Role of operations management

Question 1

What does operations refer to?

Answer 1

Operations refers to the activities of business that acquire and combine inputs, changing them into finished goods and services.

Question 2

What is operations management concerned with?

Answer 2

Operations management is concerned with managing the process that transforms inputs such as raw materials, labour-power and transport into outputs of goods and services

Question 3

What questions will Operations managers need to find the answers to?

Answer 3

What to produce? How to produce? How much to produce? For whom to produce?

Question 4

What is a major task in operations management?

Answer 4

A major task in operations management is to ensure the efficiency of operations by using the least amount of input possible. At the same time operations management needs to be effective by making sure that customers’ needs are met and that they are satisfied with the output

Question 5

What is involved in operations management?

Answer 5

• Operations- the key business function
• Employment- Most employment in any business is in operations
• Other key business functions-are linked to operations
• Visibility- operations is the part of the business most commonly seen by customers
• Assets- a large proportion of a businesses assets are in operations

Question 6

How is the strategic role of operations management different to operations management?

Answer 6

The strategic role of operations management is different to operations management. The difference can be explained in terms of short- and long-term viewpoints. Operations management is concerned with the immediate future, for example, decisions that need to be made about the next twelve months.

On the other hand, the strategic role of operations management will focus on decisions and the plans for achieving goals that need to be made in the long term, for example over the next ten years

Question 7

What is cost leadership?

Answer 7

A simple definition of cost leadership is where a business has the lowest cost of operations compared to its competitors

Question 8

How is a competitive advantage gained through cost leadership?

Answer 8

A business that is a cost leader develops a competitive advantage over its rivals. A competitive advantage over rival businesses is gained by offering consumers greater value via lower prices, better quality or by providing greater benefits and service at no extra cost to the customer

Question 9

How will a business achieve cost leadership?

What is an example of this?

Answer 9

To achieve this low cost of operation the business will attempt to achieve efficiency by using the least amount of input possible to produce a given output.

An example of this would be Qantas which could enjoy discounts because of large fuel purchases compared to much smaller purchases by airlines.

Question 10

What do business cost leaders to need to continue to do?

Answer 10

Businesses that are cost leaders need to continue to keep their costs low compared to their competitors by employing a variety of strategies which include the following

• Economics of scale
• Technology -use up to date technology
• Control other costs
• Control production costs

Question 11

What does good/service differentiation refer to?

Answer 11

Good or service differentiation refers to the differences between products of competing businesses as perceived by consumers. The business develops a good or service that is unique and which customers believe is better than or different to all the products produced by competitors

Question 12

why is service differentiation a major opportunity?

Answer 12

The production of differentiated good or services is a major opportunity for a business to continue being competitive through the operations function.

Question 13

What are three ways of aiming for differentiation for cost leadership?

Answer 13

The physical appearance

providing the customer with an adequate level of service

Producing a good or service efficiently

Question 14

What is meant by the physical appearance of the styling of goods?

Answer 14

This method of aiming for cost leadership focuses on product design. Product design includes product features. For a product or good to have a sustainable competitive advantage operations managers must determine the designs and features that customers demand and perceive add value to the good.

Question 15

What is meant by providing the customer with an adequate level of service at a minimum cost?

Answer 15

One method of differentiating services is to provide different levels of basic service. The basic service comes at the least cost to the customer while increased levels of service attract higher charges

Question 16

What is meant by producing a good or service efficiently with a maximum of quality at minimum cost?

Answer 16

Product quality refers to the features of a product that allow it to perform as expected in satisfying customer needs

• The level of quality is the amount of quality possessed by a product
• The consistency of quality is the degree to which a product is the same level of quality over time

Question 17

What is a major task for the operations manager in a goods-producing industry?

Answer 17

Selecting the appropriate manufacturing process

Question 18

What are the three manufacturing possibilities?

Answer 18

• A totally customised productions process
• Mass production
• Mass customisation

Question 19

What is a totally customised productions prosses

Answer 19

-where goods are made to customer specifications. E.g dress maker

Question 20

What is mass production?

Answer 20

Mass production where large volumes of goods are produced

Question 21

What is mass customisation?

Answer 21

Where large volumes of customised goods are produced. E.g fashion designer making lots

Question 22

How are HR and operations connected?

Answer 22

One reason why operations is the most important of the key business functions is that generally most of the employment in any business will be in operations. This means that there will be a strong link between the function of operations and human resource management

Question 23

How does HR contribute to operations?

Answer 23

• The acquisition of hiring of employees
• the development of employees- training
• the maintenance of employees by the provision of monetary and non-monetary benefits
• The separation of employees

Question 24

How are Operations and marketing interdependent?

Answer 24

The marketing function identifies consumer demand by identifying the target market for the product. There is a strong link between operations and marketing when operations managers are making decisions about how much of a product to produce and for whom.

Question 25

How is finance connected with operations?

Answer 25

The interdependence between operations and finance is critical. The business will be based on budgets which will be submitted by all of the functions, including operations. The finance function will be concerned with making decisions on how to raise finance so that production and distribution take place. Financial managers will also carefully monitor the use of inputs and outputs by the operations function of the business through working capital management, where there are controls on current assets and liabilities