chapter 3 a-c Flashcards
Operations management
coordinating and organising the activities involved in producing the goods or services that a business sells to customers
efficiency
how productively a business uses its resources when producing a good or service.
effectiveness
the extent to which a business achieves its stated objectives
To make a profit
Implement technology into the production process. Reduces the number of employees required in the operations system, which can reduce overall expenses associated with labour and increase profit.
Increase market share
Check that the products produced are not faulty. Can improve the quality of a business’s product, increasing customer satisfaction and the business’s proportion of sales within its industry.
Meet shareholder expectations
Create a website for customers to purchase goods and services. Increases online sales, leading to higher levels of profit and higher dividends for shareholders.
Fulfil a market need
Use technology to design new products. Can design innovative products to fulfil unmet needs in the market.
Fulfil a social need
Ensure that any waste is recycled in the production process. Can reduce wastage in the production process, minimising the business’s impact on the environment.
inputs
the resources used by a business to produce goods and services.
- Labour resources (employees)
- Raw materials
- Equipment and machinery
- Time
- Electricity
- Information
processes
the actions performed by a business to transform inputs into outputs.
- Mixing
- Designing
- Baking
- Computing
- Assembling
- Constructing
outputs
the final goods or services produced as a result of a business’s operations system which are delivered or provided to customers.
Production process (manufacturing business)
Manufacturing businesses tend to have highly automated processes that are capital intensive.
Occurrence of production and consumption (manufacturing business)
At manufacturing businesses, production and consumption of the good occur at separate times.
Customer contact (manufacturing business)
Manufacturing businesses often have a low degree of customer contact during production, as the production stage is separated from consumption.
Tangibility (manufacturing business)
The outputs produced by a manufacturing business are tangible.
Storability (manufacturing business)
The outputs produced by a manufacturing business can be stored as inventory.
Consistency (manufacturing business)
Manufacturing businesses produce goods that can be standardised through mass production
Production process (services business)
Service businesses tend to have production processes that are labour intensive.
Occurrence of production and consumption (services business)
At service businesses, production and consumption of the service occur simultaneously.
Customer contact (services business)
Service businesses tend to have a high degree of customer contact during production, as production and consumption occur simultaneously.
Tangibility (services business)
The outputs produced by a service business are intangible.
Storability (services business)
The outputs produced by a service business are not able to be stored as inventory.
Consistency (services business)
Services usually are not standardised, and instead tailored specifically to individual customers needs.
The relationship between operations and
productivity
Productivity is the overall measure of an organisation’s ability to transform inputs into outputs. Productivity refers to the level of output obtained from a level of input. The more efficient an organisation is in turning inputs into outputs the higher the rate of productivity.
In order to improve productivity the operations manager must ensure the most efficient use of the organisation’s inputs; that is, to get the highest output possible from the inputs used.
The organisation must effectively manage its production of goods and/or services through wise implementation of operations management strategies. These strategies focus on 4 main areas: technological developments, materials management, quality and waste minimisation
Similarities between operations systems of both manufacturing and service businesses.
- Both service and manufacturing businesses aim to optimise their operations to produce high quality outputs at a low cost of production.
- Both service and manufacturing businesses have to deal with suppliers during the process of managing operations.
- Both service and manufacturing businesses can utilise forms of technology in their operations systems.
- Both service and manufacturing businesses aim to optimise efficiency and effectiveness in their operations.
