Chapter 5 Flashcards
Operations management
Definition
The planning, directing and controlling of the transformation of inputs and outputs that meet the needs of the organisations customers 
The administration of business practices to create the highest level of efficiency possible within an organization.
Process management
Definition
combining transformed inputs (e.g. materials) with transforming inputs (e.g. labour) in a transformation process to produce an output (e.g. products, or services)
Process design
Definition
The method by which individual specialists seek to understand business activities, and ensure that they are as efficient and effective as possible
The four Vs of process
Volume - the process will be affected by the number of inputs and outputs
Variety – the process will be affected by the number of different inputs and outputs
Variation – the process of the affected by when outputs are required (e.g. peak times for a train company).
Visibility – the process will be affected by the customers can view it or not
Value chain
Michael Porter
A value chain refers to the full lifecycle of a product or process, including material sourcing, production, consumption and disposal/recycling processes.
Regardless of a business specialises in low-cost, high-volume or high-cost, low-volume all activities within the business must align with this. 
Value chain
Support activities
Firm infrastructure
Technology development
Human resource management
Procurement
Value chain
Primary activities
Inbound, Logistics
Operations
Outbound logistics
Marketing and sales
Service
Value network
Definition
Supplier - us - customer
Recognition that success of one is influence by another
All businesses in a value network should be consistent with the value chain
Capacity, planning, and control.
Overcapacity – too many resources available for the level of demand – costly and inefficient.
Undercapacity dash, not enough resources available to meet, demand – delays and fulfilment and loss of goodwill
Capacity planning implications for
Costs - if undercapacity then resources are wasted
Revenue - if demand exceeds production, capacity revenue, and custom a goodwill has lost
Quality - if production has been rushed, quality will suffer
Capacity strategies
Level capacity strategy – maintain a constant level of production
Chase demand strategy – match production to forecast, demand
Demand management strategy – manipulate demand levels to match capacity levels (e.g. incentivising, demand)
Manufacturing resource planning (MRP II)
A method for the effective planning of all resources of a manufacturing company. Key functions include
– identifying firm, orders, and forecasting future orders taking into consideration materials, capacity and current stock levels
Benefits of manufacturing resource planning
Reduce stockholding
Improved ability to meet orders (happy customers)
Reliable quotations of delivery times
Improve facilities, utilisation
Better supply relationships 
Optimise product technology (OPT)
Eliminates bottlenecks by using several computer base methods for scheduling production requirements.
Enterprise resource planning (ERP)
Integrate all departments and functions of an organisation in a computer system, able to meet the needs of all organisational users 
Ordering costs
The cost associated with placing an order and receiving a good
Transportation costs
Holding costs
Cost of storage and stores operations
Turning up, cash on inventory
Insurance costs
Deterioration
Risks of obsolescence 
Stock out costs
Lost contribution of unfilled orders
Loss of customer, goodwill and loss of repeat business
Cost of production employees, ideal time.
Administration cost associated reply to customer, queries and complaints. 
Product and service development (developing output)
ABCDEF
A key part of operations is how to develop outputs in the future to meet customer needs
Anticipate the need – what feedback have we been given?
Be innovative – what will answer the need
Challenge the concept – will it work
Design the new output
Expedia eight – speed to the market is crucial
Finish – test the product before live date. 
Procurement – reck and long
Passive – purchasing is a clerical function.
Independent – attempts to find the best prices
Supportive – centralised purchasing department, which supports the wider goals of the business.
Interrogative – purchasing is a part of the firm strategic planning process. Suppliers are considered partners of the organisation.
Procurement – cousins
The supply wheel
Spokes to the wheel are of equal importance and must work together
One – organisation structure - 
Two - portfolio of relationships
Three - cost benefit analysis
Four – skills and competencies
Five – performance measures.
Supply chain, performance objectives
Speed
Dependability
Cost
Push based demand network
Producing a product that is thought the market will need
Pull based demand network
Using data, define gaps in the market and producing a product that will fill it
