BM U3AOS3

Business Management Unit 3 Area of Study 3

Operations management

Involves coordinating and organising the activities involved in producing the goods or services that a business sells to customers.

Efficiency

Is how productively a business uses its resources when producing a good or service.

Effectiveness

Is the extent to which a business achieves its stated objectives.

Inputs

Are the resources used by a business to produce goods and services. e.g. labour resources (employees), raw materials such as flour and iron, capital resources such as equipment and machinery, time.

Processes 

Are the actions performed by a business to transform inputs into outputs. e.g. mixing, designing, baking, computing, cutting

Outputs 

Are the final goods or services produced as a result of a business’s operations system, that are delivered or provided to customers.

Manufacturing businesses

Use resources and raw materials to produce a finished physical good.

Service businesses 

Provide intangible products, usually with the use of specialised expertise.

Automated production lines

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

Robotics

Are programmable machines that are capable of performing specified tasks.

Computer-aided design (CAD)

Is digital design software that aids the creation, modification, and optimisation of a design and the design process.

Computer-aided manufacturing (CAM)

Techniques involve the use of software that controls and directs production processes by coordinating machinery and equipment through a computer.

Artificial intelligence (AI)

Involves using computerised systems to simulate human intelligence and mimic human behaviour

Online services

Are services that are provided via the internet.

Forecasting 

Is a materials planning tool that predicts customer demand for an upcoming period using past data and market trends.

Master production schedule (MPS) 

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

Materials requirement planning (MRP) 

Is a process that itemises the types and quantities of materials required to meet production targets set out in the master production schedule.

Just in Time (JIT) 

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

Quality 

Is a good or service’s ability to satisfy a customer’s need.

Quality control 

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

The effect of quality control on efficiency

• Identifying and fixing cause of error prevents error from reoccurring, results in less waste during production. Reducing waste = business optimise use of resources.

• Reduces the number of potential errors that could halt production, enabling the operations system to flow without interference, increasing productivity.

The effect of quality control on effectiveness

Removing defective products prevents customers from receiving faulty goods or services. This can allow a business to meet the objectives of increasing sales and market share.

Advantages of quality control

• Provide customers with consistently high-quality products = improve a business’s reputation

• Reducing the number of faulty goods or services that are sold to customers can minimise the number of refunds the business is required to complete.

Disdvantages of quality control

Quality assurance 

Involves a business achieving a certified standard of quality in its production after an independent body assesses its operations system.

Total Quality Management (TQM) 

Is a holistic approach whereby all employees are committed to continuously improving the business’s operations system to enhance quality for customers.

Waste minimisation 

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

Reduce 

Is a waste minimisation strategy that aims to decrease the amount of resources, labour, or time discarded during production.

Reuse 

Is a waste minimisation strategy that aims to make use of items which would have otherwise been discarded.

Recycle

Is a waste minimisation strategy that aims to transform items which would have otherwise been discarded.

Lean management 

Is the process of systematically reducing waste in all areas of a business’s operations system whilst simultaneously improving customer value.

Pull

Is a lean management strategy that involves customers determining the number of products a business should produce for sale.

One-piece flow 

Is a lean management strategy that involves processing a product individually through a stage of production and passing it onto the next stage of production before processing the next product, continuing this process throughout all stages of production.

Takt

Is a lean management strategy that involves synchronising the steps of a business’s operations system to meet customer demand.

Zero defects 

Is a lean management strategy that involves a business preventing errors from occurring in the operations system by ensuring there is an ongoing attitude of maintaining a high standard of quality for the final output.

Corporate social responsibility (CSR) 

Is the ethical conduct of a business beyond legal obligations, and the consideration of social, economic, and environmental impacts when making business decisions.

Global sourcing of inputs

Involves a business acquiring raw materials and resources from overseas suppliers.

Overseas manufacture 

Involves a business producing goods outside of the country where its headquarters are located.

Global outsourcing

Involves transferring specific business activities to an external business in an overseas country