Unit 3 AOS 3 SAC revision Flashcards
What is operations management?
Refers to coordinating and organising the activities involved in producing the goods and services that a business sells to customers.
Operations definition
Refers to the actual work done when transforming inputs into finished outputs.
Roles of operations managers
- Overseeing the operations system and ensuring it meets business needs
- Maximise productivity and efficiency while maintaining quality.
- Consult with other areas of management to ensure each area is working towards the achievement of business objectives
What is operational efficiency?
Refers to producing the same amount or more outputs than number of inputs.
Factors that determine productivity
- Technology
- Research and development
- Equipment and facilities
- Tasks and processes
- Layout of facilities
- Communication
- Workplace safety
Efficiency definition
Efficiency is how productively a business uses its resources in producing a good or service. It is particularly concerned with waste management.
Effectiveness definition
Effectiveness is the extent to which a business achieves its set objectives. Effectiveness is related to continuous improvement of processes, quality and customer satisfaction.
What is the difference between efficiency and effectiveness?
The key difference is efficiency relates to how well resources are used to produced outputs whereas effectiveness relates to how well resources are used to achieve business objectives.
What are the 3 stages of the operations system?
Inputs
Transforming/Processing
Outputs (final good/service)
Inputs definition
Refers to the resources used by a business to produce goods and services. Includes raw materials, human resources, information, knowledge, equipment, technology and time.
Processes stage definition
Refers to the actions performed by a business to transform inputs into outputs.
Outputs definition
Refers to the final goods and services produced as a result of a business’s operations system which are delivered/provided to customers.
3 types of planning
Strategic planning
Tactical planning
Operational planning
What is strategic planning?
Refers to the operations manager finding what products are needed, what facilities are in use and the where they are located to produce services/goods.
What is tactical planning?
Includes resourcing for materials and labour and sourcing technology and quality management.
What is operational planning?
Includes scheduling, sequencing, loading and rostering.
What are the 2 types of outputs?
Goods
Services
What are the characteristics of a SERVICE BUSINESS operations
- Labour intensive process
- Production and consumption of product occurs simultaneously
- High degree of customer contact
- Products are intangible
- The product cannot be stored
- The product delivered is inconsistent due to it being tailored to needs of individual rather than population.
What are the characteristics of a GOODS BUSINESS operations
- Capital intensive process
- Production and consumption occurs separately
- Low degree of customer contact
- Products are tangible
- Product can be stored
- Product delivered is consistent as they are mass produced.
Similarities between a goods and a service business
Both aim to be as productive as possible
Both deal with suppliers
Both aim to complete production at lowest possible cost
Both are likely to use technology to maximise efficiency
Differences between a goods and a service business
One produces a tangible product, the other produces an intangible product
There are different degrees of customer contact
Production and consumption occurrences are different (separately vs at same time)
One is labour intensive while the other is capital intensive
What are the 5 technological strategies?
Automation Computer Aided Design (CAD) Computer Aided Manufacturing (CAM) Robotics Uses of internet
Automation definition
Refers to replacing human resources with machinery and technology to do the same jobs.
Automated production lines definition
Refers to the machinery and equipment which are arranged in a sequence and produce goods as they proceed through each stage.
How is automation efficient?
Automation is efficient as it can perform at a speed which is usually much faster than humans, improving productivity.
How is automation effective?
Automation is effective as it allows for a higher degree of accuracy which decreases the number of errors during production.
Advantages of automation
- Increased accuracy provides a consistent level of quality of products, which can improve a business’s reputation
- Improved accuracy reduces waste which minimises impact on environment
- Allows employees to avoid repetitive tasks which may be boring
- Production can run 24/7
- Increases production speed
Disadvantages of automation
- Employees can be made redundant due to technology replacing their role
- Initial set up costs are high
- Expensive to repair and update equipment
- Employees need to be trained to use tech, which is time consuming
What is computer-aided design?
It is a computer program that streamlines product design, making the designing process faster, accurate and flexible.
How is CAD efficient?
CAD is efficient as it can reduce the amount of time and resources used to design a product, which improves productivity.
How is CAD effective?
CAD is effective as it develops various prototypes for a business to choose from. This enables a business to manufacture the highest quality product, increasing customer satisfaction.
Advantages of CAD
Greater accuracy in designing
Customers have flexibility to modify a design to suit their needs.
It removes boring processes of the design process
Allows for more creativity
Speeds up design process
Disadvantages of CAD
Can cause redundancies
Can be expensive to implement and maintain
What is computer-aided manufacturing (CAM)?
It is a tool that controls machinery, tools and equipment from programmed instructions, allowing for greater precision and less errors in manufacturing process.
How is CAM efficient?
CAM is efficient as it is generally more accurate than humans, which reduces the amount of waste that occurs during production.
How is CAM effective?
CAM is effective as it increases accuracy meaning products are of high quality consistently, improving customer satisfaction.
Advantages of CAM
Greater accuracy leads to more consistent quality
Removes boring procedures in production
Speeds up manufacturing process
Disadvantages of CAM
Employees may be made redundant
Expensive to implement and maintain
What is website development?
Refers to creation of websites for businesses that allows customers to find info about them and buy products from them at any time.
Why is website development good for a business?
It provides a business a competitive advantage by allowing customers to access their business even when the physical storefront is closed.
What is materials management?
Refers to managing materials, including procurement and storage of raw materials, other inventory and finished goods.
What are types of materials management?
Master Production Schedules (MPS)
Materials Requirement Planning (MRP)
What is Master Production Schedules (MPS)?
It plans what the business intends to produce, including quantities and time required.
How is master production schedules efficient?
MPS is efficient as it prevents a business from producing an excessive amount of products, reducing waste.
How is master production schedules effective?
MPS is effective as it ensures the business produces an amount of products that meets customer demand, improving customer satisfaction.
Advantages of MPS
Provides employees with a clear schedule of operations
Reduces the chance of a halt in production
Enables business to better meet customer demand
Disadvantages of MPS
Not a flexible program
Can be time consuming planning the details of production
What is Materials Requirement Planning? (MRP)
MRP is a process that itemises the types and quantities of materials required to meet production targets.
How is MRP efficient?
MRP is efficient as having the exact materials enhances productivity by allowing operations to flow smoothly, increasing productivity.
How is MRP effective?
MRP is effective as it ensures there are sufficient materials to meet customer demand.
Advantages of MRP
Operations less likely to stop due to insufficiency of materials, increasing productivity
Accurately determining quantities of materials reduces unnecessary costs, lowering expenses.
Disadvantages of MRP
Time consuming
Costly to implement and maintain
What are the types of inventory management?
Just In Time (JIT)
Forecasting
What is inventory management?
Refers to the management of storage of raw, unfinished and completed goods/materials.
What is 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 is JIT efficient?
JIT is efficient by holding minimal stock, meaning more space is optimised for production, increasing productivity.
How is JIT effective?
JIT is effective as it reduces idle stock, reducing waste related expenses.
Advantages of Just in Time
Allows business to switch to the production of a different product without high wastage
Reduces waste and storage costs
Disadvantages of Just in Time
Having a lack of reserve stock makes it harder to meet customer demand, damaging business reputation
If supplies are unreliable, production can halt
Costs from frequent deliveries and orders could be high
What is forecasting?
Forecasting is a materials planning tool that predicts the customer demand for an upcoming period, using past data and market trends.
How is forecasting efficient?
Forecasting is efficient as it decreases the likelihood of ordering excess stock, reducing waste.
How is forecasting effective?
Is effective as it increases a business’s ability to meet customer demand, maximising profit.
Advantages of forecasting
Enables a business to better meet customer demand, improving reputation
Reduces cost of storage as there is no excess inventory
Disadvantages of forecasting
Predictions could be wrong and business may fail to meet demand accurately, hurting their profitability.
Analysing trends can be time consuming
Quality definition
Refers to the durability and reliability of a product
Quality in operations definition
Refers to both the standard of the finished product and the standard of the operations system that makes the product.
What are 3 quality strategies?
Quality control
Quality assurance
Total Quality Management (TQM)
What is quality control?
QC is a reactive quality strategy that involves a series of checks along the production process that ensures outputs meet the required standard and that any issues are addressed asap.
How is quality control efficient?
QC is efficient as it identifies and fixes the cause of the errors, resulting in less waste created during production.
How is quality control effective?
QC is effective as it prevents customers from receiving faulty products, increasing customer satisfaction.
Advantages of Quality Control
Customers are less likely to receive faulty product, improving business reputation.
Reduces number of refunds
Disadvantages of Quality Control
Time consuming to identify cause of errors
What is quality assurance?
QA is a proactive approach that uses effective systems to ensure errors are avoided and includes getting certification from a 3rd party to prove that the production process meets minimum ethical and quality standards.
How is Quality Assurance efficient?
QA is efficient as it is preventing errors from happening in the first place, reducing faulty products and therefore waste.
How is quality assurance effective?
QA is effective as customers are more likely to buy a product with a certified standard of quality.
Advantages of quality assurance
Receiving certification of quality can increase business competitiveness
To try attain certificate, workplace standards may be made safer
Proactive approach reduces likelihood of errors occurring in the first place
Disadvantages of quality assurance
Employees may need to be retrained to comply with new procedures
It is expensive to get an external body to assess operations system.
What is Total Quality Management (TQM)
TQM is a proactive approach to improving the quality of inputs, processes and outputs of the operations system.
How is TQM efficient?
TQM is efficient as it continuously improves the quality of the production system, reducing faulty products and therefore waste.
How is TQM effective?
TQM is effective as it determines the needs and wants of a customer, so customer satisfaction increases.
Advantages of TQM
Can be adapted to meet specific business requirements
Empowers employees
Proactive approach prevents errors from occuring in the first place.
Disadvantages of TQM
Requires a shift in workplace culture
Employees could feel confused if TQM strategy is not communicated effectively.
Quality Control and Quality Assurance similarities
Both reduce the amount of faulty products reaching customers
Both require products to meet a set standard
Quality Control and Quality Assurance differences
Quality control is a reactive approach whole QA is proactive
QA requires external certification, QC does not
Quality Control and TQM similarities
Both are internally controlled
Quality Control and TQM differences
QC is reactive, TQM is proactive
QC has set, non-flexible standards while TQM focuses on continuously updating and improving their standards.
Quality Assurance and TQM similarities
Both are proactive approaches
Both aim to improve production processes
Quality Assurance and TQM differences
QA has set, non-flexible standards while TQM focuses on continuously updating and improving their standards.
QA requires external certification, TQM does not.
What is waste minimisation?
Refers to the process of reducing the amount of unused materials, time and labour within a business
What are the 4 R’s of waste minimisation?
Reduce
Reuse
Recycle
Recovery
Benefits of waste minimisation
Cut costs from waste
It improves quality of processes, therefore improving efficiency and effectiveness
Time is better used
Can improve price competitiveness so customers are more likely to purchase
How is waste minimisation efficient?
It only uses the required amount of materials so a business can produce items faster, improving productivity
How is waste minimisation effective?
It lowers operational costs so products can be sold for cheaper price, increasing customer satisfaction.
What is lean management?
Lean management is an ongoing process that looks at the whole operations process and tries to eliminate elements that do not add value to final product.
What are the 4 principles of lean management?
Pull
One-piece flow
Takt
Zero defects
What is pull? (lean management)
Identifying the amount of production based on customer demand
What is one-piece flow?
Where a product flows through production one a time
What is takt?
When multiple products flow through production in a continuous manner to meet demand.
What is zero defects?
Aiming to prevent defects from occurring by improving the production process
How is pull efficient?
Pull is efficient as it reduces overproduction, minimising waste
How is pull effective?
Pull is effective as it gains products at the the right quality so customer expectations are met and they are satisfied.
How is one-piece flow efficient?
Is efficient as it reduces the number of errors in production.
How is one-piece flow effective?
Is effective as it only uses processes which add value to customers.
How is takt efficient?
Is efficient as it optimises flow of materials, reducing time being wasted.
How is takt effective?
Takt is effective as it improves flow of production
How is zero defects efficient?
Is efficient as employees and business anticipate faults, allowing them to continuously reduce waste
How is zero defects effective?
Is effective as by aiming for continuous improvement, customers are less likely to receive a faulty product, improving satisfaction.
Advantages of lean management
Reducing waste benefits environment, improving business reputation
Improves quality of products, increasing customer satisfaction
Products are produced at a faster rate improving productivity
Disadvantages of lean management
If suppliers don’t deliver materials on time, business is unable to optimise production
Can be overwhelming for employees
What are the 3 global issues a business must consider?
Global sourcing of inputs
Offshoring
Outsourcing
What is global sourcing of inputs?
Refers to acquiring raw materials or resources from overseas suppliers in a cost efficient manner.
Advantages of global sourcing of inputs
Makes a business able to source materials which are not readily available locally
Improves access to cheaper raw materials
Able to source resources of a higher quality
Disadvantages of global sourcing of inputs
May be difficult to monitor activity of suppliers
Could be difficult to communicate with suppliers due to language barriers or time zones
Tariffs could increase business expenses
Delivery is time consuming
What is offshoring?
Offshoring refers to when a business sets up processing facilities in another country
What is outsourcing?
Outsourcing refers to a business hiring another a business overseas to complete a process in their production system for them, because it is more efficient
Advantages of offshoring
Can improve access to skilled employees
Lowers prices for products, increasing customer satisfaction
Improves production speed
reduces business costs through access to cheaper labour
Disadvantages of offshoring
Business reputation could be damaged if overseas suppliers have poor ethics
Less job opportunities for local community
Delivery takes longer
Poor communication due to language barriers and time zones could lead to delays
Advantages of outsourcing
Can improve quality of business activities
Productivity may increase as external business may be able to complete tasks more effectively
Disadvantages of outsourcing
Reduced control of business activities
Loss of local jobs
Potential delays due to longer delivery, communication issues etc
If external business has poor ethics/CSR, business reputation could be damaged
Similarities between sourcing of inputs and outsourcing
They both allocate tasks to an external business
Differences between sourcing of inputs and outsourcing
S.o.I acquires supplies for production processes from an external business while outsourcing has the external business actually perform the part of the production process.
Similarities between sourcing of inputs and offshoring
Both have products/resources travel between different countries during delivery
Differences between sourcing of inputs and offshoring
Sourcing of inputs acquires materials internationally before manufacturing locally while offshoring does both in another country
Similarities between offshoring and outsourcing
Both produce a good/service in a location away from business
Differences between offshoring and outsourcing
Outsourcing has little control over activities whereas offshoring does have control over operations
CSR definition
Refers to a business going beyond what is legally required in terms of environmental, social and economical impacts
How does CSR improve efficiency of operations?
CSR means a business is likely aiming to reduce waste, increasing efficiency.
How does CSR improve effectiveness of operations?
Customers who see a business behaving ethically are more likely to be satisfied with their product, improving effectiveness.
CSR considerations for inputs stage of production
Sourcing from local suppliers rather than overseas suppliers to reduce transport emissions and support local community
Sourcing from suppliers that use environmentally sustainable materials
CSR considerations for processes stage of production
Using precise and consistent tech to reduce waste
Develop processes to reduce, reuse and recycle waste
CSR considerations for outputs stage of production
Develop alternative products that are more environmentally friendly
Create recyclable products
Eliminate as much plastics as possible in final product
Offer customers incentives to recycle
