Processes of Operations Management Flashcards
What are the core aspects of operations processes
- Inputs
- Transformation processes
- Outputs
What are the two main inputs
- Transformed resources
- Transforming resources
What are transformed resources
Transformed resources are those resources which will be transformed or changed into finishing products by operations processes
What are the main transformed resources
- Materials
- Information
- Customers
How does the transformation process add value to transformed resources
This involves giving a product greater usefulness or utility to consumers
What are the two main types of materials
- Raw materials/direct materials
- Intermediate goods
What is information as a transformed resource
Knowledge gained from investigation and instruction, which results in an increase in understanding
What are the 2 main sources of information
- External sources
- Internal sources
What are examples of Internal sources of info
Financial reports, quality reports and customer feedback Goods (Clothing)
What are examples of external sources of info
How do customers become transformed resources
The customer acts as an input and their desires and preferences act as a transformed resource
What is customer relationhsip management
Any system that businesses use to maintain customer contact to assist them to identify changes in tastes and preferences
What are the two main transforming resources
- Human resources
- Facilities
What are transforming resources
These are inputs that carry out the transformation process, they enable the change and value adding to occur
What are examples of HR used as transforming resources for a good (clothing)
Managers, admin staff, sewing machine operators
What are facilities
Plant (office or factory) and machinery used in the operations
What are the main decisions surrounding facilities
- The design layout of the facilities
- The number of facilities to be used
- Their location
- Their capacity
How does Apple use inputs
- Production of iPhones involves assembly of many parts and components such as touch screens and memory chips
- Information such as new and existing technology contribute to the design and development of the iPhone
- Since design of iPhone 6 and 6s in 2015 customer preferences have contributed to design of iPhone through customer demands for larger screen sizes
- Workers in Foxconn factory influence speed and quality of production
- Facilities such as large Foxconn factories allows Apple to achieve economies of scale
What is the transformation process
Transformation is defined as the conversion of inputs (resources) into outputs (goods or services) by adding value.
What are the revelant operations processes outlined under transformation processes
- The influence of volume, variety, variation in demand and visibility (customer contact)
- Sequencing and scheduling – Gantt charts, critical path analysis
- Technology, task design and process layout
- Monitoring, control and improvement
What is volume
How much of a product is made
What is volume flexibility
How quickly the transformation process can adjust to increases or decreases in demand which means they must manage their lead times
What are lead times
The amount of time it takes for a manufacturer to create a product from order to delivery
Why must businesses have volume flexibility
- A business must be able to adjust to decreases in market demand, or it will over produce (and increase inventory costs).
- Alternatively, if demand increases and they cannot respond quickly by producing more, this will lead to lost sales.
What type of product are businesses with high volume more likely to produce
A standardised product
What is variety
What range of outputs should be made in the process of transformation
What is mix flexibility
Mix flexibility is product range or variety of choice offered by a business
What does variation in demand refer to
How much demand changes over time, the operations processes must respond to such changes
What will increase in demand require
- Suppliers of materials must be able to respond quickly
- Labour must be available
- Machinery must be able to adjust and increase capacity quickly
- Increased energy/power must be available
What are examples of predictable variations in demand
- Christmas will see increased demand for toys
- Seasonal factors can cause predictable increases in demand for air-conditioners in summer and winter clothes in winter
What does visibility (customer contact) refer to
How much of the operations process is actually experienced and influenced by the customer
What are two forms of customer contact
- Direct feedback
- Indirect feedback
What is direct feedback
Takes the form of customer feedback given through surveys, warranties or claims
What is indirect feedback
comes through a review of sales data that gives indication of sales data
What is the combined influence of the four V’s
The volume, variety of output, variation in demand and degree of customer contact (visibility) will shape the transformation process in many ways both in the first instance and in to the future (in terms of size of premises, tooling, automation, quantity of labour, sequencing and scheduling etc).
How is Apple impacted by the four V’s
- iPhone market is highly competitive and subject to rapid changes in product design and demand; thus, it is hard to predict the volume of iPhones required to meet customer demands
- à predicting volume required can result in overordering or underordering of components
- Managing a variety of products require ongoing monitoring and control in operations à forecasting variation in demand for different iPhone models can be difficult hence Apple uses various tools such as customer surveys to do this.
- 2017 release of iPhone 8, 8+ and X. The X exceeded demand predictions while the 8 and 8+ both underperformed.
- iPhones influenced by visibility through customer feedback as seen through iPhone 6 and 6s larger screen sizes à may also be problematic as thinner phone led to bending
What is sequencing
Sequencing refers to the order in which activities in the operations process occur
What is scheduling
Scheduling refers to the length of time activities take within the operations process
What are the two methods used by operations managers to keep track of operations processes
- Gantt Charts
- Critical Path Analysis
What do Gantt Charts outline
- The activities that need to be performed
- The order in which they should be performed
- How long each activity is expected to task
How do Gantt Charts help operations managers
- Force a manager to plan the steps needed to complete a task and to specify the time required for each task
- Make it easy to monitor actual progress against planned activities
Example of a CPA
Example of sequencing and scheduling relating to Apple
- In production of iPhone certain components and circuitry will need to be assembled before others therefore sequencing is used to determine this
- Scheduling involves identifying the time required to perform each task in the assembly process
What is use of technology and its purpose
- Business technology involves the use of machinery and systems
- Use of systems enable businesses to undertake the transformation process more effectively and efficiently
What are the benefits of technology
- Assisting employees to work more productively
- In manufacturing, technology speeds up processes
- In services sector, office and communication technology have enabled whole markets to open up allowing small to medium businesses to trade globally
- Fewer errors and higher quality products
What are the costs associated with technology
- Cost of technology is relatively high (businesses need to decide to purchase or to lease equipment, Leasing is common because lease payments are tax deductible)
- Loss of workers who may be displaced due to the acquisition of technology
- Cost of training and continual upgrading of skills required to work with new technology is expensive and there can also be much time lost in adapting to new work techniques
What are examples of office technology
- Computer’s
- Mobile phones
- Accounting software
What are examples of manufacturing technology
- Robotics
- Computer Aided Design (CAD)
- Computer Aided Manufacturing (CAM)
What are robotics and what do they do
- Highly specialised forms of technology, capable of complex tasks.
- Robots are used in engineering, specialised areas of research and on assembly lines.
- Allows precision generally unmatched by human labour and work without complaint or wage demands
What is CAD and what is its purpose
- This is a computerised design tool that allows businesses to create product possibilities from a series of input parameters
- From the design, material usage can be calculated as can timing for task completion and project cost quantification (cost saving)
What is CAM and its purpose
- Software used to allow the manufacturing process to become computer controlled.
- The ‘3-D printer’ is a new example of CAM in the manufacture of surfboards and houses for example
What is task design
- Task design is classifying job activities so that employees can successfully perform and complete the task
What does task design show the interdependence of
Operations and HRM
What does task design involve
- Job analysis
- Skills audit
What does a job analysis involve
- Requires determining who does what in the business and why
- Dividing tasks into smaller activities to allow specialisation
What are the main 3 options for plant layout
- Process layout/ process layout for intermittent production
- Product layout
- Fixed position layout
What is a process layout
- Process layout is the arrangement of machines such that the machines and equipment are grouped together by the function (or process) they perform
What is process layout for intermittent production
- Process production deals with high-variety, low-volume production
- In this process each product has a different sequence of production, its intermittent, moving from one department to another
- Lends itself to creation of work cells
What is a product layout
- Product layout is where the equipment arrangement relates to the sequence of tasks performed in manufacturing a product
- Suitable for mass production, high volume of constant quality goods
Whats the most common product layout
Assembly line
What is a fixed position layout
- This is where a product remains in one location due to its weight or bulk, and it is more efficient to bring materials to the site so that workers and equipment come to the one work area
How does technology relate to Apple
- Advancements in technology has improved Apple’s production efficiency particularly at Foxconn factory through use of robotics
How does task design relate to Apple
- Employees on an iPhone assembly line will require certain knowledge and skills so that components are placed in correct order and quality standards are met HRM function must identify the employees that are able to fill out this task and hire appropriately
How does process layout relate to Apple
- Large scale factories at Apple use product layout to produce goods as quickly as possible although may lead to employees becoming unmotivated due to competitive nature of the task
What is the monitoring, control and improvement cycle
- Plan
- Implement
- Monitor
- Control
- Improve
- Repeat
What is monitoring
- Monitoring is the process of measuring planned performance against actual performance
What main KPI’s are used in the monitoring of operations
- Lead times/wait times/idle times
- Defect rates
- Repair rates and warranty claims
- Process flow rates
- Capacity and volume rates
- IT and maintenance costs
What does monitoring of the KPI’s allow
- Monitoring of the KPIs allows operations managers to measure how the business is going and to assess performance
What is controlling
- Controlling involves taking corrective action if actual performance differs from predetermined KPI targets
What’s an example of a possible control
- Change the technology being used
- Readjust the process layout
What does improvement involve
- Refers to systematic reduction of inefficiencies and wastage, poor work processes and elimination of any bottlenecks.
- The concept of continuous improvement involves an ongoing commitment to achieving perfection.
How is monitoring/controlling/improvement relevant to Apple
- Due to apple outsourcing production, monitoring and controlling can be challenging for Apple
- Lead to loss of control over quality
- In 2013 at least 5 million iPhones had to be returned to Foxconn factory for defects at a cost of $US 1.6 billion
What are the three outputs
- The good or service
- Customer service
- Warranties
What does customer service refer to
- Refers to how well a business meets and exceeds the expectations of customers in all aspects of its operations.
- Central to customer service is to make sure the right good or service is delivered at the right place at the right time.
Why is maintaining customer satisfaction important to all businesses
- Because customers are integral to all businesses
What is a warranty
- Warranties are an agreement to fix defects.
Why are warranty claims a good way to assess the effectiveness of operations processes
- The number of warranty claims is reflective of the number of defects and assessment of these claims can help a business adjust transformation processes.
What Act outlines a consumers right to a warranty
Australian Consumer Law under CCA 2010
How does Apple relate to use of warranties
- Apple complies with ACL through the use of warranties
- 2018 Apple ordered to pay $9 million in penalties by the Federal Court for making false or misleading statements to customers with faulty iPhones and iPads under ACL
Outline Operations Processes section of syllabus
- Inputs [transformed resources (materials, information customers). transforming resources - (human resources, facilities)]
- Transformation processes [(the influence of volume, variety, variation in demand and visibility (customer contact)), (sequencing and scheduling - Gantt charts, CPA) Technology, task design, process layout), (monitoring, controlling and improvement)
- Outputs [(customer service), (warranties)]
