Role Flashcards
Define operations
- The business process that involves transformation or more generally production.
Strategic role of operations
- Involves The long term approach to managing the operations process in a way that contributes to the achievement of the goals and strategic direction of the business.
Strategic role of operations
DESCRIBE
- Involves adding value to inputs therefore making them outputs
This is done by;
- Creation of goods, and provision of services
- Allocating resources
- Meeting customer needs
- Strategies to gain a comp advantage
Strategic role of operations
HOW
- *- Cost leadership
- Goods/Service differentiation**
OPERATION ACTIVITIES INCLUDE;
- Production of goods and services
- Production controls and quality controls
- Inventory controls
- Supply chain management
- Logistics and distribution
- Cost leadership
CASE STUDY
- 2020, APPLE iphone 12 pro costs $409 per unit to manufacture.
- Most expensive component - 5G modem ($90)
- Resulted in APPLE achieving a 7% higher GP ratio than. samsung, illustrating APPLES Effective cost leadership.
- Aiming to outperform competitors by having the lowest costs or to be the most price competitive in the market
DESCRIBE
- Reducing the cost of production - Enhance profit margins.
HOW
- Standardised good and services.
- Economies of scale, through mass production.
- Global sourcing.
- Eliminate wastage (Overproduction / Idle labour)
- Outsource
- Minimise Costs - Maximise Profit - COST
- Price competitive Product - Increases sales & Market share - Maximises Profit.
HOWEVER
- Decreased product quality - QUALITY
- Negative impact on brand - less sales
- Increased warranty claims - COST
- Delays - SPEED NOT MET
- Unable to provide customised products - CUSTOMIZATION
Goods/Services Differentiation
CASE STUDY
- *Goods**
- Quality materials
- Dual camera
- Face id
- 5G
- Ceramic glass
- *Services**
- Apple music
- Podcasts
- Siri
- Apple TV
- Apple news
- Involves distinguishing products in some way from its competitors
HOW?
Goods differentiated By;
- Varying the product features (Custom design)
- Varying the product quality (New Tech)
- Including Augmented figures (Ext warranty & Faster delivery)
Services differentiated by;
- Varying the amount of time spent of the service
- Expertise brought to the service
- Qualifications and experience of the service provider
- Varying the quality Materials/ tech used in service delivery.
- Enhanced business competitiveness
- Attaining a sustainable long term advantage
- Achievement of operational objectives
HOWEVER
- Increased costs with differentiating products
Goods/services in Dif industries - Standardised goods
- *CASE STUDY**
- Iphones, mass produced in foxconn and china, india.
- Avoiding costs associated with customising products for different countries/Markets
- Apple products allow consumers to select settings individually. customising their own standardised good.
- Goods that are mass produced, usually on an assembly line.
- Uniform in quality and meet a predetermined level of quality
- Generally produced with a production process
- Low cost, high quality, high speed, low customisation.
Goods/services in Dif industries - Customised Goods
- *CASE STUDY**
- Most of apples goods are standardised, however they are customisable through when you receive the iphone through accessories
- Goods that are varied according to the needs of the customers
- EG… Sandwich at the Deli, Suit.
Goods in different industries
what are Perishables/Non perishables
- PERISHABLES are;
Short life span.. FOODS
Therefore, for an operational process it must be ensured that;
. High quality / Cleanliness
. Short lead times and distribution.
- NON-PERISHABLES are;
Long life span..
Therefore, for an operational process it must be ensured that;
- JIT
Services in different industries
- *Standardised service** ( Fast food/ Call centres)
- *Customised service** (Accounting, medical, legal)
- *Self service**
Operations impact on marketing
Marketing relies on operations:
1 - Marketing must understand the volume able to produce, and flexibility with technology with operations.
2 - Cost based pricing method affected by the level of Cost leadership.
- Operations CSR can be used in promotion, help public relations and give positive publicity.
- Marketing relies on operations to manufacture and produce the products needed for customers
Marketing impact on Operations
Operations relies on marketing;
1 - Sales predictions and the stage of the product life cycle - detects variation in demand, affects the volume/variety.
2 - Changes in marketing strategy may involve changes in operations (Dif packaging or design)
3 - The need to adhere to warranty consumer law causes operations to implement quality management strategies
4 - Marketing communications consumer wants towards operations
Operations impact on finance
Finance relies on marketing;
1 - If operations are using global sourcing, finance may use hedging and derivatives to reduce the risk of exchange rate fluctuations and will need to choose an appropriate method of international payment
(If importing, clean payment)
Finance impact on operations
Operations relies on finance;
1 - Allocates funds and current assets to use inputs and new product design and development.
2 - Enact cost controls
Operations impact on HR
HR relies on operations;
1 - Involuntary redundancy (New Tech)
2 - Ops choosing to use global sourcing and outsourcing should consider the skills, costs and supply of global human resources.
