OPERATIONS: Role of operations management Flashcards
What does Operations focus on?
Operations focuses on transforming inputs into outputs.
Identify two strategic roles of operations management
Cost leadership and good/service differentiation
What is cost leadership?
A business model that focuses on reducing production costs in order to have price competitiveness whilst still maintaining the quality of the products.
What is economies of scale?
When the cost to make each individual unit goes down as the company mass produce the product.
What does operation function focus on?
It focuses on maximising the profits of the business.
>Via minimising expenses and costs as operations are cost centres that incur costs via the transformation processes.
What do operations managers aim to do?
The strategic goal of any operations manager is to gain an advantage over their competitors by reducing costs (of production) and improving quality, henceforth increasing costs (price per unit) due to quality improvements.
True or false: economies of scale is the result of cost leadership
False. Economies of scale leads to cost leadership
What is goods and services differentiation
When business distinguishes its products from its competitors in any way.
How does good differentiation vary? Provide examples.
1) Varying the actual product features. E.g a cereal can come in many forms including plan cereal, cereal with chocolate, cereal with dried berries etc.
2) Varying the quality. E.g Adrian’s old Nokia and recently released Nokia
3) Varying the augmented features (add-ons). E.g a standard car vs a car with built in gps system or standard phone vs longer battery life phone with better quality camera
How does service differentiation vary? Provide examples.
1) Varying the amount of time. E.g Adrian making boba drink slow vs Hanzo making it fast.
2) Varying the level of expertise/qualifications. A doctor of medicine provides more comprehensive advice than a GP with only master’s degrees.
3) Varying the quality of input materials. E.g Hairdresser uses high quality hair gel
Distinguish between standardised and customised goods.
Standardised goods focus on the mass production of a particular product usually uniform in quality. The main focus is on the high scale production. On the other hand, customised products focus on the market rather than production and refers to the products that vary according to customer’s preferences.
Goods can also be broadly classified by the following:
1. P_ _ _ _ _ _ _ _ _ goods
2. N_ _ - _ _ _ _ _ _ _ _ _ _ goods
3. In_ _ _ _ _ _ _ _ _ _ goods
- Perishable
- Non-perishable
- Intermediate goods
Identify and provide an example for:
- Perishable goods
- Non-perishable
- Intermediate goods
Perishable goods: goods that have a short shelf life. Fresh produce, meat and poultry, dairy product
Non-perishable goods: goods that do not expire. Kitchen items, technology, furniture,
Intermediate goods: goods that become processed more than once (Flour, sugar, eggs, wood, textiles, metal ores); outputs that become inputs for the production of something else.
How is operations function related to perishable goods?
High standards of quality must be maintained throughout due to short life
Distribution must be quick
Appropriate and robust packaging
How is operations function related to non-perishable goods?
Operations managers must implement effective stock/inventory control and stay responsive to market’s demands
Quality should be maintained throughout
