Operations Management Flashcards
Operations Management
Is coordinating and organising the activities involved in producing the goods or services that a business sells to its customers.
Effectiveness
is the extent to which a business achieves its stated objectives.
Efficiency
how productively a business uses its resources when producing a good or service.
Improving Productivity
Leading to business competitiveness.
Increasing productivity can allow a business to achieve a competitive advantage by increasing their output , minimising waste and being as low costs as possible to the customer.
Business competitiveness refers to the ability of a business to sell products in a market.
Key elements of an operations system
Inputs
are the resources used in the process of production.
Natural resources includes raw materials, components and parts consumed or converted by the transformation process.
Physical resources includes machinery, equipment and property necessary to conduct operations.
Human resources refers to people involved in the operations function.
Financial resources refers to the funds/money required to commence and continue operations.
Information from a variety of sources contributes to the transformation process.
Time and its efficient use is critical as coordinating resources within appropriate time frames limits costs and wastage.
Relationship between Managing Operations and Business Objectives
Efficient and effective operations should lead to satisfied customers, sales and, consequently, the achievement of business objectives.
- give examples linking to quality strategies
Transformation Process
The main concept of operations management is the processes the inputs (resources) undergo to become the output (goods or services).
implies physical changes but, today, it also includes the conversion of resources into services.
Outputs
are the result of a business’s efforts — the final good or service that is delivered or provided to the consumer.
Output differences between manufacturing and service business
Manufacturing businesses transform inputs into tangible products, or goods. Goods are sometimes classed as homogenous, which means that they are basically all the same or similar. Service businesses transform inputs into services. Services tend to be differentiated, that is, they are provided to individual customers and are modified to suit each customer.
Processes in a manufacturing business
This transformation process converts the inputs into a tangible product (goods that can be touched).
Processes in a service business
Service providers rely heavily on interaction with the customer and their processes tend to be more labour intensive; that is, staff are crucial to the operations.
Characteristics of operations management within a service business
- Produce services that are intangible
- Services cannot be stored
- Customer is involved in production — the consumer typically has to be present when the service is produced
- Production process and consumption typically occur at the same time
- Services tend to be differentiated or tailored to individual customers
Characteristics of operations management within a manufacturing business
- Produce goods that are tangible
- Manufactured goods can be stored for later use
- Little customer involvement in production — the consumer is typically not present when the good is produced
- Production process and consumption are not linked
- Manufactured goods tend to be standardised
Automated production Lines
consists of machinery (often robotics) and equipment arranged in a sequence, usually on a conveyor belt. As a good passes along the line, the machinery will add components to it.
-does not need employees directly involved
- all or part of the process is automatic
Advantages of automated production lines
Minimises waste
Can improve standardisation
Disadvantages of automated production lines
Robotics can be costly to maintain or replace.
lead to the loss of jobs as fewer employees are likely to be required.
Robotics
combination of science, engineering and technology that produces machines, called robots. Used in engineering and specialised areas of research, capable of doing several different tasks.
Automated production lines efficiency
can perform at speeds much faster than humans, reducing the amount of time taken to produce
outputs, thus improving productivity.
Automated production lines and robotics effectiveness
perform tasks with a high degree of accuracy, which
can reduce errors enhancing the overall
quality of the final product, increasing customer satisfaction, sales, and market share.
robotics efficiency
can perform specific tasks quickly and with high levels of accuracy. This can reduce the amount of time and resources wasted in production, improving productivity.
robotics advantages
Tasks can be performed much faster than human labour.
The number of employees needed for production can be minimised, which can reduce a business’s wage expenses.
robotics disadvantages
high initial setup costs associated with purchasing, programming, and installing robotics.
can be expensive for a business to repair and update robotic technologies.
Computer aided design
Computer aided design software generates three-dimensional diagrams from a set of given input data (parameters).
Computer aided design efficiency
effectiveness
reduce the time and labour needed
to design a product, allowing resources to
be used more optimally and productively.
Use CAD to develop various
prototypes and choose the best design to
produce. Enables highest quality design, which can increase customer satisfaction, sales, and market share.
advantages of CAD
Product designs can be produced at a faster rate, without the need for erasing and redrawing.
View a design from multiple angles, assisting both the designer and the end user to visualise what will be produced.
disadvantages of CAD
Computer software can crash, resulting in the possible loss of work.
Costs of software can be expensive.
Computer-aided manufacturing (CAM)
refers to the use of software and machinery that allow computers to direct and control the manufacturing process.
tells a machine how to make a product.
CAM efficiency
effectiveness
CAM can follow specific instructions and
complete tasks more accurately than humans
which can reduce the amount of waste and optimise resources, improving productivity
able to coordinate tasks so they are performed with a high degree of accuracy, enabling the business to
achieve a consistent level of quality, which can increase customer satisfaction, sales, and market share.
advantages of CAM
Allows a business to produce at faster rates at reduced cost
produce with greater consistency (each component/ finished product will be exactly the same) and greater accuracy.
disadvantages of CAM
Computer software can crash, resulting in production stopping.
The costs and time involved in training staff can also deter many businesses from the use of CAM.
AI
the ability of a robot controlled by a computer to do tasks that are usually done by humans because they require human intelligence and discernment.
AI efficiency
effectiveness
reduce the time and labour used to complete complex tasks that would usually require human intelligence and improve productivity
can perform complex tasks, such as providing timely and high-quality customer assistance. This can improve customer satisfaction levels, and allow for increases in sales and market share.
advantages of Ai
may remove tedious tasks for employees, improve job satisfaction.
can perform functions much faster than humans.
disadvantages of AI
may develop a poor reputation if artificial intelligence
makes numerous employees redundant
costly to recalibrate and maintain artificial intelligence.
Online services
are services that are provided via the internet.
efficiency of online services
effectiveness
can remove the need for employees to perform certain tasks and enable labour resources to be used more efficiently.
Implementing online services can improve convenience for customers, increasing levels of customer satisfaction, sales, and market share.
advantages of online services
allow a business to gain exposure to more
customers, which can increase the size of its customer base.
A website means that a business is accessible for sales 24 hours a day, 7 days a week.
disadvantages of online services
Designing, registering and publishing a website may initially be expensive and time-consuming.
Websites and applications can ‘go down’. This can be very frustrating for customers and a business may lose sales or have its reputation affected.
Materials management
materials are received and stored in the right quantities and at the right time, so that they are available in the operations system as required.
Forecasting
This materials planning tool relies on data from the past and present, allowing a business to analyse trends so that it can predict future events.
Forecasting explanation
needs to forecast the quantity and timing of demand for its good/ service and then match supply with demand. This will allow the business to decide what goods or services to produce, how to produce them and in what quantity.
weaknesses of forecasting
Making use of historical data does not necessarily guarantee that past events will continue into the future — it is always possible that unforeseen or unexpected events will occur.
Forecasting, to some degree, will always be inaccurate — this strategy provides a ‘guesstimate’
strengths of forecasting
prevention of underproducing , resulting in a loss of customers and possibly a decline in market share
maintains an appropriate level of materials for the operations system without overproducing increasing costs for the business.
Master production plan
is a plan that describes what is to be produced, in what quantities, how and when. Inability to meet this schedule may have serious business implications.
Materials requirement planning
involves producing an itemised list of all materials involved in production to meet the specified orders.
Materials requirement planning explanation
needs to consider:
lead times required by suppliers
the exact number of inputs to complete the task
the amount of stock on hand
purchasing procedures
typically software based but is able to be conducted manually.
completed after business has clear understanding of quantities produced and time frame.
strengths of MRP and MPS
Both can be used to make adjustments to production in response to fluctuations in demand.
Both allow schedule changes when new products are introduced allowing flexibility.
disadvantages of MRP and MPS
Both strategies rely on accurate information — if incorrect information is used, it is likely that errors will occur in the materials planning process.
Once materials are ordered and employees are scheduled to work, it can be difficult to interrupt the process and make changes.
Inventory Control
is a system used to ensure that costs associated with maintaining an inventory of materials are kept to a minimum.
Just in Time
This approach makes sure that the right amount of materials and parts arrive just as they are needed for production.
JIT strengths
Holding less stock in storage reduces storage costs — improves efficiency and effectiveness.
Less of the business’s finances are tied up in stock as materials are only obtained as needed.
JIT weaknesses
Materials must be received at the appropriate time — failure to do so can bring a production line to a halt.
Can increase transportation costs as orders are arriving in smaller quantities more regularly
Quality control
relies on a business setting benchmarks and standards for quality to ensure efficiency and effectiveness.
Quality control explanation
- relies on inspections or checks on goods and services.
- Quality control is considered a reactive approach to quality, as it detects faults in products, goods and services that have already been produced.
- not possible to check every product; instead inspections are carried out randomly
Quality control strenghts
Can reduce the number of refunds.
Relatively inexpensive.
quality control weaknesses
Wastage can reduce profits
Qualified individuals may need to be employed
quality control
efficiency
effectiveness
Fixing the cause of an error prevents the error from reoccurring, which results in reduced waste allowing optimised use of resources.
Removing defective products prevents customers from receiving faulty goods or services. Allow achievement of objectives of increasing sales and
market share.
Quality assurance
involves the use of a system that will assure customers that the products of a business are fit for purpose.
Quality assurance explanation
- It does this by achieving set standards throughout the production process, thereby preventing quality issues before they occur.
- quality assurance is said to be a proactive strategy and is process oriented.
- quality systems, include process checklists, audits and the development of standards.
quality assurance
efficiency
effectiveness
Preventing errors before they occur can reduce the number of production halts and reduce the amount of time wasted in the production process
more inclined to purchase from a business with certified quality standards. increase its sales and meet the objectives of increasing profit and market share.
quality assurance advantages
Reduction in wastage from errors
Certification can increase reputation and sales
quality assurance disadvantages
Documenting operations system can be time consuming
Can be expensive to pay for certification
Total quality management
is a commitment to excellence that emphasises continuous improvement in all aspects of a business’s operation by sharing responsibility among all the members of the business.
explanation of TQM
- aim of TQM is to create a defect-free production process, and maintain a customer focus in operations.
- proactive strategy (focuses on preventing quality issues before they occur)
TQM employee empowerment
quality circles
fundamental part of TQM about employee involvement
Quality circles; Teams of up to ten workers meet regularly to solve problems related to process, design or quality. The groups often make presentations to management with their ideas, in order to improve the performance of the business.
TQM
Continuous improvement
is a process that involves a constant evaluation of, and improvement in, the way things are done in a business. Higher and higher standards are set in the continual pursuit of improvement.
TQM Customer focus
All employees should aim to satisfy internal customers as well as external customers. Each employee improves a product and passes it along to their customer, the next employee in the process, until the finished product is sold to the external customer.
TQM strengths
Employees can feel valued and empowered
Being proactive can prevent errors before they happen
TQM weaknesses
Employees may feel confused about their own role
Can take a long time as it requires a shift in culture
Waste minimisation
a process that involves reducing the amount of unusable resources created by the business’s production process in an attempt to improve the efficiency and effectiveness of operations.
Reduce strategies
Implement a quality management system which reduces the amount of waste generated and rectify issues in production to further reduce waste in the future.
Introduce robotics or automated production lines to remove human involvement so that defective products aren’t generated, and so waste is reduced at its source.
Reduce
Achieved by creating less waste. Stops the problem of waste generation at its source so less waste needs to be cleaned up or disposed of.
Reuse
explanation
is taking old or unwanted items you might otherwise throw away and finding a new use for them.
saves money that would normally be used to dispose of waste. If input can be reused it can generate a second income stream for the business.
Recycle
changing discarded materials into new products in order to avoid using more virgin resources.
recycle strategies
purchasing inputs that can be recycled
inventing new ways to recycle different items.
avoiding buying hazardous materials that could be difficult to recycle.
Lean management
is the process of systematically reducing waste in all areas of a business’s operations system whilst simultaneously improving customer value.
Pull
This relates to avoiding overproduction and stockpiling.
By enabling customer demand to dictate the rateof product delivery, a business is more likely to minimise waste as it will only be producing the outputs that will be sold.
One piece flow
this largely relates to eliminating waiting time or idle time.
Involves a piece of production moving through the operations process one at a time. All steps focused on adding value, one piece at a time, removing all wasteful and unnecessary activities.
Takt
Refers to the rate of production needed to meet customer demand.
Takt time is the average time between production starting on one product and the start of the next unit, in order to meet demand.
Takt helps the business to establish a consistent workflow following a smooth pattern that is flexible and easy to regulate as demand rises or falls.
Zero defects
This is all about the business striving for perfection. Errors or defects need to be identified as closely as possible to where they occur.
Efficiency and effectiveness of lean management
it reduces costs that may lead to an improvement in profit. Increased customer satisfaction result in increased sales and, subsequently, an fulfillment of BO.
as a business reduces the amount of waste produced while working towards achieving objectives, productivity increases and resources should be used more efficiently.
advantages of lean management
increased worker productivity
reduced delays
disadvantages of lean management
involve high implementation costs
requires good relationship with suppliers
Environmental sustainability
refers to a business making decisions that will allow it, and the rest of society, to interact with the environment both now and into the future.
CSR considerations for inputs
Sourcing from local suppliers to reduce emissions.
Sourcing from suppliers who use environmentally
sustainable methods of production.
Installing reusable and clean energy sources.
CSR considerations for processes
Using technology to increase precision to reduce wastage.
Develop methods to recycle excess to be used again.
Facilities and technology should contribute to the health and welfare of staff.
CSR considerations for outputs
Delivering products in bulk to retailers to reduce the businesses carbon emissions from transportation.
make use of environmentally friendly packaging
Creating products which have recyclable elements at the end of their lifecycle.
Global sourcing of inputs
explanation
acquiring raw materials and resources from overseas suppliers.
exploit efficiencies that can be gained from the global delivery of products, including low-cost skilled labour, low-cost raw materials and other economic factors
Global sourcing of inputs advantage
Can source materials otherwise unavailable.
Global materials may be cheaper.
Global sourcing of inputs disadvantage
Import restrictions – Governments can have import quotas.
Communication - language barriers
Overseas manufacture
explanation
Producing goods or services in a location outside of a business’s headquarters country.
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can produce a high quantity of goods at a low price, whilst still maintaining complete control of production.
advantages of overseas manufacture
Quality – Improve access to skilled employees.
Prices – Can reduce production costs, prices and increase sales.
disadvantages of overseas manufacture
Delivery may be time consuming.
Local employees may lose their jobs.
Global outsourcing
means that some part of a business’s operations is transferred to an external person or business in another country.
advantages of global outsourcing
Quality – Can improve quality as external businesses may be experts.
Efficiency – Can produce goods more efficiently.
disadvantages of global outsourcing
Reduced control over some activities.
Local employees may lose their jobs.
