AD6 - Operations Management in Supply Chains Flashcards
Define Operations Management.
Activities, decisions and responsibilities of managing the production and delivery of products and services.
What are the 4 types of operations?
- Manufacturing: where raw materials are converted to a product
- Supply: involves change of ownership of a product
- Transport: involves the movement of physical products or people
- Service: involves changing the physical, intellectual or emotional state of a customer
Operations involve transforming input resources to output products or services. What 3 areas can the inputs be grouped into?
- Materials
- Information
- Customers
All organisations can be considered to carry out three core activities, what are these?
- Input resources are acquired
- Those resources are processed
- Output products/services are delivered to customers
Which key functions are involved in the core business activities?
- Procurement (Deals with suppliers)
- Marketing (Deals with customers)
- Operations (Processes the inputs to outputs)
Operations management should be a driver for business strategy. What is it directly responsible for?
-Understanding the organisations strategic objectives
-Developing the operations strategy for the organisation
-Designing the products, services and processes
-Planning and controlling the operation
Improving organisational performance
What functions does operations management need to have a close working relationship with due to cross overs in activity?
- Marketing - Operations must understand if a change in demand is likely following advertising campaigns
- IT - Must understand systems for planning and control for information provision
- HR - For recruitment or training
- Product/Service Development - Constraints of operational processes
- Finance - Financial analysis and understanding of production requirements
What key differences are there between products and services?
Tangibility: products are tangible and services aren’t
Homogeneity: products are homogenous whereas services are heterogenous
Intensity: products are capital intensive however services are labour intensive
Transportability: products can be counted and transported, services can’t be measured or transported
What issues might globalisation have raised in operations management?
- Design adjustments to meet differences in consumer demand and operating in different climates
- Location of operations to achieve competitive advantage (through labour or transport rates)
- Cultural differences in working practices
- The availability in overseas locations of necessary skills and competences
- Problems associated with global supply chains and sourcing
Operations is the activity of transforming inputs to outputs. This can be split into 3 sub sections, Delegation, Transformation and Outputs. What sits under each of these categories?
- Delegation - People, Information, Materials, Customers
- Transformation - Machines, Processes, Facilities, Methods, Technology
- Outputs - Products, Services, Satisfied Customers
What is meant by “Productivity” in relation to output?
Total productivity = Total Outputs / Total Inputs
An increase in total outputs or decrease in total inputs improves productivity.
What is meant by “Product Mix” in relation to output?
The product mix is the % of total output that is devoted to each product (Assuming the manufacturing company creates more than one product).
What is meant by “Customer Satisfaction” in relation to output?
The customers feelings about the gap between there expectations towards a product / company and the perceived performance of that product / company. A customer is satisfied when the performance meets or exceeds their expectations.
Operations processes can differ according to their output. What did Professor Nigel Slack suggest the 4 different ways they can differ?
- Volume - High volume tend to achieve cost reduction while low volume tend to have higher unit costs.
- Variety - Higher variety achieves better customer service but costs more whereas lower variety is cheaper through standardisation.
- Variation - Low variation in demand allows for ease of scheduling and resourcing.
- Visibility - High visibility operations (such as retail shops) are more subject to the subjective views of their customers and their tolerance.
Businesses tend to develop and implement strategies at 3 different levels, what are these?
- Corporate directors: set organisational objectives, policies and procedures.
- Business strategy: set by general managers where the product line is managed independently from standard business operations. For non-diversified undertakings and those with only 1 line of business, business level strategy will be the same as corporate strategy.
- Functional / Operating strategy: strategies created by the function.
What aspects are there to be aware of around strategy strategy development?
- Strategy development is a continuous process made up of its planned or intended strategy and reaction to new developments or unforeseen events
- Strategies are shaped by internal and external factors
What roles can operations play in relation to an organisations business strategy?
- Implement strategy: It’s most basic role is to implement the strategy
- Support strategy: This involves developing the resources needed to help the organisation improve and refine its strategic goals
- Drive strategy: To drive strategy by giving it a unique and long term advantage
What is the Hayes and Wheelwright 4 step model used to evaluate the competitive role and contribution of the operations function in any type of company?
- Internal Neutrality: OM follows strategies that have been set. It makes little contribution to competitive advantage of the enterprise but aims to be neutral, not by doing anything positive but by avoiding mistakes.
- External Neutrality: OM looks outside the organisation and compares itself with similar enterprises elsewhere in the market. The OM isn’t creative or proactive but adopts best practice.
- Internally Supportive: OM aspires to be clearly the best in the market. Operations are already satisfactory but good managers seek further improvement.
- Externally Supportive: One which sees the operations function as an important foundation for its future success. Aim to always be one step ahead.
What are the 2 key roles for operations managers?
- Implementing the business strategy, translating abstract concepts such as product designs into actual products
- Designing good operations that can give an organisation a competitive advantage
What are the 9 traditional activities for OM in manufacturing?
- Production Planning: The analysis of customer requirements and development of production plans to satisfy their demand.
- Process Planning: Deciding how a product should be manufactured by reference to component and assembly drawings, determining the sequence of operations and the machines and labour required.
- Production Control: Ensuring the production plan is achieved
- Methods Engineering: The application of work study to record and critically appraise current and proposed ways of working to increase effectiveness and reduce costs.
- Quality Control: Techniques for ensuring that during design, production and servicing both works and materials are to the standards that will produce the desired product performance and reliability.
- Planned Maintenance: Plant, equipment or building maintenance programmes planned to ensure they operate or remain trouble free for a pre-determined period.
- Supplies: All the materials, goods or services used in an enterprise regardless of whether they are purchased outside, transferred from another branch or manufactured in house.
- Manufacturing: The process of making the product
- Distribution: The process or processes by which goods or services are transferred from the producer to the user.
All operations have 5 basic operational objectives, what are they?
- Cost: producing at a target cost
- Quality: providing customers with products services of the expected quality or better
- Flexibility: ability to change or adapt operational activities to cope with innovations, emergencies or special customer requirements.
- Dependability: keeping delivery promises made to customers
- Responsiveness: ensuring the shortest possible time in meeting the customers request for goods / services
What are the 6 inter-related elements to consider when designing a job?
- Environmental conditions of the workplace
- Available technology and how it will be used
- Tasks to be allocated to each person
- Best method of performing each job
- Duration of the job and how many people it needs
- Commitment to the job
What 4 key approaches are there to job design?
- Scientific Management: focus on maximising individual and organisational efficiency. Standardisation of jobs and clear processes to follow.
- Motivational: focus on increasing job satisfaction. They try to make jobs more interesting by motivating with responsibility or autonomy.
- Socio-Technological Systems: combine the needs of workers and technical requirements. Emphasise getting the work done irrespective of motivation.
- Human Factors: focus on the design of equipment, facilities and environmental factors aiming to achieve maximum employee effectiveness, health, safety and satisfaction.
In 1911, what 4 principles of Scientific Management did Frederick Winslow Taylor establish?
- All aspects of work should be examined and best practice established
- Workers should be selected and trained methodically to perform tasks
- Managers plan the work, while workers should be responsible for delivery
- Managers and workers should co-operate to achieve maximum prosperity for both
Job Design processes are generally driven by a design brief describing the need or problem to be solved, what 5 key stages does this involve?
Concept Generation Screening Preliminary Design Evaluation & Improvement Prototyping & final design
What methods are there for concept generation when doing job design?
- Suggestions from your internal architects and designers
- Watching what your competitors are doing
- Market Survey
- Talking direct to consumer groups
After concept generation, the next step to design process is screening. What three things need to be done on a concept design when screening?
- Feasibility - Can we do it? Do we have skills, resource, equipment etc?
- Acceptability - Do we want it? Does it fit with our requirements, strategic direction, give returns etc?
- Vulnerability - Do we want to take the risk? what could go wrong?
How can you assess design concepts?
Use a weighted scoring system against feasibility, acceptability and vulnerability scoring each between 0 - 3 and choosing the highest score.
After screening, the next step of design process is preliminary design where you aim to produce the first specification. What aspects are considered during preliminary design?
- Bill of materials
- Sequence in which components need to be assembled
- Scope for standardisation of components so cost efficiencies can be achieved
- Scope for commonality across a range of products so cost efficiencies can be achieved
The fourth step in the design process, after the preliminary design, is to evaluate the preliminary design and look for improvements. What 3 techniques are there for evaluating the preliminary design?
QFD - Quality Function Deployment involves identifying and ranking the importance of customer requirements and assessing how well the product satisfies those needs and improving where it doesn’t.
VE - Value Engineering analyses the components themselves looking at cost and relative importance or areas where similar components could do the same. VE exercise usually results in fewer components and standardisation.
Taguchi Methods - looks at the robustness of design testing it against possible risks.
The final step of the design process, after evaluating and improving the preliminary design is to create a prototype and test the product. What is the outcome of this stage?
A fully developed specification for a product and the processes required to make it.
Sustainability should be considered when designing a product. What techniques are there for considering sustainability in the design stage?
- Life cycle analysis (LCA) is a technique which identifies the material, energy and waste flows of a product over its entire life so environmental impacts can be determined.
- Design for disassembly (DSD) is a technique which enables a product to be easily reused, recycled or re-manufactured at the end of life.
- Use of Environmentally preferred materials which involves selecting abundant non-toxic materials which are bio-degradable.
What is a supply network?
A supply network is a series of connected supply chains. Supply Chain is a co-ordinated system of entities, activities information and resources involved in moving raw materials to an end product or service.
What three decisions does the supply network help to make with regards to the design of an organisations operations?
- Configuration and Structure - How much should be done in house, or outsourced.
- Location - Where should each part of the supply network be located?
- Capacity - Decisions relating to the physical capacity each part of a supply network has at anyone time.
What options are available to the organisation in the middle of the supply network to manage the network behaviour?
- Supply Chain Management: the process of planning, implementing and controlling the operations within the supply chain aiming to supply customers as efficiently as possible.
- Horizontal Integration: acquiring or merging with a competitor (also referred to as market integration)
- Supplier Rationalisation: reducing the number of suppliers with which it has contractual relationships
- Vertical Integration: Owning more or less of its supply networks either through acquiring a supplier of customer or developing skills to penetrate a market.
- Disintermediation: The removing of intermediaries in supply chains ‘cutting out the middleman’
As an organisation plans the configuration of its supply networks, what decisions will it have to make which will influence operations?
- Replacement: deciding whether and when to replace equipment which will impact the capacity and location of the supply network.
- Expansion: deciding whether to invest in buildings, plant and machinery. Deciding with whom to form alliances and where to locate new facilities.
- Diversification: assessing the benefits and disadvantages of offering new products or services within a market.
- Make or Buy: comparing the cost of making a product with buying it from external specialist manufacturers
- Non-quantifiable considerations: deciding on responsibilities to the community and the environment will affect the operations.
Decisions about changing a supply network involve potential investment. What two questions do organisations need to consider before progressing?
Is it feasible?
Will the potential benefits more than justify the cost involved?
What four factors must be considered before investing in reconfiguring a supply network?
- Technical feasibility: Are the technical aspects of the investment practical and achievable?
- Operational feasibility: Are existing skills and procedures sufficient to develop, implement and operate the newly designed network?
- Economic feasibility: Can the organisation access sufficient funds to pay for the investment and will it generate a return on investment?
- Schedule feasibility: Can the network be developed and implemented within a given time schedule?
