Operations Flashcards
Define operations.
The business processes that involve transformation, or more generally, ‘production’.
What does strategic mean?
refers to long-term, broad aims affecting all key business areas.
What does the strategic role of operations management involve?
involves allocating resources so that all aspects of business meet customer’s needs.
What is cost leadership?
involves aiming to have the lowest costs or to be the most price-competitive business in the market.
What does cost leadership involve balancing?
Balance between cost and quality.
What is a key component of cost leadership?
Economies of scale
Define economies of scale.
refers to costs savings that occur as a result of an increase in the scale of a business’ operations.
Economies of scale =
as _____ increases, _____ decreases.
As output increases, costs of production decreases.
What is good/service differentiation?
distinguishing products in some way from those of competitors.
Define standardisation.
The making of products that are homogeneous or identical.
How can a business differentiate goods?
- varying the actual features of the good
- varying product quality
- varying any augmented features
How can a business differentiate services?
- varying amount of time spent on a service
- varying the level of expertise brought to a service
- developing self-service options
- flexibility
- no fuss
- varying the quality of materials or technology used in the delivery of the service.
What is the advantage of cross branding or strategic alliances?
adds value to products by offering consumers added benefits from a cross-branding arrangement.
What are some examples of cross branding arrangements?
coles + shell
Woolworths + caltex
What are standardised goods?
- those that are mass produces, usually on an assembly line.
- uniform in quality and meet a predetermined level of quality.
- generally produced with a production focus.
What are customised goods?
- those that are varied according to the needs of customers.
- produced with a market focus
What is emphasised in operations processes for perishable goods?
- high standards of quality, safety and cleanliness in production.
- short lead time and distribution that is efficient.
- suitable packaging and storage processes in production and distribution.
What must be integrated in operations processes for non-perishable goods?
- manage all aspects of quality in production
- effective inventory management strategies to be highly responsive to market demand and minimise waste.
what are intermediate goods?
When goods are processed more than once because they become inputs that require further processing.
What is an example of standardised services?
fast food industry
What is an example of customised services?
Doctors, lawyers
Define interdependence.
The mutual dependence that the key business functions have on one another.
When does interdependence occur?
- when each key business function area is committed to the same business goals as the other key areas.
- they each work in a coordinated and collaborative way to achieve these goals.
What are some examples of interdependence between business functions?
Sales + marketing
Finance + administration
Operations + R and D
What are the influences on operations
- globalisation
- technology
- quality expectations
- cost based competition
- government policies
- legal regulation
- environmental sustainability
- CSR
Define globalisation.
the removal of barriers of trade between nations.
What is globalisation characterised by?
- increasing integration between national economies
- high degree of transfer of capital, labour, intellectual capital and ideas, financial resources and technology.
What is the positive influence of globalisation on operations?
- provides a source of market opportunities from other nations and to other nations.
What is an example of globalisation?
Apple
- electronic goods are designed in the USA, manufactures in China, and sold globally.
Define technology as an influence on operations.
The design, construction and/or application of innovative devices, methods and machinery upon operations processes.
What are the positive influences of technology on the administrative level of operations?
organisation, planning, decision making, control of operations processes.
What are the positive influences of technology on the processing level of operations?
manufacturing, logistics and distribution, quality management, inventory management, supply chain management and sourcing.
How can globalisation be a threat to business?
- more competition:
- businesses that become global and apply cost leadership principles can undercut the market and dominate.
What influences how global businesses target global markets?
- product design
- choice of location for manufacturing facilities
- management of quality, logistics, inventory management processes.
Define quality.
Specific reference to how well designed, well made and functional goods are, or the degree of competence with which services are organised and delivered.
What does quality inform in operations processes?
- the way products are designed, created and delivered.
Define cost-based competition?
determining the breakeven point and then applying strategies to create cost advantages over competitors.
In what ways can a business lower costs to maximise profits?
- eliminate waste
- achieve economies of scale
- produce high volume output
- bulk buy inputs
- use automated production systems
- produce standardised products for larger markets
In what ways can a business lower cots and increase productivity at the same time?
- stable production processes with limited interruption.
- Use resources to optimum advantage.
- streamline production processes.
- Update facilities and equipment with new and efficient technology.
- Provide training and development to increase skills and capabilities of staff.
What are some examples of government policies which influence operations?
- taxation rates
- requires materials handling practices
- work health and safety standards
- industry training requirements
- policies relating to public health
- environmental– carbon tax
- trade and industry
- employment relations
What are the positive influences of government policies?
- encourage operations function
How does government policies affect business operations?
- political decisions affect the business rules and regulations, which, in turn directly affect the management of various key business functions.
- encourage innovation and competition in operations function.
Define compliance.
The range of laws with which a business must comply.
What are compliance costs?
The expenses associated with meeting the requirements of legal regulations.
How does legal regulation influence operations?
- shape business practices and procedures.
- influence how practices and processes are conducted.
- influences the role of labour in transformation process.
- environmental protection
- public health
How does legal regulation influence the role of labour in transformation processes? / What specific legal regulations?
- WHS: safety training, protective equipment…
- Training and development
- Fair work and discrimination laws?
What legal regulations regarding environmental protection influence operations?
minimising pollution, eliminating and safely disposing of any toxic residues
What legal regulations regarding public health influence operations?
any fair trading rules which influence product safety standards and fitness for purpose of products.
What are the quality expectations with goods?
Quality of design
Fitness for purpose
Durability
What does quality of design involve?
- How well the concept has been developed, taking into account customer needs and expectations
- Nature of the materials used
- Innovation evident in the design, which minimises waste
What does fitness for purpose involve?
- How well the product does what it is designed to do.
- How easy it is to use.
What does durability involve?
- How reliable and long lasting the product is.
- How easily it can be repaired and maintained.
What are the quality expectations with services?
- Professionalism of the service provider.
- Reliability of the service provider.
- Level of customisation.
What does professionalism of the service provider involve?
- The cleanliness and layout of the physical facilities.
- The courtesy and professionalism of the staff and the care taken in dialogue and interactions.
What does reliability of the service provider involve?
- How efficiently the service is performed.
- Overall levels of competence.
What does a level of customisation involve?
- How well the particular needs of the customer are fulfilled by the service provider through the application of expertise and experience.
What are some of the laws affecting and shaping business operations in Australia?
Commonwealth:
Racial Discrimination Act 1975
Sex Discrimination Act 1984
Disability Discrimination Act 1992
Work Health and Safety Act 2011
Fair Work Act 2009
NSW:
Workers Compensation Act 1987
Anti-Discrimination Act 2004
What does environmental sustainability mean for a business?
Means that business operations should be shaped around practices that consume resources today without compromising access to those resources for future generations.
What are the ways a business is environmentally sustainable?
- the sustainable use of renewable resources.
- a reduction in the use of non-renewable assets.
- Application of the precautionary principle.
What is the precautionary principle?
requires that where environmental impacts are uncertain, a business undertakes actions that are most likely to cause the least environmental impact.
What are examples of ways a business can minimise waste?
- recycling water, glass, paper metals
- reducing carbon footprint
What is corporate social responsibility?
Open and accountable business actions based on respect for people, community/society and the broader environment. It involves businesses doing more than just complying with the laws and regulations.
Give an example of a business showing corporate social responsibility.
Kathmandu
- Produces a separate sustainability report providing comprehensive account of commitment to areas of ethical decision making that goes beyond legal requirements.
How does Corporate social responsibility influence operations?
- manage the effects of activities on society/community and environment and reduce negative impacts.
- understand where and how inputs are sourced: drawing only from suppliers that adhere to appropriate standards.
- shapes processes in a way to minimise environmental damage and waste.
- recruitment practices draw from wide range of employees, inclusive of all backgrounds.
What is the difference between legal compliance and ethical responsibility?
Ethical responsibility:
- going further than the law.
- meeting all legal obligations and taking it further by following the intention and ‘spirit’ of the law.
Legal compliance:
- require businesses to follow the letter of the law (prescribed standards of behaviour).
Define outsourcing.
involves the use of outside specialists to undertake one or more key business functions.
What is onshore outsourcing?
use of domestic businesses as an outsourcing provider.
What is offshore outsourcing?
taking the activities to a provider in another country.
How can a business reduce compliance costs?
outsourcing
What is sustainable economic development?
Using methods of production that conserve the Earth’s resources for future generations.
What are the consumer environmental expectations of a business?
- adopt greenhouse abatement measures
- encourage development of long-term sustainable strategies.
What are the goals of a socially responsible business?
- expanding the business
- providing for the greater good of society
How does environmental sustainability and social responsibility impact a business?
- customers can react and stop buying form an unsustainable business.
- customers will reward socially responsible business, purchasing more
How does environmental sustainability and social responsibility impact operations?
- balance between economic and environmental concerns.
- adopt policies of conservation, recycling, restoration.
- Growing consumer expectation: products should be ‘clean, green and safe’.
Define inputs.
The resources used in the transformation process. Some are owned by the business, others are provided by suppliers.
What are transformed resources?
Those inputs that are converted in the operations process.
- Give operations process a purpose of goal.
What are the transformed resources?
materials, information, customers.
What are materials?
the basic elements used in the production process.
What are the types of materials?
Raw materials
Intermediate goods
What are raw materials?
The essential substances in their unprocessed state.
What are intermediate goods?
Goods manufactured and used in further manufacturing or processing.
What is information?
The knowledge gained from research, investigation and instruction, which results in increased understanding.
How does information act as a transformed resource?
used to inform how inputs are used, where they are drawn from, which supplies/suppliers…
What are examples of external sources of information?
Market reports
Stats from industry observers
ABS
What are examples of internal sources of information?
