Business Unit 3 AOS3 - Operations Management

operations management relationship with BO

all activities in which managers engage to produce goods or services.

Business should efficiently use resources to make these goods at the lowest possible cost, to maximise profit

Eg. Just in time — reduce costs —- make profit/increase market share etc

elements of operations system

inputs —→ processes —→ outputs

efficiency

how well a business uses its resources to achieve business objectives

effectiveness

the degree to which a business achieves its stated objectives

manufacturing business

produces tangible goods, can be stored for later use, little customer involvement in production, production and consumption separate, goods are homogenous/standardised, capital intensive, eg. bread, clothing, cars

service business

produces intangible services, cannot be stored, customer involved in production/has to be present, production and consumption typically occur simultaneously, differentiated/tailored to individual customers, labour intensive, eg. haircut, transport, education

Technological Developments

automated production line, robotics, computer aided design (CAD), computer aided manufacturing (CAM), artificial intelligence (AI), online services

materials management strategies

forecasting, master production schedule (MPS), materials requirement planning (MRP), inventory control (Just In Time)

quality

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

corporate social responsibility

a business going above and beyond their legal obligation to the environment and community.

inputs

resources used in the process of production, including raw materials, machinery, equipment, money and time

processes

involves the conversion of inputs (resources) into outputs (goods/services). At yakult mixing, packaging, quality checking, storing, sterilising, fermenting

outputs

the end results of a business’s efforts - the service or product that is delivered or provided to the customer.

automated production line

consists of machinery and equipment arranged in a sequence with components added to the good with each step, this process is controlled by a computer

robotics

are a highly specialised, programmable machines capable of complex tasks, can work for long periods of time, repetitive work, without complaints or demands for higher wages/better working conditions

computer aided design (CAD)

a software tool that generates 3D diagrams from a series of input parameters, creates product possibilities that can be viewed from multiple angles helping visualise the end result, can design steps taken to make product in shortest amount of time using least material

computer aided manufacturing (CAM)

refers to the use of software and machinery to direct and control the production process, involves machines being programmed by operator and then performing the instructions with speed and precision

artificial intelligence (AI)

refers to the ability of a computer or robot, controlled by a computer to perform tasks that mimic human discernment, eg. chatbots that conversate and answer questions from customers, facial recognition in airports, grammar and fluency corrections

online services

involves the planned use of digital technologies such as websites, apps and social media to deliver services to customers over the internet. can be use for operations purposes, allows customers to make bookings/appointments, policies information

forecasting

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

master production schedule (MPS)

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

materials requirement planning (MRP)

involves developing an itemised list of all resources involved in production to meet the specific orders at the specific time, completed after the business has a clear understanding of the quantities to be produced and time frame involved

inventory control (Just in Time)

ensures the right amount of material inputs arrive only as they are needed in the operations process, suppliers should be carefully chosen and organised for reliable deliveries, means items don’t remain idle

quality

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

quality control (QC)

the use of inspections at various points in the production process to check for problems and defects, a reactive approach detecting faults that have already been produced, product oriented

quality assurance (QA)

involves the use of a system so that a business achieves set standards in production, a proactive approach preventing quality issues before they occur, process oritented

total quality management (TQM)

involves having ongoing, business-wide commitment to excellence that is applied to every aspect of the business’s operation, proactive/holistic process, employee empowerment, customer focus, continuous improvement

employee empowerment

all employees take ownership/responsibility of quality, quality circles -groups of up to 10 meet regularly to solve problems regarding process, design and quality

continuous improvement

an ongoing commitment to achieving perfection, involving constant evaluation and higher standards. Kaizen -japanese for improvement

customer focus

all employees should aim to satisfy internal and external customers. each employee improves product before the next employee in the line of production (internal), and also the consumer of the final good/service (external)

reduce

is achieved by creating less waste generation at the source, so there is less waste to be cleaned up or disposed of

reuse

taking old or unwanted items that would otherwise be thrown away and finding a new purpose for them.

recycle

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

Lean management

An approach that improves efficiency and effectiveness of operations by eliminating waste and improving quality

pull

using customer demand to decide the rate at which materials are delivered for production to avoid stockpiling and overproduction

one piece flow

a single part of production moves through operations one at a time, adding value with each step, eliminating waiting time or idle time

takt

using customer demand to determine rate of production, takt time is average time that passes between production starting at one product and the start of the next unit

zero defects

involves business striving for perfectionerrors by identifying erros as closely as possible to when they occur

inputs CSR

ethical suppliers (no exploitation), local suppliers (provide employment + reduce transport emissions), environmental sustainable materials.

processes CSR

training/safety, fair pay work conditions above legislation, produce locally to show concern for community, facilities should contribute to health and welfare of staff, sustainable energy, solar panels, green house emissions

outputs CSR

recyclable/biodegradable/safe packaging, disposed of safely, high quality/reliable product

global sourcing of inputs

the practice of seeking the most cost-efficient materials and resources from countries overseas, cheap labour, lower taxes,

overseas manufacture

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

global outsourcing

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