U3 AOS3 Flashcards
define operations management
consists of all the activities in which managers engage to produce goods or services. The coordination of recourses within a business to achieve the efficient and effective output of finished goods and services.
Bus objective is to make a profit, what is the operations objective and strategy
objective: reduce cost
strategy: through just in time
bus objective is to increase market share, what is the operations objective and strategy
objective: improve quality
strategy: quality control
bus objective is to provide a return for shareholders, what is the operations objective and strategy
objective: increase productivity
strategy: introduce automated production lines
bus man objective is contribute to the wellbeing of the community what is the operations objective and strategy
objective: minimise waste
strategy: establishment of lean management
what are tangibles
are goods, which can be touched. Goods
what are intangibles
include services, which cannot be touched. Services
what is the difference between manufacturer and service business
Manufacturer = transforms, Inputs > tangible products ~ use of machinery
service business = transforms, inputs > intangible products ~ use of labour
define quality
Good or service that fully meets customer expectations. If your product has better quality than rival, you have a competitive advantage
what is an input
the resources used in the process of production. Some resources are owned by the business, while others are from suppliers.
what are the 6 categories of inputs
materials capital equipment labour information from a variety of sources time and its efficient use money
example of capital equipment
the plant, machinery, equipment and property necessary to conduct operations.
what is transformation/process
the conversion of inputs into outputs through involving the use of resources to produce the final good or service.
example of transformation/process for tangible
example, for tangible changes Sony takes plastic, metal, glass and electronic parts, and transforms them through design, manufacturing and assembly into numerous electronic products.
example of transformation/process for intangible
example of intangible changes school takes its main inputs — students, the syllabus, staff and buildings — and produces educated, employable graduates.
what are outputs
the end result of a business’s efforts being the service or product that is delivered or provided to the consumer. That can either be to the final end customer, or to another business if the business is producing a component for another business.
difference between manufacturing and services, in terms of production
Man: product + consumption occur separately
and can be standardised and mass produced
Serv: production + consumption = simultaneously
often customised
difference bwteen man and serv, in terms of storability, degree of customer contact and production technique
storability:
man: can be easily stored
serv: difficult to store
degree of customer contact:
man: minimal contact
Serv: high degree
Production technique:
man: mainly capital intensive
Serv: mainly labour intensive production
similarities between manufacturing and services
use technology deal with customers deal with suppliers aim to produce high quality output aim to reduce costs to production aim to reduce waste
what is automation
involves lines work generally in manufacturing industries where mass production of a standardised product is possible.
Each station performs a specific operation in sequence, preferably with automatic transfer between each station.
However automated production lines can also be used in service related industries e.g. Australia post
what is an automated production line
is comprised of machinery and equipment arranged in a sequence with components added to the good as it proceeds through each step, with the process controlled by computers.
what does automation replace human effort with
machinery technology due to advances in engineering mechanics, robotics computer advancements
what is robotics
is a highly specialised form of technology capable of complex tasks.
advantages of an automated production line 5
• Productivity rates increase so cost per unit can fall 24/7 production Accuracy / precision increase Remove dangerous or repetitive tasks Reduced wastage
disadvantages of an automated production line 4
Initially very expensiveIf system breaks down major suspension to production
Requires technical training
Can lead to large scale redundancy
what is computer aided design
computerised design tool that allows a business to create product possibilities from a series of input parameters.
eg of computer aided design
For example architects, engineers use these programs to draw and adjust 3D designs based on client requests which can be emailed and reviewed from anywhere in the world e.g. car colour requests by Lamborghini
what is computer aided manufacturing
technique that involves the control of machinery, and equipment through a computer. Machines are fed instructions from a computer
why is website development important
because it is a connecting point between customers and businesses.
Businesses first contact with the consumer must be a positive one
what is procurement
: the process of researching and selecting suppliers, establishing payment terms, negotiating contracts, and the actual purchasing of resources that are vital to the operations of the business.
advantages of website development 5
24/7 availibility labour cost reduced ensures consistent message easy access to customer feedback survey saves costs for promotion
disadvantages of website development 4
initially very expensive
If system breaks down major suspension to production
requires technical training
can lead to large scale redundancy
what is computer integrated manufacturing
a method of manufacturing in which the entire production process is controlled by a computer.
difference between efficiency and effectiveness
Efficiency - involves using resources to their optimum level. Inputs/outputs
effective - involves meeting company objectives
For someone managing materials they also need to take into account: (5
- the raw materials on site
- the time taken to order new supplies, •
- the time required to find the right supplier •
- negotiation of contracts •
- delivery times
define forecasting
Forecasting is the predicting what materials
will be required and in what quantities, in order to produce at an effective level in operations
in forecasting, what happens if you make the prediction too high, or too low?
Make the prediction too low and you run out of product and lead to customer dissatisfaction
Make the prediction too high and you order too much stock which either goes out of date and is wasted or takes up storage space.
The four things the forecaster needs to consider
Supplier delivery times – global cocoa can take a while to arrive
Prices change – e.g. global exchange rates change
Market conditions change
Special customer demand times “Easter / Christmas”
Advantages of forecasting? 2
- Can anticipate seasonal changes and adjust orders to save on costs and wastage
- Can help to prevent overordering taking up storage space
disadvantages of forecasting? 2
- The “running backwards looking over your shoulder” principle - unexpected events can still catch you out
- Requires a lot of time to anticipate, track and analyse all potential impacts on supply chain
define the master production schedule
a plan that details what is to be produced and when + how.\
what does the master production break down
breaks down the whole production process into stages and determining exactly what is required, what needs to be produced and by when, this document can determine the quantity demand of inputs over time
6 specifics that need to be included in the master production schedule
Who - staff needed to do the work • What goods are to be produced • When production is to take place • Where production is to take place • How production will occur – production methods • Which materials are required
advantages of the master production schedule (5
Helps determine very accurate ordering quantities and timings – avoid wastage, time and costs •
Very clear to all staff of processes and their sequence •
Very good for standardised production e.g.. cars •
Easy for new staff to learn routine •
Reduced general wastage
disadvantages of the master production schedule (3
Initially time consuming and expensive to track, record and write up the “manual” •
Hard to account for every situation •
Not very flexible
what does the materials requirement planning involve
involves developing an itemised list of all materials involved in production to meet the specified orders.
what does the Materials requirement planing aim to do
aim is to minimise storage costs, wastage and idle machines and order the materials with sufficient time to be delivered. Managers can then consider the benefits of buying in bulk over storage costs, seasonal variations, price variations etc.
Materials requirement planing shows
The stock / materials required for the quantity determined in the Master Production Schedule (MPS) •
The stock or materials on hand •
The stock / materials to be ordered
advantages of the materials requirement planning (3
Reduction in wastage •
Reduction in storage space taken up
Reduction in idle machines
the disadvantage of the Materials requirment plannign
Initially expensive to set up a dedicated system which can accurately track materials through the site
define just in time
is a materials management strategy that ensures that the exact amount of material inputs will arrive only as they are needed in the operations process.
What is the just in time reliant on
reliant on the relationship with the supplier and the operations manager
Eg. of just in time
Eg. CUB delivering fresh barley and hops daily
Advantages of just in time 4
No raw material wastage •
The bare minimum of cash “trapped” in raw materials •
No storage space required •
No idle machines
disadvantage of just in time
Hugely reliant on suppliers to deliver on time, all of the time – failure to do this very quickly shuts down the whole production line
In materials management what happens if one orders too much stock
run out of storage
stock can pass its use by date, go off and waste money
money is tied up, “trapped” in stock
In materials management what happens if one orders too little stock
product line grinds to a halt
customer orders remain unfilled
business reputation collapses
define materials management
is the strategy that manages the use, storage and delivery of materials to ensure the right amount of inputs is available when required in the operations system.
materials management involves (5
receiving materials
storing materials safely
identifying ongoing materials requirements (by forecasting and ensuring timely purchase of materials)
reducing holdings of surplus stock
controlling the release of materials into the production process
definematerials handling
handling goods in warehouses and distribution points.
define inventory
is the goods and materials held as stock by a business.
define inventory control
keep costs down (efficient management of inventory) and good access when needed (effective management)
define quality
- Quality refers to the degree of excellence of goods or services and their fitness for a stated purpose.
a quality product should be
A quality product should be: reliable • fit for the purpose for which it were intended • easy to use • durable • well designed • delivered on time.
failure to meet quality product standards result in
Customer dissatisfaction = poor sales = poor sales revenue = poor profits •
Poor reputation = lost sales = lower profits •
Product recalls = additional costs and lost sales = lower profits.
define quality control
involves the use of inspections at various points in the production process to check for problems, defects and ensure that the goods and services meet predetermined standards.
advantage of quality control
• Prevents poor quality goods or services reaching the consumer
disadvantages of quality control (3
Is very wasteful as the rejected products involve raw materials, time and processes which are not sold to the customer •
Doesn’t always isolate the cause of the problem •
Unless Quality control is performed on every product some inferior goods may slip through
define quality assurance
involves the use of a system so that a business achieves set standards in production aiming to build quality into work processes and thereby avoid errors in the first place.
what is the International Organisation for Standardisation (ISO)
= quality certifications is a widely used international standard. is invited into the business to assess the processes of the business against its predetermined standards.
what happens when complying with these standards
the business receives certification which it can then use to promote to customers, thereby “assuring” its customers and stakeholders of a certain standard of quality.
what do the quality standards usually cover?
Production processes •
Training of staff •
Quality checks
Advantages of quality assurance (3
Great for marketing
Gives competitive advantage in domestic and global markets
Reduces wastage as the proactive focus aims to stop errors occurring before the good or service is produced
Disadvantages of quality assurance 2
Can be expensive to have the certification •
Can take additional time preparing documents and processes prior to the inspection
define total quality management
an ongoing, business-wide commitment to excellence that is applied to every aspect of the business’s operation through sharing responsibility among all the members of the business.
list and explain the three principles behind TQM
employee empowerment = employees in work groups “quality circles” empees getting together and solving issues
Continuous improvement = ongoing commitment to achieving perfection
Customer focus = importance on what the customer receives •
advantages if TQM 3
Zero defects •
Greatly reduced wastage – “prevention better than cure” •
Higher customer satisfaction
Disadvantages of TQM
Requires a whole business cultural shift which can be time consuming and expensive to implement
can be expensive
define waste
is any resource (raw material, labour, time) which is discarded after use, or it is worthless, defective or of no use
how can waste affect a business3
Money gets wasted on raw materials •
Company can be fined or prosecuted by the Environmental Protection Agency (EPA) if waste damages the environment
Customer complaints and returns of poor quality goods can damage the reputation of the business
define waste minimisation
is a process involving the reduction of the amount of unwanted or unusable resources produced by a business in an attempt to improve the efficiency and effectiveness of operations.
6 waste minimisation strategies
• redesigning products and packaging
•
procurement of materials made from recycled materials
•
reusing scrap material
•
improving quality control
• exchanging waste with other businesses
• introducing all systems approaches, such as lean production.
4 Rs of waste minimisation
Reduce • Reuse • Recycle • Recovery
Ways reducing waste can lead to achievement in business objectives
Help reduce raw material costs -> increase profits
Reduce waste treatment costs -> market share^
Prevent EPA fines -> fulfil social need
Increase marketing opportunities from being more sustainable -> shareholder exp + market need
define lean management
is an approach that improves the efficiency and effectiveness of operations by eliminating waste and improving quality.
the process of lean management involves
business carefully analyses each stage of the operations system and remove any inefficiencies that do not add value to the product.
lean production focuses on
Avoiding excess motion = reducing unnecessary motion
avoiding over production = no overworking
avoiding excess inventory = minimising storage required
Eliminating waiting time = overall to wait and produce
Avoiding over processing = no more adding unnecessary value to product
reducing excess transport
lean management aims to
increase efficiency, effectiveness and quality of processes •
Lower costs of production •
Improve customer satisfaction •
Improve employee satisfaction
advantages of lean management
Reduced energy and resource consumption Reduced delays Increased worker productivity Reduced uncertainty Increased customer satisfaction
disadvantages of lean management
Requires committed and experienced employees
Employees may resent the
change to lean or may prefer not to provide any input
The constant focus
on improvement and elimination of waste can result in workplace stress
Requires good relationships with suppliers
Can involve high implementation costs
define corporate social responsibility
management’s awareness of the social and environmental consequences of its actions, taking into account an approach that is both ethical and socially responsible.
The aspects of corporate social responsibility that would concern an operations manager include: (4
Managing inputs appropriately
Managing suppliers appropriately:
Managing staff appropriately Managing customer relationships appropriately
what should be done when Managing inputs appropriately:
CSR
use inputs that do not have a serious impact on the environment.
what should be done when Managing suppliers appropriately: CSR
work with sustainable supplies and workplaces that are free of exploitation.
what should be done with the Managing staff appropriately CSR
Ensure business’s facilities and technology contribute to the health and welfare of staff, above and beyond what is required by legislation.
what should be done with Managing customer relationships appropriately
CSR
goods produced are of the required quality, that they are safe and reliable.
advantage of CSR
Behaving in a socially acceptable manner can improve the reputation of a business, improve efficiency and reduce costs in the long term.
Disadvantage of CSR
It can be expensive and time consuming to manage an operations system in a socially responsible way.
CSR expresses concern for how a businesses practices affect: 3
the environment
society’s health and welfare
ethical concern for its workforce and their families
Examples of CSR behaviour in operations management 7
The environmental sustainability of inputs
Reducing a business’s carbon footprint
Using only fair trade inputs
Lessening noise pollution from a factory
Ensuring the supply chain is also using a CSR approach
Using renewable energy, Eg. green technology
Waste minimisation schemes, such as recycling
what is the potential influence/impact in social responsibility of waste minimisation 5
Reduction of operating costs through: reduced landfill reduced the use of materials/inputs Need for special equipment and procedures to handle toxic wastes improved reputation
what is the potential influence/impact in social responsibility of recycling of materials 3
Reduced costs through lower use of materials means:
improved reputation
lower landfill costs
what is the potential influence/impact in social responsibility of recycling of lean manufacturing 4
improvements in: productivity quality employee motivation through empowerment competitiveness
what is the potential influence/impact in social responsibility of recycling of inventory management systems
Greater efficiency and productivity through:
reduced waste
productivity improvements
Define global sourcing
the practice of seeking the most cost efficient materials and other inputs, including from countries overseas.
why do businesses globally source inputs 4
low-cost skilled labour
low-cost raw materials
lower taxes
low trade tariffs due to free trade agreements.
When global sourcing of raw materials occur a number of issues need to be considered:
5
- Growing conditions – Drought / flood
- Sustainable production / environmental damage
- Political / economic stability of region
- Labour market conditions / child labour
- Duration of delivery – shipping time
Advantages of globally sourcing shit 6
Access to cheaper materials •
Access to materials not occurring in the domestic country •
Can specialise in production not sourcing
Reduce costs
Creating potential market
Accessing skills or recourses that are unavailable domestically
disadvantages of globally sourcing inputs 6
Can lengthen delivery / supply times •
Exposed to changes in exchange rates •
Language barriers in dealing with suppliers •
Suppliers country ethical, environmental and legal standards may be different •
Risk of damage in shipping increases with distance
difficult to monitor the quality of inputs
Globalisation affects operations management in a number of ways businesses now have access to:
Lower costs of production
Resources (natural, machinery & labour) the local country doesn’t have
New consumer markets
Greater competition from overseas
define overseas manufacture
The production of a good in a country that is different to the location of the business’s headquarters. also referred to as offshoring, meaning a good is produced in a country that is different to the location of the business’s headquarters.
what is sweatshop labour
a generic term for a workplace that has poor, socially unacceptable working conditions. The work may be difficult, dangerous, or underpaid. Workers in sweatshops may work long hours with low pay, regardless of laws mandating overtime pay or a minimum wage, and child labour laws may also be violated
Advantages of overseas manufacturing 5
Access to cheaper labour rates, cheaper costs of protection •
Access to large pool of employees •
Business not directly responsible for factory operation •
Works well with large volumes of simple assembly manufacture where delivery times are not too important •
Access to new export markets
disadvantages of overseas manufacturing 6
Lost jobs in domestic manufacturing •
Can lengthen delivery / supply times • Language barriers in dealing with manufacturing
suppliers •
Suppliers country corporate social responsibility, environmental and legal standards may be different •
Concern for Sweatshop labour •
Risk of damage in shipping increases
define global outsourcing
Global Outsourcing involves the contracting out of a business process (e.g. payroll processing, claims processing) and non-core functions (e.g. IT, call centre support) to another business around the world
advantages of global outsourcing 3
Access to cheaper labour rates
Business not directly responsible for non-core services and their employees and entitlements
Works well with IT based services where internet and phone developments mean they could be based anywhere in the world
disadvantages of global outsourcing 3
Language barriers in dealing with overseas businesses sometimes translates into customer frustration
Reliance on internet connections
Suppliers country corporate social responsibility and legal standards may be different
define supply chain management 2
the management of the movement and storage of raw materials, of work-in-progress inventory, and of finished goods from point of origin to point of consumption.
involves meeting consumer demands for goods and services while making the most efficient use of input resources in both the production process and the distribution of the finished product.
how does a typical supply chain look
A typical supply chain starts with the sourcing of natural resources, followed by manufacturing activities such as component construction and assembly.
why is supply chain management critical?
3
If materials are not on hand, nothing can be produced.
If materials are of inferior quality, it is difficult or costly to produce quality products.
If the right quantity of materials is not available, the business cannot meet demand.
advantages of supply chains 5
Access to cheaper materials
Access to cheaper labour rates
Business not directly responsible for factory production
Works well with large volumes of simple assembly manufacture where delivery times are not too important
Can take advantage of global variations in tax rates
disadvantages of supply chains5
• Can be very complicated to manage • Can lengthen delivery / supply times • Exposed to changes in exchange rates • Language barriers in dealing with suppliers • Suppliers country corporate social responsibility, environmental and legal standards may be different • Risk of damage in shipping increases
