Unit 3 Aos 3 Business Management

Operations Management

The area of management responsible for managing the process of transforming inputs into finished goods or services.

Efficiency

The ability of a business to optimize its resources by maximizing the amount of outputs generated from a minimum level of inputs.

Effectiveness

The degree to which a business has achieved its stated objectives.

Relationship between operations and business objectives

The operations area creates the goods or services that allow a business to achieve its broader targets, such as using technology to lower costs to maximize the profit objective.

Inputs

The resources used by a business to produce goods or services, including raw materials, labour, equipment, time, and information.

Processes

The transformation activities that convert raw inputs into final outputs.

Outputs

The final product or service delivered to the end customer.

Tangibles

Physical goods that can be seen and touched, stored, and produced separately from consumption.

Intangibles

Non-physical products or services that cannot be touched or stored, and are consumed as they are produced.

Manufacturing Business

A business that uses inputs to produce tangible goods.

Service Business

A business that uses inputs to produce intangible services.

Characteristics of Manufacturing versus Service

Manufacturing features low customer contact, high capital/machinery intensity, and output that can be stored. Service features high customer contact, high labor intensity, and intangible output consumed instantly.

Automated Production Line

A series of workstations linked by a transfer system where electronic or mechanical devices perform sequential assembly tasks.

Computer-Aided Design

A software program that allows a business to create, modify, and test product designs digitally before physical manufacturing.

Computer-Aided Manufacturing

Software that controls machine tools and automated machinery in the manufacturing process.

Website Development

The design and implementation of an online platform to facilitate customer interactions, sales, or operational processes.

Artificial Intelligence

The simulation of human intelligence by computer systems to perform complex tasks, analyze data, and optimize decision-making in operations.

Materials Management

The planning, organizing, and controlling of the supply, storage, and movement of raw materials and inventory.

Forecasting

A materials management strategy that uses historical data and market trends to estimate future demand for materials.

Master Production Schedule

A detailed plan specifying what products a business will manufacture, in what quantities, and at what specific times.

Materials Requirement Plan

An itemized list of all the exact raw materials, components, and quantities required to fulfill the Master Production Schedule.

Just In Time

An inventory management strategy where materials arrive at the production facility precisely as they are needed, minimizing inventory storage costs.

Quality Management

The strategy a business uses to ensure its outputs meet or exceed customer expectations and regulatory standards.

Quality Control

A reactive quality strategy involving inspections at various stages of production to identify and eliminate defective items.

Quality Assurance

A proactive quality strategy where a business's processes are audited and certified by an independent external body against predefined quality standards (such as the International Organization for Standardization 9001 standard).

Total Quality Management

An ongoing, organization-wide commitment to continuous improvement, employee empowerment, and customer focus to eliminate defects.

Lean Management

A systematic approach to operations designed to eliminate waste and maximize customer value through continuous improvement.

The Seven Wastes of Lean

The operational inefficiencies lean management aims to eliminate: Transportation, Inventory, Motion, Waiting, Overproduction, Overprocessing, and Defects.

Pull Strategy

A lean principle where production is triggered directly by actual customer demand rather than forecasted demand.

One-Piece Flow

A lean strategy where products move through the production process one unit at a time without bottlenecking or accumulating inventory.

Takt Time

The rate of production required to match the rate of customer demand.

Kaizen

A lean principle focused on continuous, small incremental improvements in operational processes by employees.

Zero Defects

A quality and lean target that strives for complete error prevention throughout the operational process.

Waste Minimisation

The process of reducing the amount of unused or discarded resources generated during the transformation process.

Reduce

A waste minimisation strategy focused on minimizing the amount of raw materials or energy consumed during production.

Reuse

A waste minimisation strategy involving the repurposing of materials or components multiple times within operations.

Recycle

A waste minimisation strategy where waste materials are converted into reusable raw materials for new products.

Corporate Social Responsibility

The ethical obligation of a business to go above and beyond legal requirements to account for the social, environmental, and economic impacts of its operations.

Global Sourcing of Inputs

The practice of purchasing raw materials, equipment, or components from suppliers located in international markets.

Overseas Manufacture

The production of a business's final goods or services in a facility located in a foreign country.

Global Outsourcing

The business practice of contracting specific operational functions or business tasks to an external, third-party business located in an overseas country.

Supply Chain Management

The coordination and monitoring of the entire flow of goods, services, and information from raw material suppliers to the final end consumer.