Business Management Unit 3 AOS 3

Operations Management (Definition)

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

Efficiency (Definition)

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

Effectiveness (Definition)

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

Inputs (Definition)

are the resources used by a business to produce goods and services.

Processes (Definition)

are the actions performed by a business to transform inputs into outputs.

Outputs (Definition)

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

Manufacturing Business (Definition)

Manufacturing businesses use resources and raw materials to produce a finished physical good.

Service Business (Definition)

Service businesses provide intangible products, usually with the use of specialised experience.

Technological Strategies

Automated production lines, Robotics, Computer-aided design, Computer-aided manufacturing techniques, Artificial intelligence, Online services

Automated Production Lines (Definition)

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

Ads of Automated Production Lines

- Tasks can be performed faster

- Technology can complete tasks for extended periods without breaks

- Tasks performed precisely and accurately

Disads of Automated Production Lines

- Poor reputation if employees are made redundant for technology

- High initial setup costs

- Expensive to repair and update

Robotics (Definition)

are programmable machines that are capable of performing specified tasks.

Ads of Robotics

- Tasks performed precisely and accurately

- Minimises errors and waste

- Employees don't have to complete dangerous tasks

Disads of Robotics

- Poor reputation if employees are made redundant for technology

- High initial setup costs

- Expensive to repair and update

Computer-aided Design (Definition)

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

Ads of Computer-aided Design

- Greater accuracy in production design process results in consistent levels of quality

- Flexibility in designs to meet customer needs

- Speeds up product design process

Disads of Computer-aided Design

- Poor reputation if employees are made redundant for technology

- High initial setup costs

- Expenses to train employees

Computer-aided Manufacturing Techniques (Definition)

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

Ads of Computer-aided Manufacturing Techniques

- Improved accuracy allows for high quality products

- speeds up the manufacturing process

- Decreases labor expenses

Disads of Computer-aided Manufacturing Techniques

- Poor reputation if employees are made redundant for technology

- High initial setup costs

- Sudden breakdowns cause production to stop

Artificial Intelligence (Definition)

involves using computerised systems to simulate human intelligence and mimic human behaviour.

Ads of Artificial Intelligence

- Provides 24/7 customer service

- Performs complex functions with precision

- Decreases labor expenses

Disads of Artificial Intelligence

- Poor reputation if employees are made redundant for technology

- High initial setup costs

- Costly to recalibrate and maintain

Online Services (Definition)

are services that are provided via the internet.

Ads of Online Services

- Processes orders accurately increasing customer convenience

- Processes bookings faster

- Increases customer exposure

Disads of Online Services

- Cost involved to use established platform

- Technical difficulties may occur

- Deters customers that lack technological skills

Materials Management (Definition)

involves organising and monitoring the delivery, storage, and use of materials required for production.

Materials Management Strategies

- Forecasting

- Master Production Schedule

- Material Requirement Planning

- Just in Time

Forecasting (Definition)

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

Ads of Forecasting

- Improves the ability to meet customer demand

- Prevents excessive ordering of materials that go to waste

- Prevents taking up valuable storage space

Disads of Forecasting

- Unable to meet unexpected increases in customer demand

- Incorrect quantities if historical data and market trends don't reflect future demand

Master Production Schedule (Definition)

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

Ads of Master Production Schedule

- Prevents producing excessive amounts of products, reducing waste

- Businesses are more likely to meet customer demand

Disads of Master Production Schedule

- Not a flexible program is unhelpful for businesses constantly changing details of their operations system

- Time consuming to track, record, and write manual

- Difficult to account for every situation

Materials Requirement Planning (Definition)

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

Ads of Materials Requirement Planning

- Ensures the business has the exact materials it needs

- Avoids excess storage expenses

Disads of Materials Requirement Planning

- Expensive to set up system

- Time consuming to constantly measure stock

Just in Time (Definition)

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

Ads of Just in Time

- Eliminates idle stock, therefore reducing the amount of stock wasted from expiry or damage

- Allows switching to production of a different product as there is less materials on hand

- Reduces storage costs and expenses associated with waste

Disads of Just in Time

- Reliant on suppliers delivering on time, all the time

- Delivery costs may increase

- May cause a fail to meet customer demand

Quality (Definition)

is a good or service's ability to satisfy a customer's need.

Quality Control (Definition)

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

Ads of Quality Control

- Consistent high quality products and minimal faulty goods or services received increases business reputation

- Minimises the number of refunds

- Inexpensive to implement

Disads of Quality Control

- Does not actively reduce wastage

- Time consuming to identify and address errors

- Errors are eliminated after they are produced causing waste

Quality Assurance (Definition)

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

Ads of Quality Assurance

- Reduces number of defective products produced

- External certification improves competitiveness

- Minimises resources wasted

Disads of Quality Assurance

- Employee training required for new procedures

- Time consuming to complete documentation for external body

- Expensive

Total Quality Management (Definition)

is a holistic approach to quality and a commitment to excellence where all employees are involved in the continuous pursuit of quality in everything they do.

Ads of TQM

- Zero defects

- Employee empowerment

- Reduced wastage

Disads of TQM

- Costly

- Time consuming

Waste Minimisation (Definition)

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

Reduce (Definition)

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

Reuse (Definition)

aims to make use of items which would have otherwise been discarded.

Recycle (Definition)

aims to transform items which would have otherwise been discarded.

Lean Management (Definition)

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

Ads of Lean Management

- Improves reputation by reducing waste

- Quality is improved

- Reduces production costs

- Reduces time wasted between tasks

Disads of Lean Management

- Suppliers may not deliver materials on time

- Employees may be reluctant to commit to zero defects

- Costly to implement

- Time consuming

Pull (Definition)

involves customers determining the number of products a business should produce for sale.

One-Piece Flow (Definition)

involves processing a product individually through a stage of production and passing it onto the next stage of production before processing the next product

Takt (Definition)

involves synchronising the steps of a business's operations system to meet customer demand.

Zero Defects (Definition)

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 (Definition)

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

Ads of CSR

- Implementing CSR improves business reputation

- May improve efficiency of production process

- Customers may pay more for ethical goods and services

Disads of CSR

- May decrease productivity

- Time consuming

- Expensive

CSR Considerations for Inputs

- sourcing inputs from suppliers that use environmentally-sustainable methods

- sourcing inputs locally

- implementing operations strategies to reduce the risk of over-ordering inputs

- purchasing energy-efficient machinery

- installing reusable, renewable, and/or clean energy sources.

CSR Considerations for Processes

- using technology that performs tasks in a precise and consistent manner

- developing methods to capture and recycle unused or excess input materials

- implementing operations strategies to reduce the number of materials being unnecessarily wasted.

- disposing of any harmful waste that cannot be treated

- developing policies that promote the efficient use of energy

- training employees on how to minimise waste.

CSR Considerations for Outputs

- developing an alternative product that is more environmentally friendly

- creating products that have recyclable or biodegradable elements

- eliminating as much plastic as possible in the packaging

- delivering products to retailers in bulk

- offering customers incentives for returning the product at the end of its life cycle

- labelling on a product about appropriate methods of disposal

Global Sourcing of Inputs (Definition)

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

Ads of Global Sourcing of Inputs

- Higher quality material

- Cheaper materials

- Can get materials not available in country

Disads of Global Sourcing of Inputs

- Government tariffs

- Time consuming for delivery

- Materials may be damaged

Overseas Manufacturing (Definition)

involves a business producing goods or services outside of the country where its headquarters are located.

Ads of Overseas Manufacturing

- Greater access to highly skilled employees

- Cheaper production costs

- Allows overseas workers to support their family

Disads of Overseas Manufacturing

- Takes away jobs from locals

- Delivery may be time consuming

- Goods may be damaged

Global Outsourcing (Definition)

involves transferring specific business activities to an external business in an overseas country.

Ads of Global Outsourcing

- Improves quality of business activities

- Allows a focus on businesses own expertise

- Decreases labour costs

Disads of Global Outsourcing

- Reduced control of business activities

- Difficult to communicate

- May have poor CSR practises