Operations Management
the process of transforming resources (inputs) into outputs to achieve business objectives
Breaking Bulk
When wholesalers break larger units of product into smaller units to deliver to retail outlets.
Capital Intensive
A production is using more physical capital (machines) relative to labour.
Labor Intensive
A production process that uses more human labour relative to physical capital.
Job Production (Operation Methods)
Producing unique items that are tailor made to meet the needs of individual customers.
Flexibility and high quality
High cost and time consuming
Batch production (Operation Methods)
A production method that involves producing similar items in groups.
Economies of scale and lower risks
Lower worker motivation
Mass production (Operation Methods)
The production of large amounts of standardised products on an assembly line.
Mass customisation (Operation Methods)
The production of large quantities of goods that can be adjusted to customer specifications.
Lean production
a set of strategies to reduce waste in the production process. Based on two strategies:
continuous improvement (kaizen): involves businesses holding regular, scheduled meetings where staff are invited to suggest improvements.
just-in-time (JIT) production: Raw materials or other inputs are ordered and delivered immediately before their use, so that stock (inventory) can be minimized.
Cradle-to-Cradle Design
A design and production process that aims to work more like nature, by designing systems that feed back outputs as inputs.
Using cradle-to-cradle strategies may increase costs of production for a business in the short term. However, businesses can see reduced costs in the long term
Quality control
the inspection of a product in order to find defects and remove them before they are delivered to customer
Quality assurance
Strategies to prevent defects and improve products.
Methods of quality management
Quality circles: A group of employees who meet regularly to discuss potential improvements to product quality.
Benchmarking: The process of a business comparing itself with industry leaders on certain criteria, to learn from other’s techniques.
Total quality management (TQM): Every employee is jointly responsible for maintaining the overall quality of the final product.
Critical Path Tool
A project planning tool that shows the minimum time period that a project needs to be completed.
Outsourcing & Insourcing (Methods of reorganizing production)
outsourcing: When a business takes an internal function and has it performed externally by another person or business.
insourcing: When a business decides to have its own personnel perform tasks or operations previously performed by an external organisation.
Offshoring and Reshoring (Methods of reorganizing production)
offshoring: When a business moves some of its business operations to another country.
reshoring: When a business moves an operation that is performed in another country back to the company’s home country.
Crisis Management
The steps a company takes to limit the damage caused by an unpredicted event or crisis.
Contingency Plan: When an organisation creates an action plan to follow in case a crisis occurs.
Process Innovation
The development of a new method of production.
Positioning Innovation
When a product is marketed to a new target audience.
Paradigm Innovation
A change that fundamentally alters an entire industry.
Netflix revolutionised the home entertainment industry with its streaming service.