customer demand

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

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

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

how does MRP improve efficiency?

-minimises inventory waste: MRP order only what is needed, when its needed, reducing excess stock and storage costs.

-improves production flow:ensures materials arrive just in time, avoiding delays and idle production time.

How does MRP improve effectiveness?

-ensures product availability: coordinates materials with production schedules so products are made on time

-improves customer satisfaction: on-time production leads to reliable delivery and fulfilled orders

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

-if software is used for a MRP, it can often track the materials through the supply chain to improve production planning

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

-initial cost can be high

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

how does JIT improve effectiveness?

-faster response demand: it enables quicker adjustments to changes in customer orders or market trends

-improve product quality: focus on precision and small batch production allows better quality control

how does JIT improve efficiency?

-minimises inventory costs: reduces the need for storage by recieving materials only when needed

-reduces waste: less excess stock means lower risk of spoilage

advantages of JiT

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

-enables businesses to make better use of space

-result in less wastage from materials perishing, becoming obsolete or damages while being stored

-allows continuous flow of production

-quality of materials is fresher

-reduces loss of storage

disadvantages of JiT

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

-may be unforeseen delays on the suppliers' end which can delay the delivery of materials

-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

define quality

refers to the standard, or degree of excellence of a good or service and its ability to satisfy the customer

what are the 3 quality improvement strategies

-quality control

-quality assurance

-total quality control

define quality control

checks for defects by performing inspections at various points in the production process to check for defects in the product. Benchmarks are set and comparisons are made between the product and the set benchmarks.

how does quality control improve efficiency?

-reduces rework and waste: early detection of defects prevents faulty products from continuing through the process

-lowers costs: fewer errors mean less material, time and labour wasted on fixing problems

how does quality control improve effectiveness?

-ensures consistent quality:QC maintains product standards that meet customer and regulatory expectations

-builds customer trust: high quality products increase customer satisfaction and loyalty

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

-can reduce wastage as errors are identified

-improves customer satisfaction

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

-can be deemed reactive as defects are identified rather than proactively looking to prevent them from the outset

define quality assurance

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

how does quality assurance improve efficiency?

-prevents errors early: focuses on improving processes to avoid defects before they happen, reducing rework

-saves time and costs: consistent procedures mean fewer disruptions and lower inspection or correction costs

how does quality assurance improve effectiveness?

-ensures ongoing quality: QA builds quality into every stage of production, not just at the end

-improves customer satisfaction: products consistently meet expectations, increasing reliability and trust

advantages of quality assurance

-improved quality of the end product

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

-provides customers with the assurance that the product is of good quality by meeting an independent standard

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

How does TQM improve efficiency?

-Reduces waste and errors :through standardised procedures and quality checks

-Encourages continuous improvement: via regular feedback and performance reviews

How does TQM improve effectiveness?

-Improves product/service quality:leading to higher customer satisfaction

-Boosts competitiveness: by delivering consistent, high-quality outputs

advantages of TQM

- Motivation/Empowered employees therefore improving morale within business

- Reduces wastage and costs

- Improves the image of business

- Possible competitive advantage through quality assurance

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

similarities between QA & TQM

-both are proactive, aiming to prevent defects before occurrence

-both focus on process improvement rather than inspecting products