operations management Flashcards
operations management
all the activities in which managers engage to produce goods or services.
business competitiveness
the ability of a business to sell products in a market.
operations system
inputs -> processes -> outputs
inputs
the resources used in the process of production.
categories of inputs
- natural resources and materials
- physical resources (capital)
- human resources
- financial resources
- information from a variety of sources
- time
inputs in a manufacturing business
- make more use of capital equipment and materials
- use less human resources and information
- requires physical resources such as equipment and buildings
inputs in a service business
- buildings
- human resources and information
transformation process
the conversion of inputs into outpits
processes in manufacturing business
- using machinery to create outputs
- transformation process converts inputs into a tangible product
processes in a service business
- transforms inputs into an intangible item
- transformation process uses resources to produce the final goods or services
outputs
the end result of a business’ efforts.
tangibles
goods that can be touched.
intangibles
goods that cannot be touched.
characteristics of operations mangement within manufacturing businesses
- produce goods that are tangible
- manufactured goods can be stored for later use
- little customer involvement in production where customers are not typically present when the good is produced
- production process and consumption are not linked
characteristics of operations mangement within service businesses
- produce services that are intangible
- services cannot be stored
- customer is involved in production as they need to be present when the service is produced
- production process and consumption typically occur at the same time
- services are differentiated or tailored to individual customers
technological developments
- automated production lines
- robotics
- computer aided design (CAD)
- computed aided manfacturing (CAM) techniques
- artificial intelligence (AI)
- online services
automated production lines
machinery and equipment arranged in a sequence with components added to a good as it proceeds through each step, thr process controlled by computers.
advantages of automated production lines
- allows for a business to produce at faster rates ->higher output, increased productivity
- reduced need for human labour -> reduced costs, increased productivity
- robotics enable increased precision, accuracy, speed unmatched by human labour
- minimises waste
disadvantages of automated production lines
- robotics are expensive for small and medium scaled manufacturers
- robotics are costly to maintain and replace
- training is required so that employees know how to use robotics
- loss of jobs
- if the robots were to break down, production will be halted
robotics
a highly specialised form of technology capable of complex tasks.
computer aided design (CAD)
a computerised design tool that allows a business to create product possibilities from a series of input parameters.
advantages of CAD
- product designs can be produced at a faster rate
- designer can produce a 2D or 3D computerised versions of products
- allows businesses to see a design from multiple angles
disadvantages of CAD
- computer software can crash -> losing work
- software costs are expensive
- costs involved with training and time
- loss of jobs
computer aided manufacturing (CAM)
the use of software to direct and control manufacturing processes.
advantages of CAM
- allows for business to produce at faster rates with reduced costs
- allows for business to produce with greater consistency and greater accuracy
- allows business’ manufacturing process to become more computed directed by controlling the process
disadvantages of CAM
- computer software can crash
- CAM systems and machinery are expensive
- costs and time to train employees can deter businesses from the use of CAM
- loss of jobs
artificial intelligence
the ability of a computer or robot controlled by a computer to do tasks that are usually done by humans because they require human intelligence and discernment.
online services
amenities available on the internet to engage with customers.
procurement
the process of researching and selecting suppliers, establishing payment terms, negotiating contracts and the actual purchasing of resources that are vital to the operations of the business.
advantages of online services
- can be used to deliver consistent messages to customers
- websites enable accessibility
- reduces costs of labour and leasing or purchasing physical space
disadvantages of online services
- designing, registering and publishing websites can be time consuming
- websites and applications can suffer outages
- operating websites and applications can require highly skilled staff who may be expensive to employ or train
materials management
the strategy that manages the use, storage and delivery of materials to ensure the right amount of inputs are available when required by the operations system.
materials management strategies
- forecasting
- materials production schedule
- just in time
inventory
goods and materials held as stock by a business.
materials handling
the physical handling of goods in warehouses and at distribution points.
forecasting
a materials planning tool that relies on data from the past and present as well as the analysis of trends to attempt to determine future events.
qualitative forecasting
gathering infomration based on the opinions of people.
quantitative forecasting
making use of data in numerical form.
strengths of forecasting
- ensures businesses maintain an appropiate level of materials for the operations system without overproducing
- ensures business does not find itself underproducing
limitations of forecasting
- making use of historical data does not guarantee that past events will continue in the future
- will always be inaccurate as it is a guesstimate
production plan
an outline of the activities undertaken to combine resources to create goods or services.
master production schedule (MPS)
a plan that details what is to be produced and when.
materials requirement planning (MRP)
the development of an itemised list of all materials involved in production to meet the specified orders
strengths of MPS and MRP
- allow a business to avoid overproducing
- MPS enables operations managers to predict future needs of the business, determine materials required
- used by businesses to make adjustments to production caused by fluctuations in demand
- MRP improves efficiency in location of production resources, accurate estimates of materials requirements and delivery dates
limitations of MPS and MRP
- both methods rely on accurate information and data
- costs of implementing can be inhibitive for many businesses
- both can provide flexibility but can also have opposite effect if businesses do not have enough time to adapt as materials are tied into production schedules
- difficult to interupt process and make changes after materials are ordered and employees are scheduled to work
inventory control
minimised costs and the operations system having access to the right amounts of input when required
just in time
a materials management strategy that ensures the right amount of material inputs will arrive only as they are needed in the operations process.
strengths of just in time
- holding less in storage reduces storage costs
- less of the business’ finances are tied up in stock as materials are only obtained when needed
- reduces risks of waste occurring in storage
- ensures production can continute to flow smoothly with the right amount of materials arriving just as they are needed
limitations of just in time
- supplier deliveries must be reliable
- materials must be received at the appropiate time
- can increase transportation costs as orders are arriving in smaller quantities more regularly
- just in time procedures may require a major overhaul of a business’ systems and procedures
management of quality
the degree of excellence of goods and services and their fitness for a state purpose.
quality management strategies
- quality control
- quality assurance
- total quality management (TQM)
quality control
the use of inspections at various points in production to check for problems and defects.
quality assurance
the use of a system so that business achieves set standards in production.
total quality management
an ongoing, business wide commitment to excellence that is applied to every aspect of the business’ operation through three components / faucets: employee empowerment, continuous improvement and customer focus.
waste minimisation
a process involving the reduction of the amount of unwanted or unusable resources produced by a business in an attempt to improve the efficiency and effectiveness of operations,
waste minimisation strategies
- reduce
- reuse
- recycle
lean management
an approach that improves the efficiency and effectiveness of operations by elimination waste and improving quality.
seven wastes of lean management
- reducing excess transportation -> reducing unnecessary movement of amchines and products among the processes
- avoiding excess inventory -> minimising storage required
- avoiding excess motion -> reducing unnecessary movement of workers and products within the process
- eliminating waiting time -> eliminating any idle time waiting between stages and processes
- avoid overprocessing -> not adding more value to a product that customers want
- avoiding overproduction -> not making more than is required or making it earlier than required
- reducing defects -> reducing errors that require time to fix
principles of lean management
- pull
- one piece flow
- takt
- zero defects
pull
avoiding overproduction and stockpiling.
catering to customer demand, reducing costs of inventory
one piece flow
eliminating waste or idle time.
produces in a smooth, uninterrupted manner, idle time is minimised
takt
the rate of producing needing to meet customer demand.
consistent workflow following a smooth pattern that is flexible
zero defects
the business striving for perfection.
minimum waste, avoids quality issues
stengths of lean management
- reduced energy and resource consumption
- reduced delays
- increased worker productivity
- reduced uncertainty
- increased customer satisfaction
limitations of lean management
- requires committed and experienced employees
- constant focus on improvement and elimination of waste can result in workplace stress
- can involve high implementation costs
environmental sustainability
a business making decisions that will allow them and the rest of society to continue to interac with the environment.
global considerations in operations management
- global sourcing of inputs
- overseas manufacture
- global outsourcing
global sourcing
the practice of seeking the most cost efficient materials and other inputs, including countries overseas.
strengths of global sourcing
- reduces costs
- opportunity to learn how to do business in a potential market
- accessing skills or resources that are unavailable domestically
weaknesses of global sourcing
- hidden costs associated with different cultures and time zones
- exposure to potential high risks -> financial and political
- risk of imports shutting down and interrupting supply
- difficult to monitor quality
overseas manufacture
the production process of a good in a country that is different to the location of the business’ headquarters.
strengths of overseas manufacture
- can enable businesses to get products to the market quicker
- can reduce labour, overhead and component costs
weaknesses of overseas manufacture
- hidden costs associated with operation
- financial and political risks
- extra transport can negatively impact the environment
- local job losses
global outsourcing
the contracting of a specific business operation to an external person or business in another country.
strengths of global outsourcing
- improve quality because access to expert knowledge and high quality service
- business can focus on core activites
- costs can be reduced
weaknesses of global outsourcing
- management has less control over production process
- difficult to maintain quality
- loss of local jobs
- security and confidentiality issues
- miscommunication issues leading to customer service problems
