BUSMAN UNIT 3 OUTCOME 3

Operations management

All the activities in which a manager engages to produce goods or services. Improved operations can lead to employee productivity, business competitiveness, satisfied customers, sales and the achievement of business objectives

efficiency def

How well a business uses its resources in producing a good or service

effectivness def

The extent to which a business achieves its stated objectives

key elements of the operations system

inputs → process → outputs

inputs def

the resources used in the process of production

inputs characteristics

• some resources may be owned by the business whilst other from suppliers

• incl. materials, technology, information, employees

how do manafacturing companies use inputs

use the equipment and technology to make a good

how do service companies use inputs

use more of information and knowledge from employees

process def

the conversion of inputs into outputs

process characteristics

also known as transformation stage

process for manufacturing

• degree of customer interaction and customisation is low

• processing occurs in a seperate location to customers

process for service

• degree of customer interaction and customisation is high

• processing occurs at the same location as the customers.

output def

the finished good or service that is provided

output characteristics

the quality of the output is a reflection of the inputs and processes used

outputs for manufacturing business

produce tangible outputs

outputs for services

produce intangible service: satisfied customer.

differences between manafacturing vs service busienss

• tangiable vs intangiable

• quality measured vs hard to measure

• goods can be stored vs cannot be stored

• zero/little customer involvement vs high customer involvement

• goods are mass produced and standerdised vs service are tailored

similarities between manufacturing and service businesses

• both use an operation system that has key elements

• both can use technology

• both aim to improve efficiency and effectivness

• both aim to produce high quality outputs

technological developments

• automated production lines and robotics

• computer aided design

• computer aided manafacturing

• AI

• online services

automated production lines def

Refers to the machinery and equipment arranged in a sequence with components added to a good as it proceeds through each step, with the process controlled by computers.

robotics def

The programmable machines that are capable of performing complex tasks

advantages of robotics and APL

• faster rares - higher output and increased productivity

• reduce need for human labour

• robotics = precision, accuracy and speed in production unmatched by human labour

disadvantages of robotics and APL

• high cost: unaffordable for small to med businesses

• robots costly to maintain and replace

• training required to work robots (time and money)

computer aided design (CAD) def

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

CAD characteristics

• allows the business to meet specific needs

• business such as building or fashion may use this technology

CAD advantages

• product design at a faster rate, no need to erase and redraw

• 2 or 3D computerised versions - changes can be made to prototype

• view design from multiple angles, visualize what will be produced

CAD disadvantages

• can crash

• software is expensive

• cost and time training staff

Computer Aided Manafacturing def

The use of software to direct and control manufacturing processes, as it involves automated machinery being programmed by an operator and then performing instructions

CAM characteristics

• relies on info from CAD process

CAM advantages

• allows a business to produce at a faster rate and reduced cost

• greater consistency and accuracy

• computer directed process - greater efficiency as computers don’t need breaks

CAM disadvantages

• can crash, production halt

• CAM machinary specific tasks not versatile

• very expensive upfront investment

AI def

The ability of computer systems to do tasks that are usually done by humans is trained using data, and algorithms which enable them to learn and improve over time.

AI advantages

• can take over complex and human like tasks such as dealing with customers, lowering wages

• can perform tedious or monotonous tasks

• quick responses

AI disadvantages

• can take away jobs

• costly to maintain and establish

• may not be accurate if coding is wrong

online services def

Services that use the internet.

online service characteristics

• customers use it to find info

• make bookings

• purchase goods

online services advantages

• deliver consistent messages to customers

• accessible 24/7

• reduce costs of labour or leasing a physical space

online service disadvantages

• designing, registering and publishing website may initially be expensive and time consuming

• can suffer outages

• operating websites require highly skilled staff.

material stratergies

1. forecasting

2. Master production schedule

3. master requirement planning

4. just in time

materials managment def

The strategy that manages the use, storage and delivery of materials to ensure the right number of inputs is available when required in the operations system.

forecasting def

A tool that relies on past and present data or trends in an attempt to determine future events.

forecasting characteristics

• will forecast the quantity and timing of demand for goods and services to match supply with customer demand

forecasting advantages

• ensure the business maintains an appropriate level of materials for operations system without over producing

• does not underproduce, results in a lack of customers and decline in market share.

forecasting disadvantages

• historical data does not necessarily guarantee that past events will continue in the future

• inaccurate strategy only provides an estimate

master production schedule def

A statement of what the business intends to produce, in what quantities over a set time frame, taking into account customer demand and production costs.

MPS characteristics

• eleements include

  • each good or service that will be produced

  • the exact quantities of each good or service

  • how and where production will take place

MPS and MRP advantages

• both allow a business to avoid over or under producing

• allow business to schedule changes: flexibility

• both allow for adjustments to production in response to demand fluctuations.

MPS and MRP disadvantages

• cost of implementing both strategies can be inhibitive for many businesses as software may need to be purchased

• prevent business from quickly adapting to changes regarding material.

• once materials are ordered and employees are scheduled changes are hard to be made

Materials requirement Planning def

Completed after the MPS. It is an itemised list of materials that is required to meet specific orders.

just in time def

A strategy that ensures the right number of materials arrive just as they are required by the operations systems.

just in time characteristics

this requires suppliers to be chosen carefully and organised so that deliveries are reliable and recieved at the approperiate time.

just in time advantages

• hold less stock in storage, reduce storage costs

• reduce the risk of any waste occuring in storage

• production can flow smoothly with the right amount of materials as they are needed.

just in time disadvantages

• may deliver materials unreliable, delay production

• can increase transport costs: smaller quantities more frequently

• may be recieved outside a businesses time frame can bring production line to a halt

quality stratergies

• quality control

• quality assurance

• total quality managment

quality def

Refers to the degree of excellence of goods and services and their fitness for stated purpose. A quality product should be reliable, easy to use, durable and well designed.

quality control def

Involves the use of random inspections at various points in the production process to check for defects and take corrective action if necessary.

quality control characteristics

step 1: establish quality standards

step 2: carry out inspections of products

step 3: compare results of inspection and standards

step 4: correct processes to prevent defects from occurring

quality control advantages

• prevents faulty products reaching customers - filter out defects before they leave factory

• reduce returns and warranty claims

• speacialised knowledge - inspections carried out by trained professionals

quality control disadvantages

• wasteful and costly - as its reactive only found after the product is made

• slows down production - inspection takes time

• demotivating for employees - they believe the inspectors will catch defaults and thus less care

quality assurance def

A system established to ensure that predetermined quality standards are achieved by building quality into the work process.

quality assurance characteristics

step 1: consultants advise business on standards required to obtain certification

step 2: business makes adjustments to processes in line with certification standards

step 3: certification is granted

step 4: business now has the right to display standard on packaging

quality assurance advantages

• proactive: prevents defects before they occur

• competitive advantage and marketing

• clear processes and documentation

quality assurance disadvantages

• time consuming documentation

• expensive certification fees

• inflexibility

• doesn’t guarantee product excellence

total quality managment def

It is a business-wide commitment to excellence where every single employee is responsible for quality.

total quality managment characteristics

• customer focus

  • intentionally focusing on customers involves delivering products that meet or exceed a set standard

• continuous improvement

  • a constant evaluation on how things are done

  • striving for improvement not perfection

• employee empowerment

  • quality circles: employees meet regularly to solve problems

  • can make presentations for management with their ideas to improve performance.

total quality managment advantages

• proactive

• high quality across entire business

• significant waste production - always finding ways to be more efficient

total quality managment disadvantages

• requires total culture shift

• time and productivity costs

• delayed results

waste minimisation

Involves reducing the amount of unwanted or unusable resources created by business operations. This demonstrates concern for the environment, which can improve business operations.

reduce def

decreasing the number of resources, labour and time used in production.

reduce e.g

go paperless

reuse def

identify materials that would otherwise be discarded and use it again

reuse e.g

• refurbish technology

• offer refill statios

recycle def

using materials that would otherwise be discarded and transforming them into new products

recycle e.g

• e waste programs

• composte

lean managment def

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

lean management

• pull

• one-piece flow

• takt

• zero defects

pull def

The customer order pulls the product through the production process

pull example

only makes a sandwich when a customer orders it

pull advantages

• eliminates overproduction

• reduce inventory cost - aren’t storing massive amounts of finished goods

• quality focus - made in small batches

• improved cash flow - capital isnt trapped in stock

pull disadvantages

• susceptible to an increase in demand - if the product goes viral, orders increase

• Reliance on suppliers - production stops if late

one piece flow def

Describes how the product moves through the process: one single unit at a time.

one piece flow example

a single shirt moves from cutting to sewing to buttoning to packaging without stopping

one piece flow advantages

• reduction in lead time - product is never sits in a waiting area

• immediate quality feedback - if machine is faulty find out straight away

• storage -unfinished goods cluttering space

one piece flow disadvantage

• zero room for error - if one machine breaks entire production is halted

• high set up costs

• employee stress and fatigue - pace dictated by line flow

takt explaination

refers to the speed in which a business needs to produce goods or services

takt example

avg. time taken to make a coffee is 3 minutes if its longer than this customers will be waiting

takt advantages

• knowing takt time helps meet customer demand and fulfill market need

• eliminates overproduction - setting pace to demand don’t build up stock

• identify slow moving lines - those who don’t meet time frames can be adjusted

takt disadvantages

• not suitable for spike in deman

• stress - if takt time is too short lead to employee burnout

• risk of lower quality - if can’t make takt time they may cut corners

zero defect explaination

Is the ambitious goal of ensuring that no product leaves the production line with a flaw. 

zero defects example

employee may check quality of coffee beans and ensure milk temp is correct

zero defects advantages

• enhanced reputation - customers receive perfect product every time

• significant cost savings- much cheaper to fix a product instead of recalling it

• increased employee pride -more engaged and proud of their work

zero defects disadvantages

• employee stress- perfection requirement is intimidating

• potential production slow down - if they stop everytime there is a flaw production may stall

CSR definition

The commitment to go above and beyond legal obligations to act in an ethical manner in relation to social, economic and environmental considerations.

environmental sustainability of inputs e.g

• support local suppliers

• recycle or reuse materials

global sourcing of inputs definition

the practice of seeking the most cost-efficient materials and other inputs, including from countries overseas

overseas manafacturing definition

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

overseas manufacturing and global sourcing of inputs advantages

• reduced costs - cheaper labor, manafacturing and storage

• the opportunity to learn how to do business in a new market

• increasing capacity of total supply

overseas manufacturing and global sourcing of inputs disadvantages

• hidden costs - time zones and culture differences

• the risk of ports shutting down

• exposure to potential high risk, political and financial

Global outsourcing definition

the contracting of a specific business operation to an external person or business in another country.

global outsourcing advantages

• business is able to focus on core activities

• improved quality as access to expert knowledge and high quality services

• production may be quicker as an outsourced provider may be able to perform the task better