unit 3 aos 3 (sac 1) Flashcards
define operations management
The coordination and organisation of the activities involved in producing the goods or services that a business sells to it’s customers. It is concerned with transforming inputs into outputs of finished products that a business sells to it’s customers.
how does operations management contribute to a business achieving it’s objectives?
it aims to reduce the amount of time taken in producing a good or service with the fewest possible resources, without impacting the overall quality of the final product
what is efficiency and how is it used by operations managers when achieving business objectives?
how productively a business uses it’s resources when producing a good or service
operations managers aim to maximise productivity to improve levels of efficiency, by using strategies like technological developments, materials strategies, quality strategies, and waste minimisation strategies, which results in production costs being minimised, levels of waste decreasing, and time taken to produce goods being reduced, ultimately improving performance and achievement of objectives
what is effectiveness and how it is used by operations managers when achieving business objectives?
the extent to which a business achieves it’s stated objectives
operations managers can select the most suitable strategies to aim to lower production costs, improve quality, and reduce wastage, which ensures customers are provided with high quality at the best possible price, making them more likely to purchase products in the future, increasing sales and profitability
how does operations management contribute to the objective making a profit?
by implementing technology into the production process, which reduces the number of employees required, reducing labour expenses and increasing profit
how does operations management contribute to the objective increase market share?
by checking that the products produced are not faulty, they can improve the quality of the product, increasing customer satisfaction and the business’ proportion of sales in it’s industry
how does operations management contribute to the objective meet shareholder expectations?
by creating a website for customers to purchase goods and services, online sales increase, leading to higher levels of profit and higher dividends for shareholders
how does operations management contribute to the objective fulfil a market need?
by designing innovative products, which fulfil unmet needs in the market
how does operations management contribute to the objective fulfil a social need?
by reducing wastage in the production process, minimising the business’ impact on the environment
what are the three key elements of a business’ operations system?
- inputs
- processes
- outputs
what are inputs? give examples
the resources used by a business to produce goods and services. Businesses select inputs that are best suited to helping them produce the best quality good or service.
e. g.
- labour resources (employees)
- raw materials
- equipment and machinery
- time
- electricity
- information
- money
what are processes? give examples
the actions performed by a business to transform inputs into outputs
e. g.
- mixing
- designing
- baking
- computing
- assembling
- constructing
what are outputs?
the final goods or services produced as a result of a business’ operations system which are delivered or provided to customers. The quality of outputs are impacted by the inputs and processes in a business’ operations system.
what are ‘manufacturing’ businesses?
businesses that use raw materials and resources to produce a finished physical good
what are ‘service’ businesses
businesses that provide intangible products, usually with the use of specialised expertise
list the characteristics of a manufacturing business
production process = capital intensive
occurance of production and consumption = seperate times
customer contact = low degree (production stage is separated from customer)
tangibility = tangible
storability = can be stored as inventory
consistency = goods can be standadised through mass production
list the characteristics of a service business
production process = labour intensive
occurance of production and consumption = occurs simultaneously
customer contact = high degree (production and consumption occur simultaneously)
tangibility = intangible
storability = cannot be stored as inventory
consistency = not standardised, but tailored specifically to individual customer needs
list the similarities between manufacturing and service businesses
- both transform inputs into outputs
- both aim to produce high quality outputs at a low cost of production
- both have to deal with customers and suppliers
- both can utilise forms of technology in their operations systems
- both aim to optimise efficiency and effectiveness
list the differences between manufacturing and service businesses
- manufacturing is capital intensive, service is labour intensive
- occurence of production and consumption occurs separately in manufacturing, simultaneously in service
- degree of customer contact is low in manufacturing, high in service
- manufacturing produces tangible outputs, service intangible
- manufacturing outputs can be stored as inventory, service outputs cannot
- manufacturing has standardised production, service has tailored production
what is productivity? how do operations managers optimise it?
the overall measure of a business’s ability to transform inputs into outputs.
the more efficient an organisation is in turning inputs into outputs, the higher the rate of productivity.
In order to improve productivity the operations manager must ensure the most efficient use of inputs; to get the highest output possible from the inputs used.
what is business competitiveness? how do operations managers optimise it?
A business’ ability to match or better it’s rivals in it’s particular market by competing on cost, quality, and delivery. It is based on increased levels of productivity in the business.
Operations managers can compete on cost by eliminating waste, quality by reducing the number of defects in the production process and customer complaints, and delivery by quickly getting the product or service to the customer.
what is supply chain management? (include an outline of the businesses in the supply chain)
the coordination of the flow of goods and services from raw materials to delivering final products to customers.
the materials or products may have to be delivered within a specific time period so that processes flow continuously between suppliers, manufacturers, wholesalers and retailers.
what is global sourcing of inputs?
how would it benefit a business?
acquiring raw materials or resources from overseas suppliers.
overseas suppliers may be able to sell raw materials at a much lower price than they are sold for in australia due to lower operating costs like wages, which reduces the cost of business’ raw materials
list the advantages of global sourcing of inputs
- 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
- improves access to cheaper raw materials, reducing the cost of production
list the disadvantages of global sourcing of inputs
- imports may be affected by quotas imposed by governments (a limit on the number of items that can be imported / exported)
- 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 a business’ reputation if a supplier does not treat their employees in an ethical manner
- delivery may be time consuming depending on where supplies are being sent from
- may increase the expenses of a business due to tariffs (taxes paid to a government for particular imports / exports)
what is overseas manufacture?
how would it benefit a business?
producing goods or services in a location outside of a business’ headquarters country
businesses may implement it by setting up their own manufacturing plant overseas to produce high quantities for a lower price
list the advantages of overseas manufacture
- can improve access to skilled employees who have expertise in production
- can lower prices for products, increasing customer sales and satisfaction
- can improve production speed due to the expertise of overseas employees
- can improve access to cheaper labour and reduce business costs
- setting up a manufacturing plant overseas may be less costly than a local factory
list the disadvantages of overseas manufacture
- finished goods may be damaged during delivery
- poor CSR practises in the country may reflect badly on the business (e.g. child labour)
- local employees are likely to lose their jobs due to a business moving manufacturing overseas
- delivery can be time consuming depending on where manufacturing occurs
- poor communication and language barriers may lead to multiple delays
what is global outsourcing?
how would it benefit a business?
transferring specific business activities to an external business in an overseas country
(e.g. a business outsourcing it’s finance activities to an accounting business)
this means a business has access to a much larger number of external businesses with specific expertise
list the advantages of global outsourcing
- 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
- productivity may increase as the external business has expertise to complete tasks efficiently
- able to save on costs associated with labour by reducing the need for local employees
list the disadvantages of global outsourcing
- 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 businesses may be negatively affected if it is servicing multiple customers
- poor CSR practised performed by the external business may reflect badly on the business’ reputation
- local employees from the business’ main operating country are likely to lose their jobs
- poor communication and language barriers with the external business may lead to delays
give the similarities and differences between global sourcing of inputs and global outsourcing
SIMILARITIES:
- allocate certain business tasks to external businesses
DIFFERENCES:
- global sourcing of outputs acquires suppliers overseas for manufacturing, while global outsourcing involved certain business activities like I.T services being completed
give the similarities and differences between global sourcing of inputs and overseas manufacture?
SIMILARITIES:
- ensure that the correct materials of the right quality are acquired
- products or raw materials travel between countries during delivery
DIFFERENCES:
- global sourcing of outputs acquires suppliers overseas for manufacturing, while overseas manufacture means the manufacturing phase occurs overseas
give the similarities and differences between global outsourcing and overseas manufacture?
SIMILARITIES:
- produce goods or activities in a location seperate from the business’ main office
DIFFERENCES:
- global outsourcing means the business has little control over the transferred activities, while overseas manufacture means the business retains control of operations
define corporate social responsibility
the ethical conducts of a business beyond it’s legal obligations to improve the social, economic and environmental outcomes of stakeholders.
It is not necessary for a business to do, but performing CSR improves a business’ reputation.
list the CSR considerations for inputs in the operations system
- 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
list the CSR considerations for processes in the operations system
- using technology that perform 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
list the CSR considerations for outputs in the operations system
- developing an alternative product that is environmentally friendly
- creating products that have recyclable elements at the end of their lifecycle
- 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’ carbon emissions from transportation
- offering customer incentives for returning the product at the end of it’s lifecycle so it can be recycled properly
list the global considerations in operations management
- global sourcing of inputs
- overseas manufacture
- global outsourcing
