unit 3 aos 3 Flashcards
operations management
What is operations management?
Operations management is responsible for using operations strategies to create, operate and control the transformation of inputs from a variety of resources into outputs (ie, goods or services) that satisfy the demands of
customers.
What strategies are used in operations management?
there are four areas of strategies that can be used to improve the efficiency and effectiveness of an operations system.
- technological developments.
- materials.
- quality.
- waste minimisation in the production process, including the principles of lean management.
What should an operations manager be doing in relation to these strategies?
should be constantly asking whether the operations strategies that have been implemented, or are about to be implemented, improve the effectiveness and efficiency of the production process.
productivity
a measure of the amount of output produced by an operations system, as compared to the amount of inputs used in the production process.
- in a manufacturing business: measured by comparing the number of goods it produces to its inputs
- in service business: since input is staff hours, productivity is measured through customer service and satisfaction
Efficiency
is how productively a business uses its resources when producing a good or service.
If a business’ use of resources is optimised, the following outcomes may occur:
(1) The production costs can be minimised.
(2) The levels of waste can be decreased.
(3) The time taken to produce the goods or services can be reduced.
Effectiveness
is the extent to which a business achieves its stated objectives.
therefore, operation managers select the strategies to be used to help the business’ operations system achieve its stated objectives, and thus increase the effectiveness of the operations system.
If the business’ operations system is effective and efficient …
The operations system is achieving its stated objectives.
Additionally, when producing a good or service, the operations system is using its resources productively.
The relationship between operations management and business objectives
Operations managers can contribute to the achievement of business objectives by improving levels of efficiency
and effectiveness in a business’ operations system via the implementation of strategies related to technological developments, materials, quality and/or waste minimization in the production process.
link between OM and making a profit/meeting shareholder expectations
The efficiency and effectiveness of an operations system has a direct impact on these BO:
- the price and quality of a business’s goods and/or services because the business’ revenue,
depend on the business’ operations system.
A business’ revenue is the amount of money it earns from sales.
The more revenue a business earns, the more profit it tends to make.
- also the cost of sales, is a factor that directly affects the business’s gross and net profit
What is an operations system?
a series of processes that is used to transform inputs (resources) into outputs
(goods or services).
What are the key elements of an operations system?
inputs, processes and outputs
manufacturing business
transform inputs into tangible products (specifically, goods).
service business
businesses transform inputs into intangible products (specifically, services).
inputs
the resources used in the production process to create goods and/or services.
1)materials
2) capital resources
3) labour (human resources)
4) utilities
5) information
6) time
categories of Inputs:
1) materials
raw materials: unprocessed resources that are taken directly from the natural environment, such as unprocessed minerals or farm produce.
AND/OR
component material: are processed materials which are generally purchased from another manufacturing business.
categories of Inputs:
2) capital resources
human-made objects that contribute to the production process, but are not consumed or
converted by the process.
eg. machinery, equipment and property necessary to conduct operations
categories of Inputs:
3) labour (human resources)
to the mental and physical effort and skills contributed by human beings to the production process.
categories of Inputs:
4) utilities
includes basic services that are used in the production process, such as the supply of gas, electricity and water.
categories of Inputs:
5) information
- an intangible input that can contribute to the production process.
- can include general information on a market or industry, information on new
customer trends and information on new ways to carry out a production process.
categories of Inputs:
6) time
a non-renewable resource, is used can have a significant impact on the efficiency and
effectiveness of the production process.
How do inputs differ between manufacturing and service businesses?
Manufacturing businesses tend to make more use of capital resources, and less use of labour and information, than service businesses.
What are processes?
the actions performed by a business to transform inputs (resources) into outputs (goods or services).
The link between processes and productivity / quality
Businesses often try new processes to help improve the productivity of the production process and/or the quality of the production process’ outputs.
How do processes differ between manufacturing and service businesses?
1) the product that’s produced:
- manufacturing businesses transform inputs into tangible products WHILE service businesses transform inputs into in tangible products
2) The use of capital resources / labour
- operations system of manufacturing businesses tends to rely heavily on capital resources to transform inputs into outputs. WHILE the operations system of service businesses tends to rely heavily on labour
What are outputs?
the final good or service produced as a result of the business’ operations system and provided to the business’ customers.
The link between outputs and customers
Outputs should meet customer expectations relating to quality, cost and availability.
The link between outputs and the operations system’s inputs and processes
The quality of an operations system’s outputs is impacted by the inputs and processes in the operations system.
How do outputs differ between manufacturing and service businesses?
1) The product that’s produced (tangible vs intangible)
2)The nature of the product that’s produced
- in manufacturing, goods tend to be homogenous WHILE a service tends to be differentiated
What is the link between strategies related to technological developments and competition
Both manufacturing and service businesses can use strategies related to technological developments to increase the efficiency and effectiveness of their operations system, and thus to enhance their ability to compete with other businesses.
what is Automated production lines (APLs)?
- mainly only for manufacturing businesses
- it consists of machinery and equipment that is arranged in a computer-controlled sequence, with component parts added to the output (the good) as it proceeds through each step.
- Generally, goods proceed through each step in an APL via a conveyor belt.
the relevance of … in relation to APLs:
1) employees: generally their role is reduced to the following tasks =
- system design
- monitoring the APL
- adjusting and maintaining the machinery and equipment, as needed
- supply the APL with component material
2) robotics
- a highly specialized form of technology that is capable of carrying out complex tasks.
- A typical key feature of an APL is the use of robotics.
Automated production lines (APLs):
impacts on efficiency
a) time: APLs produce significantly faster than humans, increased output
b) labour costs: reduced as majority of work is carried out by automated machinery and equipment, and less is done by humans
c) cost of materials: the use of robotics in APLs are more accurate than labour, thus reduce waste in comparison to humans doing that work
APL advantages
- products being produced significantly faster than when produced by humans, thereby increasing the output of the production process, + operations system’s productivity.
-Employees need food, breaks, temperature control and etc, Machines don’t. = saves money + time - Decreased waste due to precision.
- Improved consistency of goods.
- Employees can avoid dangerous/mundane tasks.
APL disadvantages
- Very costly to initially set up
- Employees can be made redundant.
- Production is reliant on technology (may break down)
Computer-aided design (CAD)
computerised design tool that enables a business to use input parameters to generate and modify three-dimensional diagrams of products before the products are produced.
- used by architects, designers and engineers
Computer-aided design (CAD) relevance
1) better visualization as it allows viewing from multiple angles
2)helps calculate material use and time to produce
3)can be used to test certain aspects of a product.
4)can be used to customise a product to meet the needs of a client or customer.
Computer-aided design (CAD)
impact on efficiency
reduce time and labour needed to design a product, allowing resources to be used more optimally and productively
Computer-aided design (CAD)
impact on effectiveness
- allows various prototypes to be developed and best design can be chosen. this choosing allows the business to manufacture the highest quality design, which can increase customer satisfaction, sales and market share
Computer-aided design (CAD)
advantages
- increased quality of products
- increased rate of production becayse faster to modify than when manually designed (drawing)
- reduce labour costs with designing as it requires fewer employees than designing manually + time save
Computer-aided design (CAD)
disadvantages
- software can crash, which’ll interrupt production of design and may loose the work
- expensive to initially purchase and keep ip to date
- training would be required to use = time-consuming and expensive
- loss of jobs
robotics
- programmable machines that are capable of performance specified tasks.
- can efficiently complete specialized tasks with high levels of precision and accuracy within a business’s operations.
Relationship between Robotics and APL….
Automated production lines often involve the use of robotics,
robotics:
efficiency
- perform specific tasks quickly and with high levels of accuracy. this can reduce time and resource wasted in production,
robotics:
effectiveness
can perform specific tasks quickly with high levels of precision, which minimizes errors during production. this enhances overall quality of final product and customer satisfaction, sales and market share
robotics:
advantages
-improved accuracy can reduce errors and the number of resources wasted in production.
- Removing the need for employees to complete dangerous tasks can improve workplace safety.
- Tasks can be performed much faster than human labour.
robotics:
disadvantages
- Very costly to initially set up
- A business may develop a poor reputation if it implements robotic technology that makes employees redundant.
Computer Aided Manufacturing (CAM)
involves the use of computer software to direct and control the automated machinery and equipment that is used in a manufacturing process.
- Generally, the code used in CAM can be created using data extracted from CAD.
CAM: efficiency
can reduce time and labour needed to design a product, allowing resources to be used more optimally and productivly
CAD: effectiveness
allows business to develop various prototypes with the best being chosen to increase customer satisfaction, sales + share
CAM: advantages
- Greater accuracy and consistency of products
- Speeds up the manufacturing process (no human restraints)
- Reduction of wages (removal of roles)
CAM: disadvantages
- Redundancy in employees
- Production reliant on technology and machinery
- Expensive in the ST to implement
Artificial intelligence
involves using computerised systems to simulate human intelligence and mimic human behaviour.
- enable computerised machines to learn from past experience, problem solve, process and understand language, and reason with logic.
Artificial intelligence:
efficiency
helps reduce the time and labour used to complete complex tasks that would usually require human intelligence. allows resources to be used more optimally and improve productivity
Artificial intelligence:
Effectiveness
can perform complex tasks, such as providing timely and high - quality customer assistance. can thus improve customer satisfaction levels and allow for increases in sales and market share
Artificial intelligence: advantages
- ability to provide 24/7 customer service, which can improve customer satisfaction and the business’s overall reputation
- may remove tedious tasks for employees, which may improve job satisfaction.
- improved accuracy can enhance product quality and increase customer satisfaction, which can increase sales revenue.
Artificial intelligence: disadvantages
- Redundancy in employees
- Production reliant on technology and machinery
- It may be costly to recalibrate and maintain artificial intelligence
online services
Online services are services that are provided via the internet.
online services: efficiency
online services: effectiveness
online services: advantages
- ensures consistency of information
- Improves the productivity of support staff
- Reduction in amount of physical stores
- Increased amount of sales exposure
online services: disadvantages
May make some employees redundant
what is materials management?
relates to organising and monitoring the use, storage and delivery of raw and component materials to ensure that the right amount of inputs is available when required by the business’ production process (ie, at the right time).
what is inventory
property that is held in stock by a business.
eg. finished goods, input material and raw materials
What are the costs of a business having inventory?
a) may be lost, damaged or spoiled
b) Staff, machinery and equipment are required at the location in which the inventory is stored (eg, a warehouse)
to manage and move the inventory.
c) takes up lot of space that needs to be paid for
d) the space could be used for other productive purposes