Operations Flashcards
1
Q
The Strategic Role of Operations
A
The holistic and overarching contribution of the transformation process to the achievement of operational objectives in the short term. This involves the achievement of cost leadership and product service differentiation in the pursuit of creating a positive competitive advantage by producing products at the lowest cost and that appeal to customers relative to their competitors to maximise profitability in the long term.
2
Q
Operational objectives
Cost
A
minimisation of COGs and other expenses to achieve Cost Leadership
3
Q
operational objectives
measures of cost
A
- Profitability ratio analysis
- variation in input costs
4
Q
operational objectives
Quality
A
Product matching what it is designed to do/expected by customers which includes quality of design, conformance, and service
5
Q
operational objectives
measures of quality
A
- customer feedback satisfaction indexes
- warranty claims/returns
- defect rates
6
Q
operational objectives
Speed
A
time taken to respond to produce output to meet demand
7
Q
operational objectives
measures of speed
A
- wait times
- lead times
- process times
8
Q
operational objectives
flexibility
A
how quickly processes react to changes in market
9
Q
operational objectives
measures of flexibility
A
- variations in speed during peak/not peak times
10
Q
operational objectives
dependability
A
how constistent/reliable a business’ products are
11
Q
operational objectives
measures of dependability
A
- warranty claims/returns
- waste
12
Q
operational objectives
Customisation
A
Ability of a business to produce individualised products to meet specific needs
13
Q
operational objectives
measures of customisation
A
- Product breadth/depth
- volume of products produced
14
Q
Goods and services in different industries
Product
A
good or service
15
Q
Goods and services in different industries
Good
A
tangible aspect of good
16
Q
Goods and services in different industries
Service
A
intangible aspect of service
17
Q
Goods and services in different industries
Goods-based business
A
Business that predominantly sells goods
18
Q
Goods and services in different industries
Service-based business
A
Business that predominantly provides a service
19
Q
Interdependence with other KBFs
Interdependence
A
Interdependence refers to the mutal dependance/effect that the KBFs have on one another. Each KBF depends on the others to perform at capacity. This is a two way relationship:
1. contribution ops makes to other KBFs to achieve goals
2. reliance of ops on other KBFs to achieve goals
20
Q
Interdependence with other KBFs
How operations supports finance
A
Operations contributes to the achievement of profit maximisation, wealth creation and financial stability by:
1. Producing high value added, differentiated and cost-effective products for sale to customers.
2. Meeting the needs and wants of customers, sales generate sales.
3. Sales revenue (equity) is required by finances to carry out their role
21
Q
Interdependence with other KBFs
How operations supports marketing
A
Operations is responsible for producing a product that meets a design brief and that is desired by the consumer and seen to have ‘value’.
* In short, operations produces the best product they can at the lowest cost, marketing entices consumers to purchase that product at the highest possible price.
* The higher the quality, the more successful a marketing campaign
* ops is primarily responsible for managing the costs of production which is crucial to determining the final sale prices of products and profitability
22
Q
Interdependence with other KBFs
How operations supports HR
A
Operations is responsible for producing a product that is marketable in meeting customers expectations AND is done so at the lowest costs.
* operations process needs to add the most value to inputs throughout the transformation process in the most cost-effective manner possible.
23
Q
Interdependence with other KBFs
How finance supports operations
A
Finance supports the transformation process by allocating financial capital to:
* The purchase of stock, making payments,
* sourcing debt and equity funding for machinery purchase, improve productivity
* Finances R&D into new product/service design
24
Q
Interdependence with other KBFs
How marketing contributes to operations
A
- Market research discovers what products are demanded by consumers. The results are fed back into the operations process as an input (information and consumers)
- effectively shapes the design and production of the products.
- tangible and intangible elements of the product are determined by marketing, but contribute to the overall finished product.
25
# Interdependence with other KBFs
How HR contributes to operations
???
26
# Inputs
Transformed resources
resources that are treated, transformed, or converted in the operations process, includes:
* materials
* info: internal and external
* customers
27
# Inputs
Materials
Basic elements used in the production process which includes:
* raw materials: unprocessed
* intermediate goods: manufactured and used further
28
# Inputs
Information
Knowledge gained from research, investigation, and instruction to increase understanding of the market:
* external info: from trade organisations, competition
* internal info: financial statements
29
# Inputs
Customers
Can be transformed resources when their choices shape inputs and the transformation.
Goal of ops is that product meets consumer demand.
30
# Inputs: case study
MCDs transformed resources
Materials: beef, chicken, lettuce, onions
Info: sales data (in), shift in consumer taste (ext)
Customers: consumer preferences spurred MFY, app
31
# inputs
Transforming resources
Inputs that carry out the transformation processes, includes:
* HR
* facilities
32
# Inputs
human resources
the human capital inputs into a business eg. workers
The greatest asset to business as they appreciate and have valuable capacities
33
# Inputs
Facilities
the plant (factory/office) and machinery used in the operations processes. They assist people to convert inputs.
34
# Inputs: case study
MCDs transforming resources
HR: crew members, store managers, cooking and assembly
Facilities: resturants, drink machine, rostering software
35
# The transformation process: 4Vs
Volume
how much of a prodcut is made. Businesses aim to ahcieve volume flexibility which refers to how quickly a business can adjust to varying demand, helps to reduce lead times.
Indicators are speed and flexibility.
36
# The transformation process: 4Vs
Variety
mix of products/services. Mix flexibility is AKA producy rang e and variety.
Marketing is responsible for determining the mix, but ops is responsible for their production. The greater the variety, the greater the ops process will need to allow for the variaition.
37
# The transformation process: 4Vs
Variation in demand
how the transformation processes react/respond during periods of variation in demand.
Management must forecast, plan, and react.
38
# The transformation process: 4Vs
visibility
the contact businesss has with its customers in the ops process, shapes what the business makes and how they make it, ensures that customer perception of product are met. It can be:
* direct: surveys, interviews, warranty claims, letters
* indirect: review of sales & market share data, observations
39
# The transformation process: 4Vs
4Vs at MCDs
Volume: MCDs is a high volume seller
Variety: In 2001 had 20 items, since 2007 they have had 70% increase in variety of products
Variation in demand: challenges inc. ability of supply chain to produce massive volume, daily variations, being able to product dependable/quality products in time frame
Visibility: MCDs values direct contact through app, kiosk, online surveys, unscripted POS dialogue, in 2004 they shifted from production oriented to consumer oriented
40
# Transformation process: sequencing and scheduling
Sequencing
order in which activities in the operations process occur. This allows for the efficient ordering of activities in the operations process.
41
# Transformation process: sequencing and scheduling
Scheduling
the length of time activities take within the operations process. This allows for sufficient time to complete all activities.
42
# Transformation process: sequencing and scheduling
How sequencing and scheduling can be improved
* monitoring actual vs planned production times
* streamline processes and procedures to maximise efficiency and productivity
* improve technology in the production process
This would lead to an improvement of all ops objectives.
43
# Transformation process: sequencing and scheduling
Gantt Chart as a tool
It records the number of tasks involved in each particular project and the estimated time needs for each task, but will not show the relationship between tasks.
* shown as bar chart
* forces planning of steps and time allocation
* actual vs planned
* graphical illustration of schedule
44
# Transformation process: sequencing and scheduling
Critical Path Analysis as tool
widely-used project management tool that uses network analysis to help project managers to handle complex and time-sensitive operations. The critical path is the shortest time taken to complete all tasks
* shows what tasks need to be done, how long they take, order
* flow diagram that shows interrelationship of tasks
45
# Transformation process: sequencing and scheduling
Critical Path Analysis pros and cons
Advantages:
* decision-making tool
* provides managers with overvieew
* can support other aspects of business planning
Disadvantages:
* relies on assumption
* doesn't guarantee success of a project
46
# transformation process: tech, task design, product and process layout
Why businesses update tech
* maintain competitive
* increase productivity
* reduce cost of production (CL)
* creates point of differentiation (PSD)
* gains competitive advantage (profitability)
47
# transformation process: tech, task design, product and process layout
types of tech used in production
* Robotics
* Computer Aided Design (CAD)
* Computer Aided Manufacturing (CAM(
48
# transformation process: tech, task design, product and process layout
tech: robotics
Highly specialised, programmable machinery that is capable of completing several different tasks without human input.
eg. 3D printer, reduces human error (dependability)
49
# transformation process: tech, task design, product and process layout
tech: CAD
computerised design tool that allows business to create product possibilities from a series of input perameters, quality assurance as it reduces human error.
50
# transformation process: tech, task design, product and process layout
CAM
software that controls manufacturing
eg. AI, MyMaccas App
51
# transformation process: tech, task design, product and process layout
How tech impacts the operations process
* volume orders
* speed
* customisation
* revenue
* efficiency
* flexibility
52
# transformation process: tech, task design, product and process layout
Tech used by MCDs
* kiosk (robotics)
* MyMaccas App (CAM)
* menu
* pay by tapping phone
* grillers
* food warmers
53
# transformation process: tech, task design, product and process layout
Technology and task design at MCDs
The MFY system is reliant on technology:
* 11 sec toasters
* 22 sec double-sided grillers
* food warmers
* software that delivers orders to either side of kitchen to minimise wait times
Consistency in the supply chain is very important to MCDs processes within the resturant (OSI Foods)
54
# transformation process: tech, task design, product and process layout
Financing tech
The capital cost of tech is high due to initial outlay, maintenance, and updates. It can either be purchased outright using financial capital or leased.
55
# transformation process: tech, task design, product and process layout
Financing tech at MCDs
MCDs organises the leases of required equipment from its leasing partner CookQuip. They source all equipment requirements for MCDs stores worldwide. Their licensees are required to pay these lease payments directely to MCDs.
56
# transformation process: tech, task design, product and process layout
Task design
breaking down the operations process into individual tasks to be completed. It involves:
* job description
* job specification
* job analysis
57
# transformation process: tech, task design, product and process layout
Task design: job description
* job title
* working hours
* duties and responsibilities
* working conditions
* salary incentives
* machinery to be handled
58
# transformation process: tech, task design, product and process layout
Task design: job specification
* qualifications
* qualities
* training and development
* interpersonal skills
59
# transformation process: tech, task design, product and process layout
Task design: job analysis
process of determining and identifying the content of a job in terms of duties, number of tasks and responsibilities, skills/knowledge required
60
# transformation process: tech, task design, product and process layout
Product (plant) layout
the arrangement and set out of equipment that supports the sequence of tasks performed in manufacturing the product.
61
# transformation process: tech, task design, product and process layout
Process layout
arrangement of machines and equipment that are grouped together by the process they perform.
62
# transformation process: tech, task design, product and process layout
Resturant layout at MCDs
They have redesigned their resturants to improve workflow:
* no manager office
* increased seating area and density
* decreased customer service area
* one main production line in kitchen
* added McCafe and kiosks
* Drive-thu beverage window added
* increased storage room
* walls reduce customer visibility
63
# transformation process: tech, task design, product and process layout
process and product layout at MCDs
Process: the grouping of the griller and frier together as they both cook
Product: Having the condiments at the end of the kitchen as they are the last part of the assembled meal
64
# Transformation process: outputs, customer service, warranties
Outputs of a business
Intangible service warranty and tangible goods
65
# Transformation process: outputs, customer service, warranties
Outputs: Components of intangible service warranty
Service: intangible product/component of a product typically provided by employees of an organisation
Warranty: guarentee that a manufacturer/similar party makes regarding the conditions of its products, includes the terms when repairs will be made (CCA 2010)
66
# Transformation process: outputs, customer service, warranties
Outputs: components of tangible goods
semi-finished/intermediate goods: any partially finished goods that are used in the production of finished goods
Finished goods: goods that have been completed during the manufacturing process for the purpose of being sold to consumers/businesses
67
# Transformation process: outputs, customer service, warranties
Customer service
intangible output that requires extensive contact with customers
* often source of CA
* provided before, during, after purchase
* tech changes how services are delivered
68
# Transformation process: outputs, customer service, warranties
Customer service process
1. customer info informs production process
2. Customer Relationship Managment (CRM)
3. gathering, interpreting, analysing data
4. Produce product to consumer wants and needs
5. customer service
69
# Transformation process: outputs, customer service, warranties
Customer service at MCDs
* reminders on MyMaccas App
* delivery
* table service
* 24/7 (accessibility)
70
# Transformation process: outputs, customer service, warranties
warranty
an assurance that a business stands by the quality claims of the product they provide to the market, which becomes a right under ACL.
71
# Transformation process: outputs, customer service, warranties
warranty claims
defects caused by the transformation process that help to identify issues in the transformation process or with inputs.
72
# Transformation process: outputs, customer service, warranties
Warranties: businesses must make sure that they products they sell...
* high level of quality comparable to price and description
* suitable for purpose/job
* match description in advertising/promoting
* free from defects/faults
These make up statute/implied warranty that gives consumers legal production under ACL and the CCA 2010.
73
# Transformation process: outputs, customer service, warranties
Common warranties
when a business makes extra promises/representations generally about the standard of a good. They may refer to:
* quality, state, condition, performance, characteristics of good
* what the good can do and for how long
* availability of servicing, supply of parts/identical goods
74
# Transformation process: outputs, customer service, warranties
Warranty against defects AKA manufacturers warranty
if defective, business will repair/replace goods (part of them), resupply/fix a problem with the services, provide compensation.
They are usually limited by time, doesn't need to be a formal document, and doesn't replace consumer guarantees.
75
# Transformation process: outputs, customer service, warranties
Customer service at MCDs
reallocation of HR from counter service to out back due to demanded increase in customer service.
76
MCDs move from Made in Advance to MFY
Made in Advance had structural limitations and was in need of change:
* grillers were single-sided, now double-sided and automated (22 secs)
* toasters were 60 secs, now 11 secs
* had no production softwar, added software based on AI
77
# operations influence
Government policy
Methods used by government that encourage/incentivise businesses to behave in ways to achieve desired outcomes.
* allows for business to get ahead of government policy which contributes to meeting consumer needs and CSR
* find new efficient ways to run business
Process: can influence how business conducts its ops process (inputs)
objectives: cost and dependability
78
# operations influence
Government policy in MCDs
Changes to the Fair Work Act 2010 to include the Workers Security Package
* had to introduce rostering software that is more efficient to avoid giving part time contracts
* makes process dependable and keeps cost low
79
# operations influence
Globalisation
process by which the world is becoming increasingly interconnected as a result of increased trade and cultural exchange. It is a source of market opportunities for a business, but may also introduced increased competition. It allows access to low cost suppliers, higher quality inputs and more of them.
Process: inputs
Obj: cost and quality
80
# operations influence
Globalisation at MCDs
MCDs is supplied by OSI Foods Global for raw materials inc beef, luttuce, chicken, onions ect. They use hedging to lock down the cost of their inputs so they don't fluctuate with global economy.
81
# operations influence
Cost-based competition
derived from determining the breakeven point and then applying strategies to create cost advantages over competitors. It encourages improvement, cost minimisation, and productivity in business.
Process: inputs (transforming)
obj: cost and quality
82
# operations influence
cost-based competition at MCDs
Main competitor is Yum Brands however as MCDs has expanded their menu, they found themselves competing with a greater variety of competitors. To deal with this, they have improved the facilities (resutrants, cookers, drink machines).
83
# operations influence
quality expectations
Quality is the ability of a product/service to meet a customer's expecations for that product/service. This expecation can fluctuate over time.
Process: inputs (transformed)
obj: quality and dependability
84
# operations influence
quality expectations at MCDs
In 2011, MCDs was reported by The Australian as admitting that its coffee didn't meet the standard of Aussie customers. They re-launched the coffee blend, introduced new coffee machines, and improved barista training.
85
# operations influence
technology
the application of inovations in design, construction and equipment for practice purposes. This can result in a cost reduction (EOS), and producitivity improvements (leader, CA).
process: variation in demand
obj: cost and speed
86
# operations influence
technology at MCDs
The MCDs AI calculator of how much supplier each store needs and what is to be produced before it is ordered:
* reduces cost associate with wastage
* recieve an average of 2.5 deliveries per store
* no need to do stock take
* orders met faster
87
# operations influence
Legal regulation
all businesses must comply with laws and regulations. These often stem from govt policies which set down a broad direction for the behaviours they wish to be legislated. The costs associated with meeting these requirements is known as 'compliance costs'. Benefits:
* avoid additional cost/expense
* minimise disruption to processes
* autonomy over business decisions
* improved quality of output
* positive brand image
Process: warranty
Obj: cost and dependability
88
# operations influence
Legal regulation at MCDs
MCDs has to be compliant with local, state, and federal laws in Aus. For them to be compliant with the Workplaces Health and Safety Act 2011 (NSW) and the NSW Food Authority, a meat patty will go through 52 checks before it arrives at a MCDs resturant. By going beyond what is legally required, MCDs is highly flexible to changing laws, prevents the use of returns policy.
