unit 3 aos 3 busman sac - edrolo simple terms

Operations management

The coordination of resources within a business to achieve the efficient and effective output of finished goods and services

Effectiveness

Extent to which a business achieves its stated objectives

Efficiency

How productively a business used its resources when producing goods or services

(Materials, labour, machinery, time, tech)

Business objectives

• profit

• increase market share

• fulfil market need

• fulfill social need

• meet shareholders expectations

• improve efficiency and effectiveness

Key elements of an operations system

Inputs, processes, outputs

Inputs

Resources used by a business to produce a good or service

Processes

What is done to the inputs to transform them into the finished output

Outputs

The final good/service produced as a result of a business operations system that are provided to customers

Standardized goods

Goods that are produced consistently and are virtually identical to one another

capital intensive

When a business uses a high degree of machinery and equipment during the production process

labour intensive

When a business uses a high degree of employee involvement during its production process

 Goods

• Tangible

• Productions/consumption separable

• easily stored

• standardised/mass produced

• minimal customer contact

• mainly capital-intensive production

 Services

• Intangible

• Production/consumption occur simultaneously

• difficult to store

• often customised

• high degree of customer contact

• mainly labour intensive production

 automated production lines -  tech strategies

machinery and equipment that are arranged in a sequence where the product is developed as it proceeds through each step

Robotics -  tech strategies

programmable machines that are capable of performing specified tasks that can help assist humans

 CAM Computer aided design -  tech strategies

Digital design software that aids the creation, modification and optimisation of a design and the designing process

3D designs, architect/engineers

• email to clients

• customer flexibility to adapt design

• reduce waste

• increase creativity

• Training to operate expensive initially if fails disruptive

CAM  computer aided manufacturing -  tech strategies

The use of software that controls and directs production processes by coordinating machinery and equipment through a computer

construction robots, 3D printing

• customer flexibility to adapt design

• reduce waste

• increase creativity

• Training to operate expensive initially if fails disruptive

 AI - tech strategies

Computerised systems designed to simulate human intelligence and mimic human behaviour by perceiving an environment and taking action, maximising the chance of achieving goals

• customer flexibility to adapt design

• reduce waste

• increase creativity

• Training to operate is expensive initially if it fails, disruptive

• bad for the environment

Online services - tech strategies

Websites, apps, and platforms that allow businesses to provide their services to customers throughout the internet

+ employee flexibility

+24/7 access around the world

+ reduces cost/decreases of physical brick and motor store

tech strategies pros/cons

+ High accuracy/precision=high-quality=reduced waste

+24/7 production

+reduces repetitive human tasks

- expensive to set up

- if fails caused disruptions

- large scale redundancy

 Materials management

Involves organizing and monitoring the delivery, storage, and use of raw materials required for production

Materials management strategies (MMS)

• forecasting

• MPS - Master Production Schedule

• MRP- Materials Requirement Planning

• JIT- Just-in-time

 Forecasting MMS

Materials planning tool that predicts customer demand for an upcoming period using past data and marketing trends

predicts what/quantity of materials

 Considerations:

• special customer demand times EG) Christmas

• supplier delivery times

• price fluctuations winter/summer demand

• market conditions changing

+ Anticipates seasonal changes, reduces waste, save storage

- Unexpected events can occur, Takes lots of time to track, anticipate and analyse all potential impacts on the supply chain

 MPS master production schedule MMS

A plan that outlines what a business intends to produce in specific quantities within a set period of time

•  what, how, when, where, who, which

+ Aids in determining accurate order quantities, saves time and costs, clear for staff to understand, reduces waste

- Time-consuming, expensive, difficult to account for every situation, not flexible to changing conditions

 MRP materials requirement planning MMS

Breaks down the MPS to calculate the exact types and quantities of raw materials and inputs needed to produce finished goods

factors in the specific materials required, supplier lead times, and the amount of stock currently held.

+ Helps minimise storage costs, prevents overproduction, and reduces waste.

- initially expensive and time-consuming to set up/track

JIT - just in time MMS

 An inventory control approach that delivers the correct type and quantity of materials as soon as they are needed for production

+ elimination of waste

- relies on supply to deliver on time possible, increase on delivery costs

Quality strategies QS

• Quality control

• Quality assurance

• TQM - Total QuaQualitylity Management

Business quality and competitiveness

 A good or service’s ability to satisfy a customer’s needs.

Reliable, durable, delivery, consistent.

 Increase quality = better product reputation = more sales

 Quality control QS

Inspecting a product at various stages of the production process to ensure it meets designated standards and discarding those that are unsatisfactory

 Check and reject principal = a reactive process

 detect and reject faults once they have occurred, rather than prevent them from happening in the first place

• establishment standards of quality

• regular inspections

• comparison of standards

• removal

+Prevents poor quality, inexpensive, easier for new staff to learn

- wasteful. doesn't always isolate the cause of the effect, may slip through

Quality assurance QS

When a business achieves a certified standard quality in its production after an independent body assesses its operation system

Proactive = build quality production to avoid errors in the first place

+Marketing, competitive advantage, reduction of waste

-expensive, preparing documents for inspection takes time

TQM - Total Quality Management QS

A holistic approach whereby all employees are committed to contributing to improving the business operation systems to enhance quality for customers, with 0 defects

• strives for continuous improvement

• customer focused

• employee participation needed

+zero defects, employee empowerment, reduces waste

 - requires whole business’s cultural shift, time consuming

Waste minimization WMS (RRR)

The process of reducing the amount of unused material, time or labour within a business

 Reduce WMS

Aims to decrease the amount of resources, labour, or time discarded during production

Reuse & Recycle

Aims to make use of items that would have otherwise been discarded

 Lean management - umbrella term for 4 principles

The process of systematically reducing waste in all areas of a business’s operation system, whilst improving customer value

• Pull

• One-piece-flow

• Takt

• Zero defects

+reduces waste, increases efficiency, effective, customer satisfaction

- continuous improvement mentality

 Pull - Lean management

Production of the goods/services only starts when a customer places an order

• pulls at production system with their demand

 One-Piece-flow - Lean management

 Operation process focuses on one good/service at a time

Takt - Lean Management

Seeks to create rhythm where all steps in the production of the goods/services are synchronized to create a continuous flow

Zero defects - Lean Management

Striving for perfection by continuously improving until the operations process achieves zero defects

Global sourcing of inputs

A business acquiring raw materials and resources from overseas suppliers

Overseas manufacturer

A business providing goods/services outside of the country where its headquarters are located

Global outsourcing

Transferring specific business activities to an external business in an overseas country

Including HRM, payroll, IT support, call centres, operations and production to be completed by an external business on your behalf

 CSR

A business's ethical obligation to go above and beyond legal requirements to consider its social, economic, and environmental impact

• Waste, inputs, processes, outputs

TBFIC - CSR

Philosophy of giving back to the community

• little waste from production

• Uses local and regional suppliers for ingredients

• partnered with local First Nations people to produce a special line of ‘bushfood’ flavours to sell at Tower Hill

TBFIC - 4 lean management

PULL:

• manufacturers seasonally = Pull system

• produced September-April

ONE-PIECE FLOW:

• manufacturing one product fully before repeating the process

• Once one flavour is complete, another will be produced

ZERO DEFECTS:

• ensure standards, processes and procedures are rigorous

• staff are consistently aware of their importance in their role in the business, so mistakes don’t occur, and if they do, are picked up

TBFIC - WM

REUSE:

• plastic tub

• mobile vans

REDUCE:

• Uses solar power, reducing reliance on grid electricity - money on bills

RECYCLE:

• cardboard packaging that indreigents arrive in is returned to suppliers to be recycled.

TBFIC - TQM

• submit a suggestion about how to improve a procedure, process, policy

• staff meet regularly to do this as a collaborative group

• flavour development

TBFIC - quality assurance

• DFSV (Dairy food safety vic) -

  Requires TBFIC to have its food safety plan tested monthly for both products and water.

• HACCP (hazard analysis critical control points) - critical to the provision of safe food to the community

TBFIC - quality control

• uses an app to monitor freezer temp and notifies staff

• The red line painted sets a barrier to prevent contamination

• human taste testing

TBFIC - Achieve business objectives by:

profit-

• Icecream formula

Increase market share-

• Confined itself to SW VIC,

• brand recognition/local spending

Improving efficiency- making a product with 0 defects. Efficiency increases as they move to a new factory + new tech

• automated production of pumping product into buckets.

• use of bigger and continuous ice cream churns for greater consistency and fast churning rate

• 4 smaller blast-freezers into 2 larger ones

Improving effectiveness -

• commitment to outstanding quality of product

• dense/high quality = more profit

Fulfilling market need-

• Uses farm fresh and local ingredients - point of difference

Fulfilling social need-

• Supports local farmers - milk

TBFIC - cost of introducing new tech

Capital investment needs to be justified with increased revenues and profitability

If the cost of technology does not result in more ice cream being produced or creates delays, then the cost of implementing technology may not be warranted.

TBFIC - KEY ELEMENTS OF OPERATION SYSTEM:

inputs, processes and outputs

inputs

• ingredients = milk, cream, sugar, labour, equipment, capital, factory

Processes

• Actions = Churning/flavouring/packaging ice cream, cleaning factory

Outputs

• = Timboon Fine Ice Cream

TBFIC - MRPS

Determines how regularly the ingredients for the ice cream are delivered and coordinates them so that they can be put into production quickly

• JIT

• milk 1-2 per week, cream weekly, skim milk powder monthly

TBFIC - MPS

The bulk of September to April = greatest demand

Slows/stopped July/August

take into account:

• past sales data to determine production schedule

• new factory capacity (new consideration)- more storage

• staffing - rostering core and non-core staff

• peaks and troughs of milk production/customer demand

TBFIC - Tech

• online services = website- where to buy, book vans, flavours, info

• social media

• website allows wholesalers/supermarkets to get in touch

TBFIC- CHARACTERISTICS OF OPERATION MANAGEMENT (MANU&SERVICE)

• built a new factory, redesigning the manufacturing process to be more effective and efficient

• manufacturing process now has fewer steps 9 to 6 (efficient)

• Can now produce greater amounts of ice cream (effective)