Unit 3 AOS 3 Flashcards
Operations management
Operations management is coordinating and organizing the activities involved in producing the goods or services that a business sells to customers.
Describe ways of effective operations management
Reducing time taken to produce goods or services, using the least amount of resources, and have the responsibility of implementing strategies that will contribute to the achievement of various business objectives.
Efficiency
Efficiency is how productively a business uses its resources when producing a good or service.
How can operations of management maximize efficiency?
An operations manager will constantly aim to maximize productivity within a business. Operations of management can implement strategies such as technological developments, materials strategies, quality strategies, and waste minimization strategies. Through this operations can improve levels of efficiency optimizing a business’s use of resources, production costs can be minimized, levels of waste may decline and the time taken to produce goods or services can be reduced.
Why may a business want to maximize efficiency?
Maximizing efficiency within a business’s includes the use of resources, production costs can be minimized, levels of waste may decrease and the time taken to produce goods or services can be reduced. Ultimately, improving the level of efficiency in operations can have positive implications on a business’s performance and the achievement of objectives.
Effectiveness
Effectiveness is the extent to which a business achieves its stated objectives.
How can operations management maximize effectiveness?
Operations management can maximize effectiveness by using the most suitable strategies to lower production costs, improve quality, and reduce wastage.
Why may operations management want to maximize effectiveness?
If the management of operations ensures that the highest quality products are produced and the best price, then customers can be satisfied with the product or service and more likely to be regular customers in the future. This directly correlates towards achieving business performance and achieve objectives.
The relationship between operations management and business objectives: Make a profit
Possible operations strategies include implementing technology into production processes which can reduce the number of employees needed to complete business objectives which in turn reduces expenses and increases to make a profit.
The relationship between operations management and business objectives: Meet shareholder expectations
Possible operations strategies include checking products for being faulty which can improve the quality of a business’s product, increasing customer satisfaction and the business’s proportion of
sales within its industry.
The relationship between operations management and business objectives: Increase market share
Possible operations strategies include creating websites, maximizing effectiveness in business operations which can lead to increased sales which in turn can increase dividends and share price.
The relationship between operations management and business objectives: Fulfill a market need
Possible operations strategies include using new technology to design and increase quality of products. This can lead to new products being produced that is needed to meet customers’ needs.
The relationship between operations management and business objectives: Fulfill a social need
Possible operations strategies include using reduced waste, recycling, and fundraisers. Doing so minimising waste can improve the environment and support communities can benefit individuals.
State 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’s production process. Additionally, operations managers are in charge of implementing strategies that optimise
operations, improve business performance and achieve business objectives.
Inputs
Inputs are the resources used by a business to produce goods and services.
Processes
Processes are the actions performed by a business to transform inputs into outputs
Outputs
Outputs are the final goods or services produced as a result of a business’s operations system which are delivered or provided to customers.
Manufacturing Business
A manufacturing business is a business type that produces goods to sell to customers. A manufacturing business is typically capital and machine intensive during the processing from inputs to outputs and has minimal interaction with customers.
Service business
Service businesses provide intangible products, usually with the use of specialized expertise.
Similarities between manufacturing and service businesses
- Both service and manufacturing businesses aim to optimize their operations to produce high-quality outputs at a low cost of production.
- Both service and manufacturing businesses have to deal with suppliers during the process of managing operations.
- Both service and manufacturing businesses can utilize forms of technology in their operations systems.
- Both service and manufacturing businesses aim to optimize efficiency and effectiveness in their operations.
Differences between manufacturing and service businesses
Manufacturing businesses:
Capital intensive, Occurs separately, Low degree of customer contact during production, Tangible output. storability of output, standardized production.
Service businesses:
Labour intensive, Occurs simultaneously, High degree of customer contact during production, Intangible output, does not have storability of output, Tailored production
computer-aided design (CAD)
Computer-aided design (CAD) is a digital design tool that enables businesses to generate and modify technical illustrations of a product.
How can Computer-aided design increase efficiency?
It can reduce the time and labour resources used to design a product which improves productivity
How can Computer-aided design increase effectiveness?
A business can use CAD to develop the best designs to produce which can enable the business to manufacturer the highest quality design possible. This can, therefore, meet business objectives such as customer needs and make a profit.
Advantages and disadvantages of computer-aided design: Business
Advantages:
• Greater accuracy in the design process
results in a consistent level of quality which
can improve the business’s reputation.
• Customers have the flexibility to
modify a design to suit their needs. This
customization can attract more customers
for the business.
Disadvantages: If Computer-based designs replace employees it can cause a negative reputation to the company due to redundancies.
Advantages and disadvantages of computer-aided design: Employee
Advantages:
• Removes tedious processes involved in the
the design process which could be boring for
employees and mind straining.
• Allows employees to be more creative in the workplace.
Disadvantages:
• Employees may be made redundant due to replacement by CADs.
Advantages and disadvantages of computer-aided design: Time
Advantages:
Decreases design process times
Disadvantages:
N/A
Advantages and disadvantages of computer-aided design: Money
Advantages:
• Improved accuracy results in a consistently high-quality product which can increase customer satisfaction and may increase the number of sales.
Disadvantages:
• Expensive in the short term due to
purchasing and installing this technology.
• Updating software for technology can be expensive
• There can be expenses associated with
technical employee training on how to use
CAD.
Computer-aided manufacturing (CAM)
Computer-aided manufacturing (CAM) is a software used to control and direct the production process by controlling machinery and equipment through a computer.
How can Computed aided manufacturing (CAM) increase efficiency
• CAM does not require machinery to be manually reset by humans which reduces the amount of time and labour resources used in operations which
improves productivity.
• CAM is generally more accurate than humans which reduces the amount of waste that occurs during production which is optimal use of resources.
How can Computed aid manufacturing (CAM) increase effectiveness?
• The increased accuracy of CAM creates products with a consistent level of quality which can meet the
the objective of increasing customer satisfaction and sales.
Advantages and disadvantages of computer-aided manufacturing: Business
Advantages:
• Greater accuracy results in a consistent level of quality which can improve the business’s reputation.
Disadvantages:
• The business can develop a poor reputation if CAM makes numerous employees redundant.
Advantages and disadvantages of computer-aided manufacturing: Employee
Advantages:
• Removes tedious processes involved in
the manufacturing process which could be
boring and hard for employees.
Disadvantages:
• Employees may be made redundant by this
technology.
Advantages and disadvantages of computer-aided manufacturing: Time
Advantages:
• Speeds up the manufacturing process as machinery does not have to be manually reset by humans.
Disadvantages:
• As CAM is a machine if it breaks or malfunctions it can halt production altogether and reduce productivity.
Advantages and disadvantages of computer-aided manufacturing: Money
Advantages: • Improved accuracy can improve quality and increase customer satisfaction which can increase the number of sales. • Can remove many roles completed by employees which reduce wage expenses.
Disadvantages:
• Expensive in the short term due to
purchasing and installing this technology.
• Updates in software can be
expensive.
• There may be expenses associated with
technical employee training on how to use
CAM.
• If repairs are required on CAM equipment,
it can be expensive.
Automated production lines
Automated production lines are machinery and equipment which are arranged in a sequence,
and the product is developed as it proceeds through each step.
How do automated production lines improve efficiency?
Can perform at a speed which is usually much faster than humans, improving productivity
How can automated production lines improve effectiveness?
It allows for a high degree of accuracy in production. Reducing the number of errors enhances the overall quality of the completed product which can meet the objective of increasing customer satisfaction and sales maximizing effectiveness within the buisness.
Advantages and disadvantages of automated production lines: Buisness
Advantages:
• Increased accuracy provides a consistent
level of the quality of products which can
improve the business’s reputation.
• Improved accuracy can reduce waste from
errors which can improve the business’s
reputation for minimizing its impact on the
environment.
Disadvantages:
• The business can develop a poor reputation if automated production lines make numerous
employees redundant.
Advantages and disadvantages of automated production lines: Employee
Advantages:
• Allows employees to avoid mundane,
repetitive and potentially dangerous tasks.
Disadvantages:
• Employees can be made redundant due to
this technology replacing their role.
Advantages and disadvantages of automated production lines: Time
Advantages:
• Usually performs tasks much faster than
human labour.
• Production can run 24/7.
Disadvantages:
• Malfunctions of technology can halt production and compromise productivity.
Advantages and disadvantages of automated production lines: Money
Advantages: • Improvements inaccuracy can enhance the overall quality of a product which can lead to an increase in sales. • Minimises the number of employees needed which reduces wage expenses.
Disadvantages:
• high setup costs in purchasing and installing automated production lines.
• Can be expensive to repair and update this
technology.
• There may be expenses associated with
training employees to use this technology
Website development
Website development is the creation and improvement of online web pages controlled by a business that customers can use to discover information about the business and purchase their goods or services at any time.
How does website development improve efficiency?
Website development can provide information regarding the business such as policies which in turn can save customer service times and improve business productivity.
How do website development improve effectiveness?
Online business is less expensive in comparison to a physical store which therefore reduces expenses and increases profits. Website development also allows for a business to reach a wider audience such as globally which can cause increased sales and meet business objectives such as making a profit.
Advantages and disadvantages of website development: Business
Advantages:
• Website development establishes a
a platform that enables easy access to
customer feedback.
• Websites can ensure information is consistent
business-wide, such as their prices, sales
and policies.
Disadvantages: • The business can develop a poor reputation if website development makes numerous employees redundant. • Websites are susceptible to allowing a customer’s private information to be leaked which can irreversibly damage a business’s reputation.
Advantages and disadvantages of website development: Employees
Advantages:
• Businesses can publish information on its
a website which can reduce the amount of
customer service staff spend on answering
commonly asked questions.
Disadvantages:
• Employees may be made redundant by this
technology.
Advantages and disadvantages of website development: Time
Advantages:
• Information, such as a business’s return
policy is readily available for customers
to access on a website, such as return
policies, saving customer service staff
time.
Disadvantages:
• Time consuming to develop and maintain website
Advantages and disadvantages of website development: Money
Advantages:
• Having an online website reduces the need
for a business to establish a physical store
presence, reducing expenses.
• Customers can purchase goods or services
at their convenience which can increase a
the business’s number of sales.
• Website development can reduce the
number of sales employees needed which
reduces labor costs.
Disadvantages: • Website development can incur costs to develop and maintain. • There may be expenses associated with training employees on how to create and maintain a website.
Forecasting
Forecasting is a materials planning tool that predicts customer demand for an upcoming period using past data and market trends.
How does forecasting improve effiencey?
Forecasting decreases the chance of ordering and storing excessive stock which optimizes the use of
resources by reducing wastage. And through forecasting, it can ensure enough materials are supplied to minimize halts to production which
improves productivity.
How does forecasting improve effectiveness?
Forecasting increases a business’s ability to meet customer demand which can meet the objective of
increasing customer satisfaction and sales as it ensures the business has necessary stock.
Advantages and disadvantages of forecasting: Business
Advantages: • Informed decisions about materials can improve a business’s ability to meet customer demand which improves its reputation.
• Improves a business’s reputation by having
a minimal impact on the environment by preventing exessive waste whilst also gaining a reputation for always being properly supplied with stock.
Disadvantages:
• A business may be unable to meet
unexpected increases in customer demand
which may damage their reputation.
• Amount of materials ordered may be
incorrect as historical data and market
trends may not reflect current
business demand.
Advantages and disadvantages of forecasting: Money
Advantages:
• Can reduce the cost of storage as it prevents
the need for a large space to store materials.
Disadvantages:
• Businesses may need to hire employees
specifically for forecasting which incurs
training and wage costs.
Advantages and disadvantages of forecasting: Time
Disadvantages:
• It can be time-consuming to analyze
historical data and market trends.
• Production may be brought to a halt if the
the business has insufficient materials due to
inaccurate predictions.
Master production schedule (MPS)
A master production schedule (MPS) is a plan that outlines what a business intends to produce, in its specific quantities, within a set period of time.
How does master production schedule affect efficiency?
• Prevents a business from producing
an excessive amount of products
which optimises the use of resources
by reducing wastage.
• Promotes organized operations system and minimizes the number of avoidable errors that occur which improves productivity by reducing the number of interruptions to production.
How does master production schedule effect effectiveness?
• A business is more likely to produce an amount that meets customer demand which meets the objective of meeting customer satisfaction and increasing sales.
Advantages and disadvantages of master production schedule: Business
Advantages: • Improves a business’s reputation by having a minimal impact on the environment. This reputation is achieved as master production schedules prevent the business from producing an excessive amount of products, therefore reducing the amount of stock wasted from expiry or damage in storage.
Disadvantages:
• Businesses that are constantly changing
details of their operations system may find
a master production schedule unhelpful as
it is not a flexible program.
Advantages and disadvantages of master production schedule: Employee
Advantages:
• Can provide employees with a clear
schedule of operations that includes the
timeline and quantity of production targets.
Disadvantages
Employees can feel pressured or stress if accidental recourse wastage and potentially falling behind schedule.
Advantages and disadvantages of master production schedule: Time
Advantages:
• By determining specific details about
how production will occur, it is less likely
production will be brought to a halt and
time is wasted due to an organization error.
Disadvantages:
• It can be time-consuming to map out
details of production.
Advantages and disadvantages of master production schedule: Money
Advantages: • By determining production targets, businesses are more likely to meet customer demand. Meeting customer demand can increase sales and increase a business’s net profit figures
Disadvantages:
• Implementing and maintaining this plan
can be expensive.
Materials requirement planning
Materials requirement planning (MRP) is a process that itemises the types and quantities of materials required to meet production targets set out in the master
production schedule.
How does materials requirement planning improve efficiency?
• Having the exact materials required
reduces avoidable halts in production
which enhances productivity by
allowing operations to flow smoothly.
• Having the exact materials needed for production reduces the amount of an excessive stock that expires or becomes damaged in storage which optimizes resources by reducing wastage.
How does materials requirement planning improve effectiveness?
• Ensures there are sufficient materials to meet customer demand. Meeting customer demand helps meet the the objective of increasing customer satisfaction and sales.
Advantages and disadvantages of materials requirement planning: Business
Advantages: • Improves a business’s reputation by having a minimal impact on the environment. This reputation is achieved as materials requirement planning ensures a business only has the exact materials required which prevents reduces the amount of stock wasted from expiry or damage in storage. Disadvantages:
Advantages and disadvantages of materials requirement planning: Time
Advantages:
• By determining the exact materials
required, it is less likely that production
will halt due to insufficient materials or
organizational errors.
Disadvantages:
• It can be time-consuming to constantly
update and maintain the materials plan.
Advantages and disadvantages of materials requirement planning: Money
Advantages: • Accurate ordering of the quantities of material required avoids excess storage and therefore reduces associated expenses.
Disadvantages:
• Implementing and maintaining the
materials plan can incur costs.
Just in time (JIT)
Just in time (JIT) is an inventory control approach that delivers the correct type and
quantity of materials as soon as they are needed for production.
How does “just in time” improve efficiency?
Through holding minimal stock can free up
space that can now be optimized to increase production.
How does “just in time” improve effectiveness?
• Costs saved from reducing storage space can be used in other areas of the business, such as sales and marketing, which can meet the the objective of increasing sales.
• A reduction in idle stock can reduce
expenses associated with waste which
can meet the objective of
increased profits.
Advantages and disadvantages of just in time: Business
Advantages:
• Improves a business’s reputation by having
a minimal impact on the environment. This
reputation is achieved as JIT eliminates idle
stock which reduces the amount of stock
wasted from expiry or damage in storage.
• Able to switch to the production of a
different product without high wastage as
there is minimal material on hand to
go through.
Disadvantages: • A business may fail to meet customer demand from a lack of reserve stock and damage a business’s reputation. • There may be less time to check the quality of stock as it must be used as it arrives, which could result in errors or defects in products.
Advantages and disadvantages of just in time: Time
Disadvantages:
• If suppliers are unreliable and fail to deliverthe correct materials at the right time,
production may be brought to a halt.
Advantages and disadvantages of just in time: Money
Advantages:
• Reduces storage costs and costs
associated with waste meaning this money
can be used in other areas of the business.
Disadvantages:
• Discounts from bulk buying supplies may
be reduced.
• Delivery costs may increase due to more
frequent deliveries.
Quality Control
Quality control is inspections at various stages of the production process to ensure products meet designated standards and unsatisfactory products are discarded.
What are the steps for quality control to be implemented properly?
- Standards of quality are established.
- Inspections are regularly conducted.
- A good or service is compared against set standards.
- A good or service is removed if it does not meet the set standards.
- The cause of the error is fixed to prevent further errors
How does quality control improve efficiency?
Quality control can help identify and fix reoccurring errors in producing products which can help in reducing wastage and optimizing resources. This can also reduce any errors that may halt or slow production which can then enable for production to operate with minimal interference.
How does quality control improve effectiveness?
Quality control eliminates errors in production which then eliminates a high chance of a customer receiving faulty products which therefore can meet objectives of satisfying customer needs and therefore increase sales.
Advantages and disadvantages of quality control: Business
Advantages:
Preventing customers from receiving
a faulty good or service can improve
a business’s reputation for having
consistently high-quality products.
Disadvantages:
• Businesses can develop a poor reputation
as environmentally harmful as this strategy
does not actively attempt to reduce waste.
• Unless every product is inspected, inferior
goods may still reach a customer and lead
to a reputation for poor quality.
Advantages and disadvantages of quality control: Time
Advantages:
As products are checked for a level of quality a reduce amount of returns due to quality will occur therefore reducing customer service times.
Disadvantages:
• It can be time consuming to identify the
causes of errors.
Advantages and disadvantages of quality control: Money
Advantages:
• Can reduce the number of refunds required
for faulty goods or services.
• The strategy is relatively inexpensive as it
is internally controlled by the business.
Disadvantages:
• Errors are eliminated after they happen
which can incur costs associated with
waste.
Quality assurance
Quality assurance is a business achieving a certified standard of quality in its production after an independent body assesses its operations system
How does quality assurance improve efficiency?
As quality assurance certifies the quality of a product this prevents errors to occur therefore limiting faulty products which can reduce wastage and be the most optimal use of recourses. Preventing errors also reduces the number of production halts helping maintain production.
How does quality assurance improve effectiveness?
Once quality assurance has been implemented meaning products have been certified for quality, customers can be more inclined to purchase goods due to the knowledge that there is a set standard of quality for the product. This can then meet customers’ needs and inturn meet business objectives and produce such as making a profit.
Advantages and disadvantages of quality assurance: Business
Advantages:
• Quality assurance reduces waste from
errors, which improves the environmental
reputation of a business.
• Receiving external certification from an
external body can improve a business’s
competitiveness as customers are likely to
have increased confidence in the business.
Disadvantages:
Expenses to get certfiited from extenral party may be costly therefore increasing expenses and affecting buisness profits
Advantages and disadvantages of quality assurance: Employee
Advantages:
• Workplace standards implemented to
achieve external certification is likely to
improve the safety of the workplace.
Disadvantages:
• Employees may have to be trained and
comply with the new procedures.
Advantages and disadvantages of quality assurance: Time
Advantages:
• A reduced number of errors enables
production to flow smoothly.
Disadvantages:
• Documenting the operations system for
the external body to check could be time
consuming.
Advantages and disadvantages of quality assurance: Money
Advantages: • The proactive prevention of errors can reduce waste and its associated expenses. • Can be used as a marketing tool to increase sales.
Disadvantages:
• It can be expensive to organise an external
body to assess an operations system.
Total Quality Management (TQM)
Total quality management (TQM) is a holistic approach where all employees are committed to continuously improving a business’s operations system to enhance the quality for customers.
What are the three key features of Total quality management? (TQM)
1 Customer focus, which is identifying and fulfilling the customers’ exact needs and wants from a business’s goods or services.
2 Continuous improvement, which is the process of constantly evaluating the way things are done and identifying methods to achieve a higher standard.
3 Employee empowerment, which is fostering teamwork and employee participation within the business environment so employees are involved in developing solutions to improving quality. This empowerment can be done through quality circles where employees initiate and share ideas to improve quality.
How does TQM improve efficiency?
Through continuously improving the quality of production systems to prevent errors this reduces the number of products that go to waste therefore helping optimize the use of resources.
How does TQM improve effectiveness?
Total quality management assesses the needs of employees it can meet objectives such as customer stratification whilst also meeting business objectives such as making a profit.
Advantages and disadvantages of total quality management: Buisness
Advantages: • A business can adapt TQM to suit their specific business requirements. • Improves a business’s reputation by having a minimal impact on the environment. This reputation is achieved as TQM aims to prevent errors from occurring altogether which reduces the amount of waste from defects.
Disadvantages:
Advantages and disadvantages of total quality management: Employee
Advantages;
• Employees may feel valued and satisfied
by being empowered in the process of
improving quality
Disadvantages:
• Employees may feel confused about their
role in improving quality if managers fail to
communicate the TQM strategy clearly.
• Employees may not be interested in imporving quality of products
Advantages and disadvantages of total quality management: Time
Advantages;
Disadvantages:
• It can take a long time for a business to
enjoy the benefits of TQM as it requires a
shift in culture.
Advantages and disadvantages of total quality management: Money
Advantages;
• Being proactive prevents errors from
occurring which reduces waste and its
associated expenses.
Disadvantages:
• May incur costs as employees have to be
trained to continuously identify methods to
improve quality.
Waste minimisation
Waste minimisation is the process of reducing the amount of unused material, time or labour within a business.
What are some types of waste that can occur in businesses?
- Time can be wasted from delays between production stages.
- Labour can be wasted when employees have little or no work to complete during production.
- Products are wasted when they are defective and cannot be sold.
- Products can be wasted when a business produces too much and is unable to sell them.
How does waste minimisation effect efficency?
Through only using the required amount of
materials, time, a business can
produce items faster, increasing their
rate of production and achieve business objectives.
How does waste minimisation effect effectiveness?
Waste minimisation can effect effectiveness through maximising its use of resources that can be tangible such as raw resources or intangible such as time and productivity. Through minimising waste it can allow for the business to function at its highest levels and produce as much products or services and achieve its objectives such as making a profit and fulfilling a market need.
Waste minimisation can also effect effectiveness is Through reducing waste it lowers operational
costs which can allow for a business to lower prices to customers. This can assist in meeting the objective of increasing customer satisfaction and sales.
Lean management
Lean management is the process of systematically reducing waste in all areas of production while improving customer value
Lean management: Pull
Pull is customers determining the amount of products a business should produce for sale
Lean management: One-piece-flow
One-piece-flow is a single product moving through all stages of production one at a time.
Lean management: Takt
Takt is synchronising production steps to meet customer demand.
Lean management: Zero defects
Zero defects is preventing defects from occurring in the production process
How can Pull increase efficiency?
Pull can reduce overproduction and minimises waste of materials, time, and labour.
How can One-piece-flow increase efficiency?
One-piece-flow reduces the number of errors in production by only producing one unit at a time.
How can Takt increase efficiency?
Takt optimises the flow of materials between stages and production, reducing time being wasted.
How can Zero defects increase efficiency?
Zero defects can improve efficiency as employees and the business aim to continuously reduce waste and encouraged to expect faults.
How can Pull increase effectiveness?
Pull can improve effectiveness through developing products at the right quantity which ensures customer needs and expectations of value are met without causing unnecessary waste due to overproduction.
How can One-piece-flow increase effectiveness?
only maintains processes which add value to customers, improving their satisfaction. Whilst quickly and effectively developing the product at each stage.
How can Takt increase effectiveness?
improves the flow of processes and optimises the production of goods, improving customer satisfaction.
How can Zero defects increase effectiveness?
Aiming for continuous improvement can lead to customers receiving products with no defects and of quality, improving their satisfaction. Whilst attempting to minimise waste in production of the product.
Advantages and disadvantages of lean management: Buisness
Advantages: • Business reputation is improved as they are actively reducing and managing waste which benefits the environment. • Quality is improved as processes are streamlined to ensure all activities add value to the final product and customer expectations are met.
Disadvantages:
• If suppliers do not deliver materials on time,
the business may be unable to optimise
the flow of production and meet customer
demand.
• Employees may be reluctant to commit to
an attitude of zero defects due to the effort
and commitment required.
Advantages and disadvantages of lean management: Employee
Advantages:
• May improve employee satisfaction as they
are actively involved in reducing waste in
operations which has a positive effect on the
environment.
Disadvantages: • May be overwhelming for employees as there is a continuous goal for the improvement of processes and waste minimisation.
Advantages and disadvantages of lean management: Time
Advantages:
• Products can be produced at a faster rate
when principles such as takt and onepiece-flow are introduced to focus on
continuous production.
Disadvantages: • May be time consuming to train inexperienced employees with the required knowledge and build commitment to lean methods of production.
Advantages and disadvantages of lean management: Money
Advantages:
• Reduces the overall use of materials, which
leads to less production costs.
Disadvantages:
• Can be costly to implement as employees
may need to be trained when production
processes are altered.
Supply chain management
Supply chain management is the coordination of the flow of goods and services from raw materials to delivering final products to customers
What are some factors that should be considered when implementing supply chain management?
- The price of raw materials and resources differing from each country.
- Delivery costs varying due to the different distances between countries.
- The environmental impact of different methods used by supplier’s to extract raw materials.
Advantages and disadvantages of global sourcing of inputs: Business
Advantages: • Able to source materials which are not readily available in the country of operations. • Able to source resources of a higher quality which allows the business to better meet customer expectations.
Disadvantages:
• Imports may be affected by quotas imposed by governments.
• May be difficult to communicate with suppliers due to language barriers.
• May be difficult to monitor the activities of suppliers due to different time zones and
locations.
• Materials may be damaged during delivery.
• May reflect badly on the business’s reputation if a supplier does not treat their employees in an ethical manner.
Advantages and disadvantages of global sourcing of inputs: Time
Advantages:
Disadvantages:
• Delivery may be time consuming
depending on where supplies are being
sent from.
Advantages and disadvantages of global sourcing of inputs: Money
Advantages:
• Improves access to cheaper raw materials,
reducing the cost of production.
Disadvantages:
• May increase the expenses of a business
due to tariffs
Overseas manufactre
Overseas manufacture is producing goods or services in a location outside of a business’s headquarters country.
Advantages and disadvantages of overseas manufacture: Buisness
Advantages:
•Can improve access to skilled employees
who have expertise in production.
• Can lower prices for products, increasing
customer satisfaction and sales.
Disadvantages: • Finished goods may be damaged during delivery. • Poor CSR practices in the country may reflect badly on the business. i.e. use of child labour
Advantages and disadvantages of overseas manufacture: Employee
Advantages:
Disadvantages:
• Local employees are likely to lose their jobs
due to a business moving manufacturing
overseas
Advantages and disadvantages of overseas manufacture: Time
Advantages:
• Can improve production speed due to the
expertise of overseas employees.
Disadvantages:
• Delivery can be time consuming depending
on where manufacturing occurs.
• Poor communication and language barriers
may lead to multiple delays.
Advantages and disadvantages of overseas manufacture: Money
Advantages:
• Can improve access to cheaper labour and
reduce business costs.
• Setting up a manufacturing plant overseas
may be less costly than a local factory.
Disadvantages:
Global outsourcing
Global outsourcing is transferring specific business activities to an external business in an overseas country.
Why may a business implement Global outsourcing?
When implementing global outsourcing, a business can access a much larger number of external businesses with specific expertise. A business can outsource its operations system to an established manufacturing factory rather than creating their own. The expertise of the external business allows them to perform their functions at significantly lower costs and higher quality.
Advantages and disadvantages of global outsourcing: Buisness
Advantages: • Can improve the quality of business activities as the external business may be experts in the area. • Allows the business to allocate more resources and focus towards their own areas of expertise.
Disadvantages: • Reduced control over the business as some activities have been transferred to external businesses. • May be difficult to communicate with external overseas businesses due to language barriers. • The quality of service from external business may be negatively affected if it is servicing multiple customers. • Poor CSR practices performed by the external business may
Advantages and disadvantages of global outsourcing: Employee
Advantages:
Disadvantages:
• Local employees from the business’s main
operating country are likely to lose their
jobs.
Advantages and disadvantages of global outsourcing: Time
Advantages:
• Productivity may increase as the external
business has expertise to complete tasks
efficiently
Disadvantages:
• Poor communication and language barriers
with the external business may lead to
delays
Advantages and disadvantages of global outsourcing: Money
Advantages:
• Able to save on costs associated with
labour by reducing the need for local
employees
Disadvantages:
Additional costs such as tariffs and other possible taxes including travel costs
What are the similarities and differences between global sourcing of inputs and global outsourcing?
Global sourcing of out puts acquires supplies from overseas manufacturers whereas global outsourcing has certain business activities, such as IT services, are
completed overseas.
Similarities is that they allocate certain tasks to external businesses.
What are the similarities and differences between global sourcing of inputs and overseas manufacture?
Global sourcing of inputs acquire supplies overseas for manufacturing. Whereas Overseas manufacture is where manufacturing phase occurs overseas
Both ensure that the correct materials of the right
quality are acquired and products or raw materials
travel between countries during delivery.
What are the similarities and differences between global outsourcing and overseas manufacture?
Global outsourcing the business has little control over transferred external activities whereas a overseas manufacture the business retains control of operations.
A similarity is that they both produce goods or activity
in a location separate away from the business’s main office.
Corporate Social Responsibility (CSR)
Corporate social responsibility (CSR) is the ethical conduct of a business beyond legal obligations to improve the social, economic and environmental outcomes of stakeholders.
What are the CSR considerations for inputs
CSR considerations include environmental considerations such as a manager identifying how the business can improve the environmental sustainability of its natural resources and differentiating between using the cheapest vs most sustainable options.
Ethical considerations must also be considered such as sourcing inputs from suppliers that operate ethical such as paying minimum wages, safe working conditions and also legal workers. Therefore a manager must decide whether to buy from a more expensive, ethical supplier or a unethical, illegal and hurtful supplier.
Examples of CSR considerations for inputs
• Sourcing from local suppliers instead of overseas suppliers to reduce transport emissions.
• Sourcing from suppliers that use environmentally sustainable methods with regards to
natural resources.
- Implementing forecasting and just in time to reduce the risk of over ordering inputs that may later be discarded.
- Purchasing energy efficient machinery to be used in production.
- Installing reusable and clean energy sources.
What are the CSR considerations for processes
When performing operations processes, a business will aim to be as efficient and effective as possible. However, many processes may use a large amount of energy or excess inputs that are discarded freely. Implementing CSR in the operations processes can make a business more efficient and effective by reducing waste and improving its reputation
Examples of CSR considerations for processes
- Using technology that performs processes in a precise and consistent manner to reduce waste generated from errors.
- Developing methods to capture and recycle excess input materials to be reused in production and place them back into the input element of the operations system.
• Implement just in time and lean management strategies to reduce unnecessary
materials waste.
- Removing harmful chemicals from waste products.
- Disposing of any harmful waste that cannot be treated safely
What are CSR considerations for outputs
While the output of a business is meant to create value to the customer, it is socially responsible to ensure that goods and services produced does not cause harm to the wider community. Therefore, one of the most important CSR considerations is that any output produced creates minimal waste and environmental damage.
Examples of CSR considerations for outputs
- Developing an alternative product that is environmentally friendly.
- Creating products that have recyclable elements at the end of their life cycle.
- Eliminating as much plastic as possible in the packaging and creation of the final product.
- Delivering products in bulk to retailers to reduce the business’s carbon emissions from transportation.
- Offering customers incentives for returning the product at the end of its life cycle so that it can be recycled properly.
Inputs of a service business
Inputs of a service business includes facilities, employees, equipment, time and money
Processes of a service buisness
Processes can be assessments of services, training and transportation in needed.
Outputs of a service buisness
Outputs include the delivered service
Inputs of a manufacturing business
raw materials, resources, employees, time and falcities
Processes of a manufacturing business
Preparing resources, making products, quality checks.
Outputs of a manufacturing business
The completed product that is sold to customers
