4.1 setting operational objectives Flashcards
Operations function of a business:
- Department responsible for the actual production of the good or service
- Overseeing the process of converting inputs into outputs
Operations management involves taking decisions such as:
The level of output a business needs to be producing
The range of products a business wants to offer
The level of customer service that is offered
The best process to produce the goods / services
Labour intensive or capital intensive?
How to best provide the goods and services to the customer
Selling online or via shops?
How much of the process the business provides itself / how much they use suppliers
what is labour intensive?
process uses a relatively high proportion of humans, relative to the machines
what is capital intensive?
process uses a relatively high proportion of capital (machines), relative to humans
what is the supply chain?
Series of activities involved in making the initial product until the customer receives it. e.g. Cow is milked Milk is heated to kill bacteria Milk is bottled Milk is transported to supermarkets Tesco sells milk
what are the stages of operations:
raw materials -> manufacturing -> transportation -> retail -> disposal
What is meant by adding value?
The output is worth more than the inputs
How can a business add value?
Good service Guarantees Developing raw materials Packaging Brand image
Operations can involve:
Producing goods Transforming people Storing products Transporting products Gathering information Distributing information Analysing information Wellbeing services
categorising operations: 4 V’s model
- Volume- the amount of output
- Variability- how constant the demand is for the product
- Variety- how different each product is
- Visibility- how much direct contact the producer has with the final customer
Impact of high 4 V’s
Volume- High repeatability
Low unit costs
Capital intensive
Variety- Quite complex operations to manage
Can meet customer needs precisely
Visibility- Good customer service skills needed
Flexible in terms of information and communications to the customer
Variability (variation in demand)- Changing levels of capacity utilisation
Need to try and predict demand
Needs to be flexible
Impact of low 4V’s
Volume- Likely to be high unit costs
Employees likely to be multi-skilled
Little repetition of tasks
Variety- Routine operations
Standardised processes
Visibility- Limited customer service skills
Time lag between production & consumption
Variability (variation in demand)- Stable
Routine
Predictable
High capacity utilisation
process of operations decision making:
set operations objectives -> analyse operations data -> make operations decisions -> implement decisions -> review
What type of objectives might an operations department have?
Quality Costs Flexibility Speed Dependability
Environmental objectives - recycling materials
Defect rates - number thrown away
Safety targets - health risk to employees
What is competitive advantage?
A way in which a business offers superior value to compared to its competitors.
an edge a firm has over others selling the same product.
