Business Management Unit 3 AOS 3

Operations management

involved coordinating and organizing the activities involved in producing goods or services that a business sells to its customers

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 businesses operations system, that are delivered or provided to customers

Manufacturing business

Manufacturing uses resources and raw material to produce a finished physical good

Manufacturing characteristics

Tangible,

Production and consumption occur separately

can be stored as inventory

can be standardized/consistent quality

Service business

provide intangible products, usually with the use of specialized expertise.

Service business characteristics

intangible

production and consumption most often occur simultaneously

impossible to store

performed

Service and manufacturing

(SIMS)

both businesses aim to optimize their operations to produce high-quality outputs at low cost of production

Both have to deal with suppliers during process of managing operations

Both can utilize forms of technology in their operations system

Automated production line

(APL)

involve machinery and equipment that are arranged in a sequence, and the product is developed as it proceeds through each step

APL (ADS)

tasks can be performed much faster than human labour

tech can complete tasks for extended periods of time without need for breaks, increasing producitivy

performing tasks percisely and accurately can ensure products are consistently produced at a high standard, increasing rep

APL (DISADS)

a biz may develop poor reputation if it implements tech that makes employees redundant

initially high set up costs with purchasing and installing them

can be expensive to repair and update

Robotics

are programmable machines that are capable of performing specified tasks.

Robotics (ADS)

performing tasks precisely and accurately ensures products are completed at high standard

improved accuracy minimizes error and number of resources wasted, improve rep for enviro

removing employees for dangerous tasks can improve workplace saftey.

robotics (Disads)

-Biz may develop a poor reputation if it implements robotic tech making employees redundant

-high initial set up costs with purchasing, programming and installing

-very expensive for repairs and updating tech

Computer - aided design (CAD)

is digital design software that aids the creation, modification, and optimisation of a design and the design process

CAD (ads)

-Greater accuracy results in consistent levels of quality improving biz rep

-customers have flexibility to modify a design to suit their needs, increase customization leads to more customers

-CAD software helps to increase speed on the product design being created and modified faster.

CAD (disads)

-biz can develop poor reputation for making employees redundant

-there are high initial setup costs associated with purchasing and installing CAD software

-expenses associated with training employees to use CAD software

Computer aided manufacturing techniques

involve the use of software that controls and directs production processes by coordinating machinery and equipment through a computer

CAM (Ads)

improved accuracy allows for high quality products to be consistently produced, improving reputation

CAM software speeds manufacturing process as machinery does not have to be manually reset

many employees roles can be removed, reducing labor expenses.

CAM (disads)

biz can develop poor rep if CAM software makes employees redundant

sudden breakdowns can cause production to halt altogether and compromise productivity

high initial setup costs associated with purchasing and installing software

AI

involves using computerized systems to stimulate human intelligence and mimic human behaviour

AI (ads)

AI has the ability to provide customer service 24/7 which can improve customer satisfaction and rep

AI can perform complex function such as analysing data with greater precision

tasks required human labour can be removed, reducing expenses.

AI (disads)

Biz may develop poor reputation if AI makes employees redundant

high initial set up costs associated with purchasing and installing AI

may be costly to re calibrate and maintain AI

Online services

are services that are provided through the internet

online marketplaces, booking platforms, food ordering, cloud based storage

Online services (ads)

can process orders accurately and provide increase customer convenience, which may improve reputation

can process bookings faster than employees

may provide a biz with greater exposure to customers which may increase revenue from sales.

Online services (disads)

cost involved using an established platform to offer online services

if the platform providing online service experiences tech difficulties it may disrupt biz operations

if the business allows access to its services online it may defer customers who lack technological skills

Materials management (MAT MAN)

involves organizing and monitoring the delivery, storage, and use of materials required for production

forecasting

is a materials planning tool that predicts customer demands for an upcoming period using past data and marketing trends

forecasting (ads)

informed decisions about the quantity of materials required can improve a biz ability to meet customer demand

forecasting prevents excessive ordering of materials, preventing waste = enviro increasing reputation

helps prevent over-ordering taking up valuable storage space

Forecasting (disads)

if a biz is too reluctant on forecasting, it may be unable to meet unexpected increases in customer demand

the quantity of materials ordered may be incorrect as historical data and market trends may not reflect future demands (Covid)

Master production schedule (MPS)

is a plan that outlines what a business intends to produce, in specific quantities, within a set of period of time

MPS Ads

improve a biz rep by having a reduced impact on environment

a MPS prevents the biz from producing excessive amount of products, minimising waste.

by determining production targets, biz are more likely to meet customer demands

MPS disads

initially time consuming and expensive to track, record and write up the manual

difficult to account for every situation

its not very flexible to changing conditions

Master requirement planning (MRP)

is a process that itemises the types and quantities of materials required to meet production targets set out in the master production schedule.

MRP (ads)

ensures a business has the exact materials is needs, decreasing waste = increase in reputation

accurate ordering avoids excess storage and therefore reduces associated expenses.

MRP disads

its initially expensive to set up a dedicated system that can track materials through the site

can be time-consuming to constantly measure the levels of raw materials /stock

Just in time (JIT)

is an inventory control approach that delivers the correct type and quantity of materials as soon as they are needed for production

JIT (ads)

eliminates idle stock; therefore eliminating amount of stock wasted, help minimize environment = increased rep

allows a biz to switch the production of a different product without wasting resources as there are minimal materials on hand to go through

reduces storage costs and expenses associated with waste, allowing for money to be used in other areas of the biz

JIT (disads)

hugely reliant on suppliers to deliver on time, all of the time - if this fails, the waste production is disrupted

delivery costs may increase if more frequent deliveries are needed

a biz may fail to meet customer demand from a lack of reserves stock, which can negatively impact the biz's rep

Quality

is a good or services ability to satisfy a customers need

Quality control

involves inspecting a product at various stages of the production process, to ensure it meets designated standards, and discarding those that are unsatisfactory

Quality control (ADS)

High quality = high reputation

reducing number of faulty goods can minimize refunds the biz is required to complete.

the strategy is relatively cheap to implement, no external parties are required to carry out quality checks.

Quality Control (disads)

biz does not actively attempt to reduce waste produced = lower rep due to harming environment

time consuming to identify and address the causes of errors in production

errors are eliminated already after they occur, causing the biz to incur costs associated with waste

Quality assurance

involves a business achieving a certified standard of quality in its production after an independent body assesses its operations system.

Quality Assurance (ADS)

can reduce number of defective products, reducing waste increasing biz rep

receiving external certification from an independent body can improve a businesses competitiveness as customers are likely to have confidence in the biz products

proactive prevention of errors can minimize resources wasted. allows the biz to utilize the resources optimally, avoiding repurchasing assets.

Quality Assurance (Disads)

Employees may have to be trained to comply with new procedures

completing documents required for external body can be time consuming

can be expensive to organise an external body to assess the operations of the biz

Total Quality Management (TQM)

a holistic approach whereby all employees are committed to continuously improving the businesses operations systems to enhance quality for customers.

1-customer focus (identifying and fulfilling customer needs)

2-continuous improvement (engaging in the process of constantly evaluating biz methods to improve)

3- Employee empowerment (fostering teamwork to ensure all employees are involved in solutions to improve quality, eg quality circles)

TQM (Ads)

a biz can mimimize the amount of waste generated improving its reputation, as customers percieve the businesses as having a positive enviro impact

employees may feel increasingly valued if they are involved in the process of improving quality

the proactive prevention of errors can minimise resources wasted = avoiding repurchasing inputs

TQM (disads)

employees may feel confused about their role in improving quality if managers fail to communicate the TQM strategy clearly

it may take time for a business to enjoy the benefits of TQM as it requires a shift in culture

Introducing TQM can be costly for a biz an employees have to be trained so they can identify methods to improve quality

Quality assurance vs Quality control (SIMS)

both strats reduces the number of faculty products reaching customers

both strats require a good or service to meet set standards

Quality assurance vs Quality control (DIFFS)

QC is reactive as it identifies and climates errors after they occur, whereas QA is proactive as it prevents errors from occuring

QC does not involve external certification, whereas QA involves a business receiving certification after it meets standards set by an external body

Quality Control VS TQM (SIMS)

both can be implemented to see noticeable improvements in the quality of the final output

both are internally controlled and involve employees assessing quality

Quality Control VS TQM (DIFFS)

QC focuses on setting predetermined standards of quality in the first store of this strategy, TQM focuses on continuously developing and improving standards

Quality control is reactive as it identifies and eliminates errors after they occur. TQM is proactive as it aims to prevent errors from occuring

Quality Assurance vs TQM (SIMS)

QA focuses on meeting set standard of quality to gain external certification, whereas TQM focuses on internally developing and improving biz standards

TQM does not involve external certification, however QA involves receiving certification after it meets standards set by an external body

Quality Assurance vs TQM (DIFFS)

QA focuses on meeting set standards of quality to gain external certification, whereas TQM focuses on internally developing and improving biz standards

TQM does not involve external certification, however QA involves receiving certification after it meets standards set by an external body

Waste Minimisation

the process of reducing the amount of unused material, time, or labour within a business

Reduce

is a waste minimisation strategy that aims to decrease the amount of resources, labour, or time discarded during production.

Reuse

is a waste minimisation strategy that aims to make use of items which would have otherwise been discarded.

Recycle

is a waste minimisation strategy that aims to transform items which would have otherwise been discarded.

Lean management

The process of systematically reducing waste in all areas of a business's operations system whilst simultaneously improving customer value.

Pull

Pull is a lean management strategy that involves customers determining the number of products a business should produce for sale

One - piece flow

is a lean management strategy that involves processing a product individually through a stage of production and passing it onto the next stage of production before processing the next product, continuing this process throughout all stages of production.

Takt

is a lean management strategy that involves synchronising the steps of a business's operations system to meet customer demand.

Zero Defects

is a lean management strategy that involves a business preventing errors from occurring in the operations system by ensuring there is an ongoing attitude of maintaining a high standard of quality for the final output.

Lean Management (ADS)

a biz can reduce the amount of time that is wasted in between tasks

reduces the overall use of materials, which leads to fewer production costs

a biz can improve its reputation as its reducing and managing waste = benefits enviro

Lean Management (DISADS)

may be time consuming to train experienced employees and provide then with knowledge and lean production methods

if suppliers don't deliver materials on time, the biz may be unable to streamline its production to meet customer demand

can be costly to implement lean man as implementing new policies, procedures, and training can be expensive.

CSR

is the ethical conduct of a business beyond legal obligations, and the consideration of social, economic, and environmental impacts when making business decisions.

CSR considerations for inputs

Sourcing inputs from suppliers that use enviro sustainable methods

sourcing inputs locally (transport emmisions)

implementing op strategies such as forecasting, just in time to reduce risk of over-ordering inputs

CSR considerations for processes

using tech that performs tasks in a precise consistent manner

developing methods to capture and recycle unused or excess input materials

developing policies that promote the efficient use of energy

CSR considerations for outputs

- Developing an alternative product that is environmentally friendly.

- Creating products that have recyclable elements at the end of their lifecycle.

- Eliminating as much plastic as possible in the packaging

CSR (ADS)

can result in positive biz reputation = attract more customers

may attract highly skilled employees who value ethical conduct, committed to achieving biz objs

after CSR is implemented, production processing may be more efficient

CSR (DISADS)

constant focus on CSR to benefit society and environment may decrease productivity in levels in the completion of biz tasks

can be time consuming to implement CSR practices

CSR practices can be expensive for a business to initially implement

Global sourcing of inputs

involves a business acquiring raw materials and resources from overseas suppliers.

Global sourcing of inputs (factors to consider)

pricing of materials and resources differ between countries

delivery cost based on travel

enviro impact of suppliers to extract inputs

gov regulations of import and exporting

Global sourcing of inputs (ADS)

High quality material can be sourced, meeting or exceeding customer expectations = higher rep

greater access to cheaper raw materials, allowing reduction in operating costs

able to source materials not readily available in its country or origin

Global sourcing of inputs (DISADS)

imports may be affected by government imposed quotas or tariffs, limiting number of suppliers or increasing costs

delivery can be time consuming depending on where they come from

materials may be damaged in transport

Overseas Manufacturing

involves a business producing goods or services outside of the country where its headquarters are located

Overseas Manufacturing (ADS)

greater access to highly skilled employees who have expertise in production

cheaper production costs can allow a biz to lower its products prices

overseas works are provided with employment, allowing them to support their families

Overseas Manufacturing (DISADS)

local community may resent the business for taking away jobs from the local community, by moving production overseas.

delivery can be time consuming depending on where they come from

manufactured goods may be damaged during transport

Global outsourcing

involves transferring specific business activities to an external business in an overseas country.

Global outsourcing (ads)

quality of biz activities can be improved as the external business will have experts in the area

businesses can focus on its own areas of expertise

biz can decrease labour costs as global outsourcing reduces the need for local employees

Global outsourcing (disads)

businesses have reduced control over some of its activities as they have been transferred to external business

may be diffciult to communicate with external overseas businesses due to language barriers or time zones

poor csr practice by external businesses can impact the biz reputation

Global sourcing of inputs vs Overseas manufacturer (SIMS)

both have the potential to improve quality and reduce production costs

products or raw materials and raw materials travel between country during delivery

Global sourcing of inputs vs Overseas manufacturer (DIFFS)

global sourcing of inputs involve aqcuiring resources and raw materials from overseas suppliers for manufacturing in the businesses main country of operation

overseas manufacture involves a business' manufacturing phase occurring in a country outside of the biz main headquarters

Global sourcing of inputs vs Global outsourcing (SIMS)

Both allocate certian business tasks to external businesses

both allow the business to reduce operational expenses

Global sourcing of inputs vs Global outsourcing (DIFFS)

global sourcing of inputs involves acquiring resources and raw materials from overseas suppliers for manufacturing in the business main country of operation

global outsourcing involves completion of specific business activities, such as IT services, in a country outside of the biz main headquarters

Overseas manufacturing vs global outsourcing (SIMS)

both involve the execution of businesses activities in a location away from the businesses main HQ

both allow the business to reduce operation expenses.

Overseas manufacturing vs global outsourcing (DIFFS)

a biz retains full control of its operations when implementing manufacturing overseas

a business that implements global outsourcing retains little control over the transferred activities