operations influences Flashcards
Globalisation
the elimination of trade borders between countries, creating more interactions between businesses across the globe, increasing imports and exports
There’s an integration between economies, so transfer of labour, resources and finance is growing
Globalisation: Effects on Operations
Globalisation widens the potential market, leading to opportunities and threats.
Globalisation: opportunities
Opportunities
New markets: new markets mean more potential customers and sales
- Production levels need to increase to meet growing demand
- Opportunities for economies of scale and cost savings
Supply chain management
The supply chain: a business’s supply network and the relationship between the business and its suppliers (predictable, dependable and reactive)
- more sources of raw materials and more places (easier to find lower costs) to locate factories
- Locating factories close to suppliers lowers transport costs
Production benefits
These cuts costs
- Outsourcing overseas (to countries with cheaper labour and less stringent laws)
- Flexibility of location (to countries with lower rent costs)
Globalisation: threats
Threats
For global businesses:
- Increased competition from new markets
- Operations managers need to work harder to stand out from the competition
For domestic businesses:
- New global competitors with better cost cutting techniques can overtake their markets
- Operations managers need to reduce their costs to stay competitive
Technology
The use and application of innovative devices, systems, and machinery in the operations process
There are two main types of technologies that can be applied to operations processes: administrative and process
Technology: administrative
Administrative: these technologies revolve around organising, planning and decision making! They’re responsible for controlling all operations processes. Includes:
- Planning technologies (sequencing and scheduling tools)
- Office technologies (those you can find in any office)
- Software (word processing, graphic and publishing programs)
Technology: process
Process: used to carry out functions like manufacturing, logistics and quality management
Includes:
- Machines (found in manufacturing plants)
- Robotics (used in highly complex processes)
- Computer technologies (Computer Aided Design (CAD) and Manufacturing (CAM))
Technology: cost savings
Processes can run more efficiently, safely and without error, which creates cost savings
Even though technologies are expensive, they can lower production costs in long term by boosting efficiency, which leads to cost leadership
Technology can also reduce or eliminate the need for staff, so businesses can locate their production facilities anywhere
Technology: competitive advantage
Product quality can be improved as there is less human error, and businesses can develop new products, which leads to differentiation
Businesses can then increase their prices and incur higher revenues
Elements of supply chain management, like ordering, logistics and inventory management can also become more efficient
Quality Expectations
refers to the degree of excellence of a product
Product can be tangible, such as goods or intangible, such as services
Quality is measured differently for goods and services
Quality expectations: Goods
Goods are tangible, so quality revolves around how well they are designed.
Quality of design: how well a product idea has been developed and executed according to customers needs and wants (includes how innovative the product is and the quality of materials used)
Fitness for purpose: how well the product does the job it was intended to, and how easy it is to use
Durability: how long goods last and how easily goods can be maintained and repaired (includes aspects of after-sales service)
Quality expectations: Services
Professionalism: the manner (dialogue) that staff engage with customers and the physical environment (cleanliness)
Reliability: the overall competence and efficiency of the service provider
Level of customisation: how the service is tailored to meet individual customer needs
Quality expectations: effects on operations
Quality impacts the entire production process, including the way that products are:
- Designed
- Manufactured
- Delivered
To ensure goods and services meet a certain standard, operations management usually adopt quality management processes:
- Quality control
- Quality assurance
- Total quality management
Cost-based competition
When competitors try to create cost advantages over each other
Businesses try to reduce costs rather than increase revenue to maximise profits
Cost-based competition: effects on operations
The aim of operations managers is to achieve cost leadership by reducing fixed and variable costs
Sourcing supplies: supply costs can be lowered by
- sourcing lower quality inputs,
- sourcing from lower-cost nations
- bulk-buying inputs
Production:
- Economies of scale (EOS): better use of machinery and boosted efficiency
- Standardised products: less inputs, and simpler and faster production
- Automated production: streamlined processes can speed-up production
- Lean production: aims to minimise waste and costs
Output:
- EOS: high volume of output reduces production costs (this spreads fix costs across a large number of outputs)
