Business Operations Management U3 AOS3 3A

Operations Management and Business Objectives

Operations Management Overview

• Operations management involves managing activities that transform inputs into final goods or services (outputs).

• Effective operations management aims to:

  • Reduce production time.

  • _Use minimal resources.

  • Maximize the quality of goods or services.

Core Objective

• The primary goal of businesses is the production of goods and services.

• Effective management of transforming inputs into outputs is crucial for business success.

  • Maximizes efficiency and effectiveness of production.

  • Meets stakeholder needs.

• Students must examine operations management.

  • Consider responsible use of resources.

  • Focus on producing quality goods/services in a competitive, global environment.

Areas of Management

• Key areas of management include:

  • Human Resources

  • Technology Support

  • Operations

  • Finance

  • Sales and Marketing

• These areas collaborate to achieve business objectives.

• In large businesses, operations managers often hold senior management positions.

• Operations managers oversee various roles such as production, warehouse, and quality managers.

Efficiency and Effectiveness

• Efficiency: How productively a business uses its resources.

• Effectiveness: The extent to which a business achieves its stated objectives.

Efficiency in Operations Management

• Aim: Maximize productivity, improving efficiency.

• Manage resources through strategies:

  • Technological Developments

  • Materials Strategies

  • Quality Strategies

  • Waste Minimization Strategies

• Optimizing resource use can:

  • Decrease production costs (materials, equipment).

  • Reduce waste.

  • Decrease production time.

Productivity

• Essential for maximizing operations.

• Defined as the amount of output per unit of input.

• Equation: $Productivity = \frac{output}{input}$

• Increase productivity by:

  • Reducing input per unit of output, OR

  • Increasing output per unit of input.

Effectiveness in Operations Management

• Using strategies can:

  • Decrease production costs (materials, equipment).

  • Increase quality.

  • Reduce waste.

  • Decrease production time.

• This leads to:

  • Increase Customer Satisfaction.

  • Increase Repeat Business.

  • Improve Business Reputation.

  • Increase Sales.

  • Increase Profitability.

• Improving operations' effectiveness positively impacts business performance and objective achievement.

Objectives of Operations Management

• Effective and efficient operations management enables businesses to achieve their objectives.

• Efficient: Generating higher output with constant or decreasing inputs.

• Effective: Achieving intended results.

• Objectives include:

  • Growth of Market Share.

  • Maximizing profit.

  • Increasing number of sales.

  • Growing shareholder returns.

  • Fulfilling a social/market need.

Achieving Objectives Through Operations

• Operations can achieve objectives by:

  • Improving quality to enhance customer satisfaction.

  • Reducing wastage to cut costs and improve efficiency, making the business more price competitive.

  • Managing materials effectively to reduce costs and improve efficiency, enhancing price competitiveness.

  • Utilizing technology effectively to reduce costs and improve price competitiveness.

  • Using overseas manufacturing, global outsourcing, and global sourcing to cut costs.

How Operations Strategies Support Business Objectives

• Operations strategies directly support business objectives:

  Business Objectives	Operations Objectives	Operations Strategies
  To make a profit	Reduce costs	Just In Time
  Increase market share	Improve quality	Quality control
  Provide a return for shareholders	Increase productivity	Introduce automated production lines
  Contribute to community well-being	Minimize waste	Establishment of lean management

Operation Strategies Assisting with Achieving Objectives