UNIT 3 AOS 3 - OPERATIONS MANAGEMENT

Operations Management

All of the activities in which managers engage to produce goods or services

Efficiency

How well a business uses its resources to achieve objectives

Effectiveness

Degree to which a business has achieved its stated objectives

Productivity

How many inputs it takes to produce an output

Input

Resources such as raw materials, labour, plants, equipment, capital, information used in any organisational production system.

Operations system

The series of procedures and processes an organisation undertakes in order to create it’s outputs of finished goods and services through the transformation of inputs.

Processes

A set of coordinated tasks and activities conducted y people and equipment that will lead to accomplishing a specific organisational goal, such as production of a product/service.

Transformational processes

Conversion of inputs (resources) into outputs (goods or services)

Input categories

MTCLIM

• Materials

• Capital equipment

• Labour

• Information

• Time

• Money/finances

Output

End result of a business’ efforts - the product or service that is delivered or provided to the consumer.

Manufacturing Characteristics

• Tangible

• Stored as inventory

• Production/Consumption not linked

• Customer not involved in production

Service Characteristics

• Intangible

• Not stored as inventory

• Production/Consumption linked

• Customer involved in production

Technological Strategies

• APL

• Robotics

• AI

• Computer aided Manufacturing

• Computer aided design

• Online services

Automated production lines

Machinery and equipment arranged on a sequence with components added to the good as it processes through each step

APL E/E

Efficiency: Costs (don’t pay as many staff)

Consistency/precision

Can work 24/7

Effectiveness: Reduce cost of wasted resources = profit

Strengths: Fast = higher output

Less labour = profit

Accuracy

24/7 work

Less waste

Weaknesses: High cost to buy, maintain and replace

can break

loss of jobs

Robotics

The combination of science, engineering and technology that produces machines

Robotics E/E

• Precision that humans dont have

• Can replace staff in dangerous jobs
  
  

• High cost - small and medium businesses

Computer aided design

Computerised design tool that allows a business to create product possibilities from a series of input parameters

Computer aided design E/E

Efficiency: No time and resources wasted on prototypes

Save money
Can be done quicker than by hand

Effectiveness: Precise = profit

Strengths: Designs products quickly

Improves overtime

Modification/customisation

Weaknesses: Can crash

Expensive

Time/cost to train staff

Loss of jobs

Computer aided manufacturing

Software used to allow the manufacturing process to become comupter directed by designing and controlling the process

Computer aided manufacturing E/E

Efficiency: Costs

Less wastage

24/7

Effectiveness: Increase profit with reduced cost and wastage

Strengths: Faster rates and reduced costs

Consistency

No breaks needed

Weaknesses: Crash/break

Task specific

Upfront cost

Loss of jobs

Costs to train staff

Artificial Intelligence

Ability of a computer or robot controlled by a computer to do tasks that are usually done by humans. They require human intelligence and discernment.
EG. Bea, woolies AI

Materials Management

the series of strategies that manages the use, storage and delivery of materials to ensure the right amount of inputs is available when required in the operations system

Forecasting

is a materials planning tool that relies on data from the past and present and analysis of trends to attempt to determine future events

• Appropriate material levels

• Wont under produce
  

• Historical data isnt always accurate

• will never be exact

Production plan

is an outline of the activities undertaken to combine resources (inputs) to create goods or services (outputs).

Master production schedule

a plan that describes what is to be produced, in what quantities, how and when. The plan is linked to specific delivery dates or contracts for delivery in the future.

Materials requirement planning

completed after the business has a clear understanding of the quantities to be produced and the time frame involved. It is an itemised list of all materials involved in production to meet the specified orders.

MPS and MRP

• Avoid overproducing

• Avoid underproducing

• rely on accuracy

• costly

Just in time

a materials management strategy that ensures that the exact amount of material inputs will arrive only as they are needed in the operations process.

• Reduced storage costs

• Less risk of waste occurring in storage

• Smooth production

• Gotta have reliable suppliers

• Has to come at the right time

• Increased transport costs

Quality

The degree of excellence of goods or services and their fitness for a stated purpose

Quality control

The use of inspections at various points in the production process to check for problems and defects

Effectiveness:

• Less waste = less cost = more profit

• Quality = customer satisfaction = profit
  

Efficiency:

• Reduces waste

• Consistency

• Quality

• Internal benchmark

• Ongoing process

• Reactive (waits for defect to happen)

• Internal benchmarks may be low

Quality Assurance

The use of a system so that a business achieves set standards in production

PROACTIVE (Prevents defects)

• Guarantee quality

• Prevents defectives getting to customers

• Less wastage

• Costly and time consuming

  Effectiveness: Quality = more sales

  Efficiency: Prevents defects = less wastage
  

Total Quality Management

Ongoing, business wide commitment to excellence that is applied to every aspect of the business operations


Customer Focus
Continuous improvement

Employee empowerment

• Improve competitiveness

• Improved product quality

• Customer focused/improving

• Expensive/timeconsuming

• Relies on everyones participation

• Staff gotta be trained to do it
  

Effectiveness:

• TQM = quality =sales

Efficiency:

• Less idle time (resources) bc constantly improving

Waste Minimisation

Process involving reduction of the amount of unwanted or unusable resources produced by a business in an attempt to improve the efficiency and effectiveness of operations

Reduce

Achieved by creating less waste

• decreases costs, improve efficiency

• May include: JIT, automation, QA/TQM

Reuse

Repurposing old or unwanted items (into something else)

Recycle

Changing discarded materials into new products in order to avoid using more virgin resources

Lean Management

Approach to OM that attempts to improve efficiency/effectiveness by eliminating waste and improving quality

Pull

Production of good or service is only started when customer places an order.

Customer pulls at production system w their demand

• Efficiency: costs on inventory reduced and likelihood of stock becoming lost, damaged or spoiling

• Effectiveness: reduction in costs = profit

One piece flow

Operations process focuses on one good or service at a time

• Efficiency: smooth, uninterrupted manner, idle time and overall waste in minimalised

• Effectiveness: reduced expenses, increased productivity, quality

Takt

the operations process seeks to create a rhythm whereby all the steps in production of the good or services are synchronised to create a continuous flow

(avoid overproduction)

• effectiveness: reduce storage costs, input costs and production = profit

Zero defect

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

• Effectiveness: reduce waste = profit

CSR Considerations

• Environmental sustainability of inputs

• Waste generation from process

• Waste generated from production of inputs

Global sourcing

The practice pf seeking the most cost efficient materials and other inputs, including countries overseas

• Strengths: low cost and wider variety, quality

• Weakness: Global shock tarriffs, cultural/time differences

Overseas manufacture

Production of a good in a country that is different to the location of the business’ headquarters

• Strengths: Take advantage of cheaper labour

• Weaknesses: Cultural/time differences, delays in shipping, hidden costs
  

Global outsourcing

Contracting of a specific business operation to an external person or business in another country

• Strengths: reduced costs

• Weaknesses: Less control, communication, culture