Decision Making To Improve Operational Performance Flashcards
Operations management involves decisions eg……
- The level of output s business needs to be able to produce
- The range of products a business wants to offer
- How best to produce the good or service (labour or capital (equipment) intensive )
- How best to provide the good or service to the customer
Operations management
Managing the process of converting inputs into outputs.
It transforms resources into goods and services
Operational process analysis 4vs model
Volume of output
Variety of output
The visibility of production
The variability of demand
Operations involves ethical decisions ……
- How to reward and treat employees
- Where to locate the business
- Safety features ( if not necessary adding will increase costs)
- The environment
Operational objectives
Costs Flexibility Dependability Speed Quality Environmental objectives Defect rates Safety targets
Internal influences on operational objectives
- Marketing activities -what has to be produced
- Human resources - what is actually possible
- Finance
External influences on operational objectives and decisions
Political/legal factors Economic factors Social factors Technological factors Competitive factors
Measures of operational performance
Labour productivity
Unit costs
Capacity utilisation
Ways of improving efficiency
- Using capacity more efficiently
- Choosing the optimal mix of resources
- Increasing labour productivity
- Introducing lean production
- Using technology
If capacity utilisation is low managers might…
- Try to improve marketing to boost sales eg reduce price,change product
- Reduce its capacity
If demand is too high for existing capacity
- Outsource to other producers
- Find a way to reduce demand in the short term eg push price up
Labour productivity
Number of employees
Unit costs
Total output
Capacity utilisation
Existing output
—————— Times by 100
Maximum possible output
Ways to improve labour productivity
- Invest in technology- access to more equipment
- improve training of employees - more skills
- change the way the work is organised and the design of jobs to improve flow of work
- change the way employees are rewarded to provide more incentive
Problems of increasing labour productivity
Quality may suffer
Customer satisfaction may fall
Employees may demand higher pay for higher productivity
Lean production aims to reduce waste by …..
- Improving quality so reducing the amount of items that need to be reworked, thrown away or fixed
- Reducing the amount of inventory held as this reduces costs of protecting and storing it, also reduces risk of it going out of date or not being sold
- Reducing the time Items are waiting for something to happen to them
- Reducing the time when items are moving from one stage of process to another
Kaizen
Continuous improvement
Employees encouraged to work on kaizen groups to focus on their area of work and come up with ideas on how processes can be improved and made leaner
Andon - helps them to become leaner
If there is a problem the andon cord is pulled and production stops. Lights show where the problem happened and Everyone goes there to understand what happened.
Transparency
It ensures that when there’s s problem everyone learns from it and they therefore become more efficient
Processes to become leaner
Kaizen
Andon
Changes In the layout of the store or factory to make it more efficient
Difficulties of adopting lean production
- Business is more vulnerable as there is no inventory so if there is a problem and production stops they run out of stock
- Can be hard to introduce - employees need to be engaged, have skill,and training to improve quality of own work
- Some employees may resist the change
Technological development allow businesses to…..
- Be more flexible to customer needs
- Reduce costs by having more efficient processes with less errors
- Be innovative
Quality PDCA
Plan
Do
Check
Act
How to achieve quality
- Understand customer requirements
- Training
- Investment in technology
- New processes
- Selecting the right partners
