operations Flashcards
operations
refers to the business’s processes that involve transformation or more generally ‘production’. applies to both manufacturing and services sector
manufacturing sector
processes involved in turning raw material and resources into outputs or finished goods/ products
eg. burger or chair
service sector
process involved in carrying out a service eg. getting hair done
overarching goal of business
to maximise profits, this is done by focusing on two important aspects of profit
- revenue or income
- cost or expenses
the role of operations management
to design, implement and improve processes for turning resources into products. The main aims for the operations management are to make processes more efficient to reduce costs and improve quality to better satisfy customers.
cost leadership
aiming to have the lowest costs or to be the most price competative in the market. Key aspect: although trading with the lowest costs, the overall business should still be profitable
economies of scale
cost advantages that can be created because of an increase in scale of business operations. Cost savings come from being able to purchase lower cost per unit of inout and efficiency created from the improved use of technology and machinery
product differentiation: goods
varying the actual product features: providing one basic product and then in other varieties of increasing complexities or options
varying product quality
making a low quality model available that is affordable and then increase the quality in another product under a higher price
varying any augmented features
varying add ons or additional benefits assosiated with particular goods i.e. additional features you can purchase with a car
product differentiation: services
varying the amount of time spent on a service: time is a factor that differentiates
varying the level of expertise bought to a service
higher skill can bring a more specialised service
varying the qualifications and experience of the service provider
highly qualified and experienced service providers can affect the quality of the service provided
varying the quality of materials/ technology used in service delivery
more advanced technology and materials can improve the quality of service (from information software to advanced medical technology)
differentiation being created from cross branding or strategic alliance
this approach adds value to products by offering consumers added benefits from cross-branding arrangements (woolworths x caltex alliance)
differentiation is a business stratergy where:
the business seeks to be competative on the basis of characteristics of its good or service that set it apart from its rivals
distinguish between standardised goods and customised goods
standardised goods: - mass produced - uniform in quality - meet a predetermined level of quality Customised goods: - varied to meet customers needs - produced with a market focus rather than a production focus
drip pricing
headline price that is advertised at the beginning of an online purchasing process and additional fees and charges which may be unavailable are then incrementally disclosed
interdependence
the mutual dependence that the key business functions have on one another. this means that the various business functions work best when they work together
how can service be both standardised and customised
the fast food industry is an industry that aims to standardise their services - the process of producing their goods is followed within set guidelines. Things such as medical services are generally customised meaning they get treated differently depending on their problems.
how is cost leadership linked with standardising products
when a product is standardised, costs associated with the can be minimised. When a business offers a service, then it can bring a cost leadership to the service by standardising how that service is performed.
four main business functions
operations
- manufacturing, provision of service, other value adding, may be domestic or global
marketing
- sales and advertising, product design, marketing stratergies
finance
- administration, financial management, financial planning, management and change
human resources
- industrial relations (IR), human resource management (HRM), personal management
key functions are interdependent which means they rely on each other
operations and finance
the interdependence of operations and finance hinges on money. all activities rely on funds. Operations might decide that a new machine is needed or that the plant needs to be reorganised, all of which cost money.
marketing and operations
is concerned with how goods are promoted and delivered to customers, this includes decisions about production design, pricing, image of product on market, promotion etc.
human resources and operations
HR is hiring, training and otherwise managing of staff. HR is needed to perform tasks and operate machinery. The performance of human resource management effects the performance of operations, the right workers must be hired with the right skill and be well motivated. this will allow for more efficient and effective operations.
globalisation
the process by which businesses or other organizations develop international influence or start operating on an international scale.
globalisation has resulted in:
the removal of trade barriers which means that there is greater free flow of capital (facilities/ machinery), labour, financial resources and technology between nations.
supply chain management
involves the management and flow of supplies throughout the inputs, transformations processes and outputs to best meet the needs of customers.
- managing
- making decisions (which suppliers and how many)
5 stratergies to respond to globalisation
- supple chain management (logistics, e-commerce, global sourcing)
- global factors (global sourcing, economies of scales, scanning and learning, research and development)
- outsourcing (advantages and disadvantages)
- new product or service design and development
- overcoming resistance to change (financial costs, purchasing new equipment, redundancy payments, retraining, re organising plant layout, inertia)
logistics as a key aspect to supply chain management
Logistics - refers to the physical distribution and transportation of products (management of the movement of inputs, resources, outputs and information through the supply chain and distribution of finished good to markets - goal is to achieve efficient, steady flow of materials through supply chain)
E- commerce as a key aspect to supple chain management
the buying and selling of goods and services over the internet (businesses manage their supply chain through electronic ordering. E-procurement is the use of online systems to manage supply, allowing suppluers direct access to the business’s level of supplies. B2B (business to business) arrangement gives one business (supplier) access to another (buyer) allowing them to supply goods when needed)
global sourcing as a key aspect to supple chain management
refers to the businesses purchasing production inputs from suppliers from all around all around the world, rather than local suppliers to take advantage of lower costs, expertise, and access to new technologies and quality resources EXTEND
global sourcing (global factors)
operations strategy involving the sourcing of goods and services from across national boundaries.
benefits of global sourcing
- cost advantages
- access to new technologies
- labour specialisation
- expertise
- ability to operate over extended hours
challenges:
- possible relocation of aspects of operations
- managing different regulatory conditions between nations
- financial concerns from risk associated with exchange rate fluctuations
- misunderstandings due to poorly negotiaited service level agreements
