U3: AOS3: Operations Management Flashcards
Operations Management
Refers to the actual work done transforming inputs into finished outputs
Productivity
Producing the same amount of outputs for lower input costs.
Impact of introducing technology on operations
Increases efficiency and effectiveness
Impact of introducing materials management on operations
Reduces level of inventory
Impact of introducing quality on operations
Reduces wastage and defects
Impact of introducing minimisation on operations
Reduces cost and meets community expectation
What does optimising productivity involve?
-Reliable supply chains
-Minimising wastage and defects
-Applying technology
-Maximising facility layout
What is an operations manager responsible for?
-Overseeing the operations system
-strategic decision making by ensuring that it meets the business’ needs
-planning such as process, capacity, location, HR and quality
-**managing and overseeing operations **as they occur
What is an optimal operations system determined by?
-Productivity levels
-Quality
-Speed
-Reliability
-Flexibility
-Strategic Decision Making
-Overseeing operations as they occur
Key Elements of an Operations System
Inputs, Process and Outputs
Inputs
Resources required for conversion or the production of goods and services
Processes
Steps that** transform inputs into finished outputs**. Add value
Output
Final product provided that are generated by the operations system.
Manufactured Good
Tangible, can be produced, stored and consumed seperately
Services
Intangible and often produced and consumed simultaneously
Key characteristics of operations systems
-Production process
-Production and consumption occurance
-Customer contact
-Tangiblity
-Storage
-Custom/standard
Technology
Strategy Area
Using equipment and knowledge to assist a business to function and create products.
What can developments in technology do?
Strategy Area 1
-Enable new methods of production, which can quicken or lower costs of production, increasing efficiency
-Improve accuracy and therefore improve effectiveness
Automated Production Lines
Strategy Area 1
The replacement of human effort using machinery and equipment arranged in a sequence with the product developed through each step.
How do Automated Production Lines Increase Efficiency
Strategy Area 1
Can perform at a speed which is usually much faster than humans, improving productivity.
How do Automated Production Lines Increase Effectiveness
Strategy Area 1
-Allows for a high degree of accuracy which decreases the number of erros that occur.
-Reducing the amount of errrors enhances the overall quality of the final product.
Robotics
Strategy Area 1
Programmed machines with the ability to detect changes in the environment
How does Robotics increase effeciency?
Strategy Area 1
-Reduces labour costs
-Reduces waste due to robotics being more accurate than humans
How does Robotics increase effectiveness?
Strategy Area 1
-Improves consistency in final output
-Increases customer satisfaction
Computer Aided Design
Strategy Area 1
Software tool that facilitates the creation and development of the design process.
Assists in generating and modifying technical illustrations of a product.
How does Computer Aided Design increase efficiency
Strategy Area 1
Reduces the time and labour resources used to design a product which improves productivity
How does Computer Aided Design increase effectiveness?
Strategy Area 1
Can develop various prototypes, and choose the best design, increasing customer satisfaction and sales.
Computer Aided Manufacturing
Strategy Area 1
Software used to control and direct the production process by controlling equipment and machinery.
How does Computer Aided Manufacturing increase efficiency?
Strategy Area 1
No machinery to be manually operated, reduces time and labour.
Generally more accurate, reduces waste.
How does Computer Aided Manufacturing increase effectiveness?
Strategy Area 1
Creates product with a consistant level of quality which can meet customer expectations and sales.
AI and Online Services
Strategy Area 1
-AI can act as an aid to humans and enables machines to function with human-like intelligence
-Online service is any information or service that a business offers on the internet.
How does AI and Online Services increase efficiency?
Strategy Area 1
Providing information about the business online can save customer service staff’s time.
How does AI and Online Services increase effectiveness?
Strategy Area 1
Less expensive, so can reduce expenses and meet the objectives of increased profits.
Reach a wider audience - increased sales.
Advantages of using Technology in operations.
Strategy Area 1
-Improved productivity through lower labour costs, reduced production times.
-Improved safety levels
-Reduction in human labour costs
-Greater precision and accuracy of work
-Consistant quality of outputs
-Reduction in waste material
Disadvantages of using Technology in operations.
Strategy Area 1
-High inital setup costs
-Technology may be inflexible
-CSR issues- local employment
-Maintenance may be high
Materials Management
Strategy Area 2
Refers to the inward flow of materials:
-The procurement and storage of materials, inventory, and finished goods.
What can optimising materials management strategies do?
Strategy Area 2
-Reduce costs
-Create effectiveness
-Improve competitiveness
What should a materials manager consider?
Strategy Area 2
-Where new materials are being sourced from
-Right goods, right price, right time
-suppier lead in time and future price changes
What does storing materials require?
Strategy Area 2
Space
Security
Money
Risk that materials can become damaged or out of date
What will a good quality operations system do?
Strategy Area 2
-Reduce waste
-Reduce defect rates
-Improve the business’ competiveness
Forecasting
Strategy Area 2
Using past data and trends to predict future demand, so informed decisions can be made about materials.
How does Forecasting increase efficiency?
Strategy Area 2
-Decreases the likelihood of ordering and storing excessive stock, reducing waste and optimises resources.
-Having enough minimises halts to production
How does Forecasting increase effectiveness?
Strategy Area 2
Increases business’ ability to meet customer demand- meeting objective of customer satisfaction and sales
Master Production Schedule
Strategy Area 2
Shows the time frame for production. It allows the operations manager to assess capacity and reallocate resources to meet production needs.
How does a Master Production Schedule increase efficiency?
Strategy Area 2
Prevents a business from producing an excessive amount, using the correct amount of resources and reducing waste.
How does a Master Production Schedule increase effectiveness?
Strategy Area 2
Promotes an organised operations system and minimises the number of avoidable errors
Materials Requirements Planning
Strategy Area 2
-A detailed plan of exact materials needed to meet production targets.
-works backwards from MPS. By specifying output requirements, an MRP system determines material requirements and time frames.
How does Materials Requirements Planning increase efficiency?
Strategy Area 2
Having the exact materials required reduces avoidable halts in production which enhances productivity by allowing operations to flow smoothly
How does Materials Requirements Planning increase effectiveness?
Strategy Area 2
Ensures there is sufficient materials to meet customer demand. Meeting customer demand helps meet the objective of increasing customer satisfaction and sale.
Just In Time
Strategy Area 2
Inventory management system that aims for the absolute minimum amount of inventory at each stage of the operations process.
-materials delievered that can be used immediately
-reduces the amount of held inventory
How does Just In Time increase efficiency?
Strategy Area 2
Holding minimal stock can free up space that can now be optimising to increase production
How does Just In Time increase effectiveness?
Strategy Area 2
Costs saved from reducing storage space can be used in other areas, which can increase sales.
-reduce expenses associated with waste
Quality Management
Strategy Area 3
???
Quality
Strategy Area 3
the degree of excellence in a product and its ability to satisfy a client/customer requirements.
What do quality management strategies aim to do?
-Minimise waste and defect rates
-Obtain consistantly high standards of product and service at every stage of production
-achieve set quality standards or benchmarks
Factors that determine quality
-Durability
-Performance
-Customer Satisfaction
-Ease of use
-Consistancy
-Reliability
Quality Control
-A series of checks along the production process
-Ensures outputs meet the required standard and that any issues are addressed ASAP.
-Reactive process addressing faults after they occur.
How does quality control increase efficiency?
-Identifying and fixing the cause of an error prevents the error from reoccuring which results in less waste.
-Reduces the number of potential erros, that could halt production
How does quality control increase effectiveness?
Eliminating errors prevents customers from recieving faulty products- customer satisfaction and increased sales
Advantages of Quality Control
-Preventing customers from recieving faulty products can improve reputation.
-Can reduce number of refunds
Disadvantages of Quality Control
Business can develop a poor reputation as environmentally harmful
-Time Consuming
-Errors are fixed after they happen, leading to more waste.
Quality Assurance
-Proactive process: Aims to build quality into the work and avoid errors before they occur.
-Involves certification from a third party.
Process of Quality Assurance
1- Business employs a consultant to advise on quality standards to be met
2- Adjustments made
3- Certification granted
4- Rights granted to use standards authority logo.
How does quality assurance increase efficiency?
-Preventing errors before they occur reduces the number of faulty products produced which reduces the amount of waste generated.
-Reduces the number of halts
How does quality assurance increase effectiveness?
Customers are more likely to purchase a product with a certified standard, increasing sales
Advantages of Quality Assurance
-Reduces waste
-Improve competitiveness
-Enables smooth production due to low errors
Disadvantages of Quality Assurance
-Employees may have to be trained
-Time consuming
Total Quality Management
Is a holistic approach to improving quality in the business as a whole.
Involves 4 principles.
4 Principles of Total Quality Management
Customer Focus, Total Employee Commitment and Responsibility, Process Management and Continuous Improvement
Customer focus
Principle of TQM
All members of the business have responsibility for improving quality and achieving customer satisfaction
Total Employee Commitment and Responsibility
Principle of TQM
Commitment of all employees to quality
Lean Management
Continuous process of identifying and eliminating areas of
waste in the operations system. Lean management involves a systematic process in identifying
and removing all activities that do not add value to a product
Pull, One Piece FLow, Takt, Zero Defects
Continuous Improvement
Principle of TQM
Proactive, aims to change the system to prevent defects.
How does TQM relate to efficiency
Continuously improving the quality of the production system reduces the number of faulty products.
How does TQM relate to effectiveness
By determining the needs and wants of a customer, TQM can meet the objectives of improving customer satisfaction and + sales.
Advantages of TQM
Improves business’ reputation by having minimal impact on the environment.
Reduces waste + expense
Disadvantages of TQM
Employees may be confused if the strategy isn’t explained.
Requires a shift in employee culture.
Costly
Similarities between Quality Control and Quality Assurance
Both strategies reduce the amount of faulty products
Both strategies require a good or service meeting standard.
The 4 lean management principles
Pull
One-piece flow
Takt
Zero defects
Similarities between Quality Control and Total Quality Management
Both strategies can be implemented to see notable improvements in quality in the final output.
Both are internally controlled and involve employees assessing quality.
Similarities between Quality Assurance and Total Quality Management
Both strategies are proactive as they present errors from occuring.
Both improve the process
Pull Examples
Supermarkets
Fast food
Item purchased = restock
Differences between Quality Control and Quality Assurance
QC is reactive while QA is proactive.
QC does not involve certification.
One-piece flow examples
Bakeries
Tailoring
From start to finish of production no stops
Differences between Quality Control and Total Quality Management
QC focuses on setting standards of quality in the first stage. TQM focuses on continuously developing and improving standards.
QC is reactive while TQM is proactive.
Similarities between Quality Assurance and Total Quality Management
Both strategies are proactive as they present errors from ocurring.
Both improve the process
Differences between Quality Assurance and Total Quality Management
QA focuses on meeting set standards, whereas TQM focuses on internally developing and improving standards.
TQM does not involve external certification
Takt
Refers to the consistant, continous rhythm in production.
When this is achieved, processes become easier and can respond flexibility to fluctuations in demand.
Zero defects
Focuses on quality, identifying potential defects as soon as possible to ensure that any issues are resolved quickly and efficiency, resulting in high quality.
Pull
When the rate of production is determined by customer demand, which effectively ‘pulls’ value through the production process.
One piece flow
An uninterrupted flow of process from the beginning until the end of the production process.
Advantages of Lean Management
-Business’ reputation increases as they are reducing waste.
-Processes are streamlined so all activites add value.
-Production can be faster
-Reduces the overall use of materials
Disadvantages of Lean Management
-If suppliers don’t deliever, the business will be unable to optimise
-Employees might not be commited
-If employees can’t meet the requirements, increases anxiety
-Time consuming to train
-Costly
Waste
Any action in the production process that fails to add value for the customer.
What will reducing waste result in?
-Lower waste disposal costs
-Lower energy costs
-Lower storage costs
-Cost reducing through sale of recycleable materials
Types of waste
Transporation
Inventory
Motion
Waiting
Overprocessing
Overproduction
Defects
Skills
Waste minimisation strategies
-The 3 R’s
-POTZ
-TIMWOOD
How does waste minimisation increase efficiency?
By only using the required amount of materials, a business can produce items faster, increasing their production rate.
How does waste minimisation increase effectiveness?
Reducing waste lowers operational cost and lower prices
Aspects of CSR Operations
-Corporate governance
-Sustainability and Environment
-Employee QOL
-Human rights and ethical sourcing of suppliers
-Community involvement
Corporate Social Responsibility
Businesses are responsible for their economic activities as well as any social and environmental implications.
Going above and beyond legal responsibilites
Why use CSR?
-Pressure to behave ethically from various stakeholders
-When implemented through operations, CSR can improve productivity and contributes to the success of the business both effiency and effectiveness
-A committment to reducing waste can improve profits
-Customers may favour a socially responsible company
CSR in terms of inputs
-Socially responsible suppliers
CSR in Processes
-Should reduce waste
-Cleaner tech choices
-Treat staff fairly
CSR in outputs
-Quality outputs must be fit for purpose
-Packaging with minimal environmental impact. Recycleable
-Honest marketing
Advantages of CSR
-Long term gains of reputation and market share
-Maintain stakeholder expectations
-Increases morales
Supply Chain
A network that involves a wide range of people, activities and resources in the sourcing, development and sale of a product.
Supply Chain Management
Involves meeting customer demand for goods and services by ensuring the flow of materials throughout the supply chain.
Logistics
The delivery of products including the movement of materials and products from one location to another.
Advantages of a Global Supply Chain
-Decreases costs
-Ability to take advantage of cost difference between nations
-Access to not availiable locally skills and resources
-Development of alternative suppliers
Disadvantages of Global Supply Chain
-Border shutdowns
-Difficult to monitor quality
-Loss of Australian Jobs
-CSR factors
Global sourcing of inputs
Involves a business procurring inputs from overseas
Advantages of Global Sourcing of Inputs
-Opportunity to source inputs that are cheaper and better quality
-Reduced labour costs
-Economic development of less-developed countries
Disadvantages of global sourcing of inputs
-Political and economic interruptions
-CSR obligations might be challenging
-Environmental impact considerations
Overseas Manufacture
When the process stage of the operations system is conducted in an overseas location
Advantages of Overseas Manufacture
-With the operations further trasnferred overseas, business can focus on other areas
-Lower production costs
-Goods can be produced in large volumes
Disadvantages of Overseas Manufacture
-Issues with language barriers
-Delays and blockages
-Increased cost due to shipping
Global Outsourcing
When a business contracts a third party to conduct a specific business operation to be performed overseas.
Advantages of Global Outsourcing
-Potential to access greater expertise
-Reduces the need to hire and train new employees for the out-sourced activities
-Enables move time to be focused on core business and improving productivity
Disadvantages of Global Outsourcing
-Coordination of workflow between different aspects of the business can be challenging,
-Communication issues resulting from working in different countries
-Loss of control
