operations strategies Flashcards
Performance objectives
Goals that relate to specific areas of the transformation process. They are targets that operations managers are aiming to reach.
Each objective is allocated a specific target, based on the metrics used to assess the objective. Businesses then use these targets to assess their performance.
If the business didn’t hit the target, it needs to make changes. Doing so will lead to the outcomes of efficiency, productivity and profitability
QSDFCC
Quality, speed, dependability, flexibility, customisation and cost
Quality
Purpose:
- Exceed customer expectations
- Offer “value-for-money”
- Boost sales revenue
How to achieve it:
Adopt quality management processes throughout the transformation process
Goods
Higher quality design:
- Requires advanced inputs and detailed quality management processes
- Allows the business to charge higher prices
Higher conformance:
- Products accurately meet the design specifications
- Production processes are effective
Services
- Meeting the client’s needs
- Being reliable and efficient
- Pleasant interactions between customer and service provider
Speed
How quickly/how well production can adapt to rising or falling demand.
Businesses operate in dynamic environments where demand and output are constantly changing.
The purpose is to fulfil customer demands as quickly as possible
It can be achieved by changing input levels and processing times.
Eliminate production bottlenecks and create open communication → Reduce lead, production and delivery times → Avoid under-or overproduction
Dependability
How consistent, reliable and long-lasting products are
Purpose
- To reduce warranty claims (goods) and customer complaints (services)
- To gain a positive business reputation and long-lasting relationships with customers
How to achieve it: Use quality management processes to ensure products meet customer expectations consistently
- Use research and development to access high-tech quality management procedures and equipment
Non perishable goods: dependable if they’re extremely durable
Perishable goods: dependable if their quality is consistent
Flexibility
How well the business can adapt capacity or volume to all changes in the market
The purpose is to improve processing times (better chance of adapting quickly when the time comes)
How to achieve it:
Increase demand for:
- New products → change inputs and processes
- Existing products → increase the volume and variety of outputs by increasing capacity
Goods
- Use technology
- Increase number of employees
Services
- Hire more service providers
- Increase their skill levels
- Use more technology
Customisation
Creating tailored products to meet specific customers need or wants
The purpose is to satisfy customers by using their specific desires as inputs in the transformation process (Businesses can then charge higher prices whilst increasing customer satisfaction)
How to achieve it: use a differentiation strategy
Mass production: standardise products
Mass customisation: allow customers to choose certain features
Cost
Minimising expenses so that operations processes are carried out in a cost-effective and efficient manner
The purpose is to achieve cost leadership
Lowers costs can lower prices for customers → Wider market share and competitive advantage
How to achieve it: reduce post-production costs
Hire cheaper distributors or manage quality during production → less warranty costs
Product development
Businesses develop new products because consumers have ever-changing needs and wants, so products have a limited lifespan
Through product development, businesses can:
- Maintain customer satisfaction
- Achieve a greater market share for long term growth
- Gain a competitive advantage and keep their business relevant
Developing goods
How they are developed
In response to consumer preferences: Undertaking lots of market research to learn what consumers desire
From advances in technology: New and improved technology can create more functional, appealing and better quality products
Key considerations
Supply chain management: New products requires new inputs. Businesses must consider whether their existing suppliers can respond to the needs of the new product
Capacity management: Businesses need to have the facilities to produce a new product at the right volume + continue to produce existing products
Quality management: Ensure new products meet the business’s existing quality standards and customer expectations
Cost: The costs (time, money, efforts) shouldn’t outweigh the benefits of designing a new product
Developing services
How they are developed
In response to customer preferences: Most of the elements in service delivery requires customer input
From advances in technology
Key considerations
Explicit service: the tangible part of the service delivery (the time, skill and effort of the service provider)
Implicit service: the service experience (how does the service make the customer feel?)
Goods: Which goods are needed? How much will they cost? How will they add value to the service?
Supply Chain
Supply chains: a sequence of processes that enables businesses to coordinate supplies throughout operations to meet customer needs
i.e. make products available to customers
Organising inputs (suppliers) → Manufacturing products (manufacturers) → Delivering to customers (distributors)
Procurement (sourcing)
Finding and buying the inputs that a business needs from suppliers
Global sourcing: Due to globalisation, businesses now have a wider variety of suppliers to choose from
Advantages
- Inputs are usually cheaper
- More suppliers to choose from
Disadvantages
- Economic costs
- Time and logistical costs
- Legal and ethical issues
Key considerations
Volume of inputs: Businesses need to balance consumer demand with input volume
Suppliers: Businesses need suppliers who are flexible and reliable, respond quickly to changes in demand, deliver on time and keep costs as low as possible
Quality: quality of inputs need to match the quality of the business’s products
Logistics
The organisation and implementation of a plan
It includes handling and packaging as well as storage and transport of goods. Involves products moving from one part of the supply chain to another.
Key considerations: products need to be available at the right time, at the right place and in the right quantity
Inventory: managing inventory, insuring it and keep it safe from theft
Warehousing: using large facilities to store and distribute goods
Distribution centres: strategic short term story before distribution to retail outlets
E-commerce
Buying and selling products using the internet
This can be broken down into:
E-procurement: Using the internet to purchase stock (allows suppliers to use online systems to directly manage a business’s stocks, which can be done automatically)
Selling products to consumers: Using the internet for ordering (ordering goods from the business’s website) and logistics (packaging goods based on online orders)
Advantages:
- Networks: helps establish networks of suppliers
- Data: makes collecting and storing data easier
- Access: provides access to more information
Managing supply chains effectively (advantages)
- Speed (faster transactions → faster access to revenue)
- Revenue (satisfying customer demand more quickly → boost revenue)
- Inventory (reduced inventory → save on costs of storage, insurance and obsolescence)
Outsourcing
When businesses use external providers to perform business activities
Usually, businesses outsource to companies that specialise in certain activities. Therefore, tasks can be completed at a lower cost with better efficiency
Factors
Cost: will outsourcing be cheaper and more efficient?
Location: which location and which company will we outsource to?
Contract: how will we manage the outsourcing contract (length of the contract and level of service needed)?
Advantages and disadvantages of outsourcing
Advantages:
Cost and efficiency
Simplification
Process capability
Accountability
Accessibility
Disadvantages:
Payback periods
Miscommunication
Loss of control
Organisational change Losing business knowledge
