Operations Management Flashcards

LO15: Evolution of Operations Management

  • Division of Labour (1776):
    • Adam Smith introduced breaking work into smaller, specialized tasks.
    • Increased worker efficiency by focusing on specific tasks.
  • Industrial Revolution (Late 18th – Early 19th Century):
    • Shift to machine-based production in factories.
    • Faster and cheaper production compared to manual methods.
  • Interchangeable Parts (Early 19th Century):
    • Eli Whitney and Simeon North introduced standardized parts.
    • Simplified repairs, enabled mass production.
  • Scientific Management (1911):
    • Frederick Taylor advocated studying work processes for efficiency.
    • Used time and motion studies to improve productivity.
  • Quality Revolution (1950s):
    • Japanese companies (e.g., Toyota) emphasized quality.
    • Introduced Total Quality Management (TQM) for high-quality products and customer satisfaction.
  • Technological Advancements (1980s):
    • Computers, just-in-time production, and Enterprise Resource Planning (ERP) systems.
    • Improved resource management and reduced waste.
  • Business Process Re-engineering (1990s):
    • James Champy and Michael Hammer introduced redesigning business processes.
    • Focused on improving collaboration between departments for efficiency.
  • Balanced Scorecard (1992):
    • Robert Kaplan and David Norton created a performance measurement tool.
    • Considered financial and non-financial factors (e.g., customer satisfaction).
  • Business Intelligence (Late 1990s – Early 2000s):
    • Use of software to analyze data for better decision-making.
    • Helped understand trends, predict customer needs, and improve operations.

LO16: Strategic Importance of Operations Management

  • Operations management is critical for smooth business operations and competitiveness.
    • Efficiency:
      • Optimal use of resources (materials, labor, machines).
      • Reduces waste and lowers costs.
    • Customer Satisfaction:
      • Production of high-quality products delivered on time.
      • Increased customer loyalty and recommendations.
    • Innovation:
      • Encourages finding new and better ways of doing things.
      • Includes adopting new technology, improving processes, or creating new products.
    • Strategic Decisions:
      • Operations managers involved in key decisions like factory location and product design.
      • Affects the entire company.
    • Sustainability:
      • Reduces environmental impact through energy conservation and waste reduction.
      • Use of sustainable materials.
    • Adaptability:
      • Enables quick response to market changes, such as new customer demands or supply chain disruptions.

LO17: Differentiate Between Goods and Services

  • Goods:
    • Definition: Physical products (e.g., phone, car).
    • Nature: Tangible (can be touched).
    • Ownership: Ownership transfers upon purchase.
    • Valuation: Quality can be assessed before purchase.
    • Return: Can be returned if defective.
    • Storage: Can be stored until sold.
    • Production & Consumption: Produced first, then consumed later.
  • Services:
    • Definition: Activities or benefits provided (e.g., haircut, taxi ride).
    • Nature: Intangible (cannot be touched).
    • Ownership: Consumed as provided (no ownership).
    • Valuation: Quality is hard to judge before experiencing.
    • Return: Cannot be returned once provided.
    • Storage: Cannot be stored; used as provided.
    • Production & Consumption: Produced and consumed simultaneously.

LO18: Apply the Transformation Process

  • Inputs: Resources needed to create a product or service.
    • Transformed Resources: Materials or information changed during the process (e.g., wood, metal, data).
    • Transforming Resources: Resources that facilitate the change (e.g., machines, workers).
  • Transformation Process: Activities that convert inputs into outputs.
    • Examples: Cutting, shaping, assembling materials, teaching a class, repairing a car.
  • Outputs: Final products or services received by customers.
    • Examples: Bread from a bakery, a taxi ride.
  • Feedback: Information from customers or employees to improve the process.

LO19: Interpret Operational Efficiency Calculations

  • Operational efficiency measures how well a business uses resources.
  • Key calculations:
    • Productivity
    • Efficiency

LO20: Future Trends and Challenges of Operations Management

  • Future Trends:
    • Technology: Increased use of AI, robots, and data analytics.
      • Example: AI predicting machine breakdowns.
    • Sustainability: Focus on eco-friendliness, like using less energy and recycling materials.
    • Personalization: Customizing products and services to meet individual customer needs.
    • Remote Work: Managing remote teams and maintaining connectivity.
    • Agile Supply Chains: Quickly adjusting supply chains to respond to changes.
  • Challenges:
    • Globalization: Managing operations across different countries with varying laws and cultures.
    • Technology: Requiring skilled workers and training for new tools.
    • Sustainability: Balancing cost with customer willingness to pay more for sustainable products.
    • Ethics: Ensuring fair treatment of workers and avoiding unethical cost-cutting measures.
    • Resilience: Preparing for unexpected events like natural disasters or pandemics that can disrupt operations.