Unit 3 AOS 3 : Operations Management

Operations Management

The area of the business that is responsible for producing goods and/or services

What does Operations Management Influence?

- Quality of the product

- The price of the product

- Quantities produced to meet customer demand

- How quickly the customer can receive the product

Relationship between Operations Management and Business Objectives

By improving levels of efficiency and effectiveness in a business's productions process

Inputs

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

Processes

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

Outputs

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

Manufacturing business

A business that utilises their operations system to produce physical goods.

Characteristic of manufacturing business

A business that produce tangible goods and have unique operations system characteristics.

Service business

A business that utilises their operations systems to produce intangible products.

Characteristic of service business

A business that provide services that are non-physical, are provided by individuals with specialised expertise, and have unique operations system characteristics.

Automated Production Line

Consists of machinery (often robotics) and equipment arranged in a sequence, usually on a conveyor belt.

Advantages of Automated Production Lines

- Faster production

- cheaper in the long term

- less need for labour.

Disadvantages of Automated Production Lines

- High setup cost

- Machinery can break down, halting production

Robotics

The combination of science, engineering and technology that produces machines, called robots.

Advantages of Robotics

- Robotics are able to work long periods;

- No wages or complaints;

Disadvantages of Robotics

- Expensive to develop and maintain

- Reduces jobs

Computer-aided design (CAD)

A software generates three-dimensional diagrams from a set of input data.

Advantages of CAD

- Reduces errors

- Saves time and materials

Disadvantages of MPS

- Using software MPS can come at a significant cost

- Number of products required is often forecasted which can be inaccurate

Materials Requirement Planning (MRP)

Is an itemized list of all materials involved in production to meet the orders

Advantages of MRP

- Ensures there are materials on hand to meet the production numbers in MPS

- Leads to a continuous flow in production

Disadvantages of MRP

- Heavy reliance on accurate data

- Lacks flexibility to meet a large spike or drop in customer demand

Just in Time

A strategy that mases sure that the right amount of materials and parts arrive just as they are needed for production

Advantages of JIT

- Holding less in storage reduces storage costs

- Less of the businesses finances are tied up in stock

Disadvantages of JIT

- Supplier deliveries must be reliable

- Materials must be received at the appropriate time

Quality Control

is where a business checks goods and services against predetermined standards at regular intervals

Advantages of quality control

- Ensures products meet the desired standards

- Improves customer satisfaction

Disadvantages of Quality Control

- Slows down production if checks occur regularly

- Deemed as reactive

Quality Assurance

A system where the business achieves a set of quality standards to prevent errors from occuring

Advantages of quality assurance

- Improved quality of the end product

- Reduces the chances of errors actually occurring

Disadvantages of quality assurance

- Can be costly and time consuming to implement

- May require a change in culture

Total Quality Management (TQM)

A whole business approach to quality that focuses on continuous improvement.

Advantages of TQM

- Employees are empowered to find new ways to achieve quality

- Quality of products constantly improve

Disadvantages of TQM

- Requires commitment from all employees

- Can be expensive to implement (training employees)

Different Types of Waste (7)

- Transportation

- Inventory

- Motion

- Waiting

- Overproduction

- Overprocessing (doing more work than needed)

- Defects

Waste Minimization Strategies (3)

- Reduce

- Reuse

- Recycle

Reduce

Decreasing number of resources, labour or time wasted during production

Reuse

Making use of items that would have otherwise been discarded

Recycle

Transform items (that would have other been discarded) into reusable items

Lean Management

where a business establishes systems that aim to eliminate waste and inefficiencies in the operations system and maximise customer value

Pull (avoiding overproduction)

Where customer demand determines the rate of production.

One Piece Flow (eliminating wait time)

Involves a piece of production moving through the operations process one at a time

Takt (rate of production to meet customer demand)

the average time that passes between production starting on one unit of a product and the start of production on the next unit in order to meet demand

Zero Defects

striving to eliminate errors throughout production

CSR

The continuing commitment of a business to go above and beyond its legal obligations

Inputs CSR Considerations

- Ensuring suppliers incorporate CSR

- Using local suppliers

Processes CSR Considerations

- Efficient use of resources

- Ethical Disposal of Waste

Outputs CSR Considerations

- Packaging decisions

- Creating goods that are high quality and good value

Environmental Sustainability of Inputs

An operations manager should ensure that the inputs used in the production process do not have a negative impact on the environment

Global sourcing of inputs

The purchase of products from overseas

Global sourcing of inputs advantages

- reduced costs

- accessing resources that are unavailable domestically

Global sourcing of inputs disadvantages

- the risk of ports shutting down and interrupting supply

- difficult to monitor the quality of inputs

Overseas manufacture

A good produced in a different country that is different to the business's headquarters

Overseas Manufacture Advantages

- Production speed improve with the use of highly skilled overseas employees

- Manufacturing plant may be cheaper overseas

Overseas Manufacture Disadvantages

- Poor CSR practices may reflect poorly on the business

- Local employees lose jobs if a business moves manufacturing overseas

Global outsourcing

That some part of the business's operations is transferred to an external person or business

global outsourcing advantages

- The business is able to focus on core activity

- Productivity improves as outsourced provider focuses on their specialize task

Global Sourcing Disadvantages

- Difficulty to maintain quality

- Loss of local jobs

Disadvantages of CAD

- Expensive software

- Reliant on computers.

Computer-aided manufacturing (CAM)

Refers to software and machinery that allow computers to direct and control manufacturing.

Advantages of CAM

- Reduces waste

- Increases production

- Less labour needed.

Disadvantages of CAM

- High cost

- Requires specialists (expensive)

CAD and CAM Relationship

CAM comes after CAD; CAM uses CAD data to manufacture products.

Artificial Intelligence (AI)

The ability of a computer or robot to do tasks that require human intelligence.

Advantages of AI

- Improves efficiency

- Reduces human error

Disadvantages of AI

- Job losses

- Expensive

Online Services

A website is a group of pages on the internet used by businesses to sell products and provide services.

Advantages of Online Services

- Easy customer access

- Global reach

- Convenient.

Disadvantages of Online Services

- cost to develop

- requires maintenance.

Forecasting

Where past data and trends are used to predict future demand so decisions can be made on materials requirements

Advantages of forecasting

- Ensures that a business maintains an appropriate level of materials

- Ensures that a business does not find itself underperforming.

Disadvantages of forecasting

- Forecasting will always be inaccurate

- Unexpected events will occur

Master Production Schedule (MPS)

A plan that describes what is to be produced in what quantity, how and when.

Advantages of MPS

- Business can determine its ideal level of materials

- Clear plan on how many employees will be required

Waste minimisation

Is a process that involves reducing the amount of unwanted or unusable resources created by the business's production process to improve the efficiency and effectiveness.

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