UNIT 3 AOS3 - SAC 3 Flashcards
Explain what is Operations.
Operations is the area of the business that is responsible for the production of goods and/or services.
- Every good or service you have purchased has been produced using resources. The operations area has produced this.
- Operations management aims to have operations operating effectively and efficiently to achieve business objectives.
List the key components of operations management.
- Process design and management
- Managing quality
- Managing materials
- Managing capacity to meet customer demand
- Waste management
Explain Operations and Business Objectives in relation to customers.
Customers want value from the business by purchasing quality products and the best possible price.
Operations can provide value by:
- Producing quality products free of defects
- Producing the product efficiently, leading to an effective price
- Produce the product quickly
- Offering unique features
- Producing the product in an ethical manner
Explain how the Operations can help achieve Business Objectives.
Operations team is able to achieve objectives by producing quality products in an efficient manner that provides value for customers.
Business may achieve objectives such as:
- Increased sales
- Improved customer satisfaction
- Increased profits
- Improved productivity / efficiency
- Increased market share
- Meet shareholder expectations
Explain the operations system.
- Every good or service that is produced goes through an operations system.
- The operations system is the transformation of inputs into a final output (good or service).
- There are THREE elements in every operations system.
Inputs -> Processes -> Outputs
Explain inputs.
Inputs are the resources used in the process of production. They include:
- Materials
- Facilities, machinery and equipment
- Human resources
- Information
- Time
Explain processes.
Processes are all of the activities that transform the inputs into the final output.
The “ing” words
The processes can impact areas such as:
- Quality
- Price
- Wastage produced
- Speed of producing outputs
- Safety
Explain outputs.
Outputs are the final good or service that is produced and ready for customers.
- Manufacturing businesses produce tangible outputs.
- Service businesses produce intangible outputs.
- Many businesses will produce outputs that involve both goods and services.
- The quality of the output is a reflection of the inputs and processes used.
List the similarities of Manufacturing and Service businesses.
- Go through the three elements of the operations system - inputs, processes and outputs.
- Aim to produce quality outputs for customers to purchase.
- Impacts the quality and price of the good or service.
List the differences of Manufacturing and Service businesses.
Manufacturing: Often relies on heavy machinery and equipment for their inputs.
Service: Often relies on heavy human labour for their inputs to perform the service.
Manufacturing: Minimal customer involvement during the processes being performed.
Service: Often a high level of customer involvement as the processes are being performed.
Manufacturing: Production processes and consumption of the output are separated.
Service: Production processes and consumption of the output often occur at the same time.
Manufacturing: Produces tangible outputs. Meaning they can be touched or handled.
Service: Produces intangible outputs. Meaning they can’t be touched or handled.
Manufacturing: Outputs can be stored.
Service: Outputs cannot be stored.
Explain Technological developments and list the strategies.
Businesses can implement technology into their operations to improve their efficiency and effectiveness.
- Efficiency: making the best use of resources.
- Effectiveness: Increasing ability to achieve objectives.
Possible strategies include:
- Automated production lines
- Robotics
- Computer aided design
- Computer aided manufacturing
- Artificial intelligence
- Online services
Define an automated production line.
An automated production line is where a series of machines and workstations are arranged in sequence to perform tasks automatically with little to no employee involvement.
List how an automated production line can improve efficiency, and effectiveness, and its disadvantages.
It can improve efficiency by:
- Using fewer human resources
- Reducing wastage due to improved accuracy
- Perform tasks quicker than humans
It can improve effectiveness by:
- Allowing the business to meet customer demand
- Improving safety
- Increased quality due to improved accuracy and consistency
Disadvantages include
- High establishment costs
- Ongoing maintenance costs
- If production solely relies on APL, production may need to stop if machinery breaks down
- May lead to job losses
Explain robotics.
Robotics are programmable machines that can operate tasks automatically.
- Robotics are used to perform repetitive tasks, allowing a streamlined work flow.
- Can be used in both manufacturing and service industries.
List how robotics can improve efficiency and effectiveness, and its disadvantages.
They can improve efficiency by:
- Using fewer human resources
- Reducing wastage due to improved accuracy
- Perform tasks quicker than humans
They can improve effectiveness by:
- Allowing the business to meet customer demand
- Improving safety
- Increased quality due to improved accuracy and consistency
Disadvantages include
- High establishment costs
- Ongoing maintenance costs
- Robotics may break down, causing delays
- May lead to job losses
Explain Computer-aided design (CAD).
CAD is a software system that enables a product to be created in digital form, modified, analysed and tested.
- Allows changes to designs to be made easily with fewer resources.
List how Computer-aided design (CAD) can improve efficiency and effectiveness, and its disadvantages.
CAD can improve efficiency by:
- Using fewer resources to design a product.
- Allows the business to determine material requirements, preventing understocking/overstocking.
- Ability for others to view the product and provide feedback, preventing producing a product the market doesn’t want.
CAD can improve effectiveness by:
- Viewing the product before production and making adiustments to ensure it meets customer needs.
- Can view 3-dimesional product to get a more realistic perspective.
Disadvantages of CAD include:
- Employees need to be trained, increasing time and costs of implementation.
- Software can crash, causing design delays
Explain Computer-aided manufacture (CAM).
CAM is the use of software and machinery that allow computers to direct and control the manufacturing process.
- Can link with CAD to manufacture a design with minimal human involvement.
List how Computer-aided manufacture (CAD) can improve efficiency and effectiveness, and its disadvantages.
CAM can improve efficiency by:
- Speeding up production
- Need for fewer human resources
- Ability to produce with fewer errors
CAM can improve effectiveness by:
- Can enhance product quality
- Ability to easily provide customisations for customers
Disadvantages of CAM include:
- Cost of implementation. Initial investment and training.
- Machines often only perform one type of task, potentially reducing flexibility for multiple products.
Explain Artificial Intelligence (Al).
Al: systems or machines that mimic human intelligence to perform tasks that are traditionally done by humans.
- Al can be included into different areas of operations, including quality, market analysis and materials management.
List how Artificial Intelligence (Al) can improve efficiency and effectiveness, and its disadvantages.
Al can improve efficiency by:
- Can greatly speed up the analysis of large amounts of data. E.g. can analyse customer demand.
- Can monitor materials to ensure there is no over/under stocking.
- Can identify errors in a product early and notify employees to allow corrective action to take place.
Al can improve effectiveness by:
- Improving decision making
- Improving quality of the product being produced
- Speed up and improve customer service
Disadvantages of Al include:
- High initial costs
- Can make incorrect assumptions/advice as it relies on human data
- Potential for ethical issues to arise without regulation
- Possible job losses
Explain Online Services.
Online services allow businesses to connect with their customers in some way over an internet connection.
- Can include: website/mobile applications, Saas, Online education, Cloud computing, Social media platforms.
List how Online Services can improve efficiency and effectiveness, and its disadvantages.
Online services can improve efficiency by:
- Reduced costs of operating
- Ability to monitor real time data, helping manage materials
- Communicate with customers with fewer resources
Online services can improve effectiveness by:
- Increased accessibility, improving customer satisfaction.
- Ability to monitor demand, helping plan for materials and production needs.
Disadvantages include:
- May need to increase distribution channels if being offering products abroad.
- May require large investment to keep online services updated and up and running.
- Need to invest heavilv in data privacy.
Explain Materials in Operations.
- Businesses need to ensure they have enough materials on hand to produce their output.
- Without enough materials, production may need to stop.
- Having too many materials, can also cause inefficiencies.
Operations manager needs to ensure that:
- Materials arrive at the right place
- Materials arrive on time
- The business has the right quantities of materials
- The materials are the right quality
Explain not enough in materials management.
- Not having enough materials can make it challenging to meet customer demand.
- Being out of stock can result in unhappy customers and loss of sales.
- It can also slow production and increase waiting times - increasing costs.
Explain too much in materials management.
- Having too much inventory can create inefficiencies.
- Inventory can become damaged, lost, may perish or become obsolete while being stored.
- Storage takes up space and/or costs money.
- Inventory ties up money that can’t be used in other areas of the business.
List the strategies to help improve the effectiveness and efficiency of operations in the area of materials.
- Forecasting
- Master production schedule
- Materials requirement planning
- Just in time
Describe Forecasting.
Forecasting: is where past/historical data and trends are used to predict future demand so decisions can be made on materials requirements.
- Predicting demand can assist in having the right amount of materials on hand.
List how Forecasting can improve efficiency and effectiveness, and its disadvantages.
Forecasting can improve efficiency by:
- Ensuring enough materials are on hand, leading to a continuous flow (reducing waiting times).
- Minimises wastage - reduces the amount of stock perishing/becoming obsolete/damaged.
Forecasting can improve effectiveness by:
- Helps the operations meet customer demand.
- Enhances the ability to respond to changes in the market.
Disadvantages include:
- Potential for innacuracies.
- Time consuming to monitor data and trends.
Describe a Master Production Schedule.
Master production schedule (MPS): is a plan that describes what is to be produced, in what quantities, where and when.
- MPS allows the business to plan how many materials they require to meet the the production needs.
List how a Master production schedule can improve efficiency and effectiveness, and its disadvantages.
MPS can improve efficiency by:
- Streamlines production processes by providing a clear plan and schedule for production (planning resources).
- Can reduce lead times as materials are on hand at the right time.
- Reduces overproduction.
MPS can improve effectiveness by:
- Meeting customer demand by aligning production with market demand.
- Allows the business to plan their resources, reducing costs and improving profits.
Disadvantages include:
- Using an MPS can sometimes result in less flexibility if there are quick changes to production required.
- Maintaining and monitoring the MPS can take dedicated staff, increasing costs.
Describe a Materials Requirement Plan (MRP).
Materials requirement plan (MRP): is an itemised list of all materials involved in production to meet the orders.
MP considers:
- What needs to be produced and the quantities
- Materials already on hand
- Lead time
List how a Materials Requirement Plan can improve efficiency and effectiveness, and its disadvantages.
MRP can improve efficiency by:
- Ensuring materials are on hand so there is a continuous flow.
- Minimises wastage.
MRP can improve effectiveness by:
- Reduces delays, helping meet customer demand.
- Can lead to reduced costs.
Disadvantages include:
- Requires accurate data to be effective.
- Costs involved in implementing MRP can be significant.
Describe Just in time.
Just in time (JIT): is where the right amount of materials arrive just as they are needed for production.
- Materials are not idle for long periods of time.
- Deliveries will occur more regularly as fewer materials are on hand at a given time.
List how a Just in time can improve efficiency and effectiveness, and its disadvantages.
JIT can improve efficiency by:
- Reduces storage costs
- Minimises wastage
JIT can improve effectiveness by:
- Allowing the business to be more responsive to market conditions and changing customer needs/wants.
- Improving product quality
- Less money tied up in idle stock
Disadvantages include:
- Highly dependent on suppliers
- Vulnerable to supply chain disruptions
- Increased risk of stockouts
- Increased delivery costs (potential for higher carbon emmissions)
Explain Managing Quality.
Businesses implement strategies to ensure their goods/services they are producing meet their desired quality.
Effective quality management can lead to:
- Improved customer satisfaction
- Enhanced reputation
- Competitive advantage
- Less wastage
List the Quality Management Strategies.
- Quality control
- Quality assurance
- Total quality management
Explain Quality Control.
Quality control (QC): is where a business checks goods/services against predetermined standards at regular intervals.
- REACTIVE
- If the standards are not met, corrective action is taken.
- QC is a product-based approach where the standards are often set by the business.
To implement QC, the business will:
- Determine the standard
- Determine how the product will be checked and how often
- Check against the quality standard
- Take corrective action where necessary
List how Quality Control can improve efficiency and effectiveness, and its disadvantages.
QC can improve efficiency by:
- Identifies errors early, reducing wastage.
- Less time spent reworking products.
- Fewer product returns - less time and resources.
QC can improve effectiveness by:
- Improved customer satisfaction
- Improved image, brand loyalty
- Increased profits
Disadvantages include:
- Can slow down production
- Reactive strategy - identifies errors after they have occurred
Explain Quality Assurance.
Quality assurance (QA): is a system where the business achieves a set of quality standards to prevent errors from occurring.
- PROACTIVE
- The standards are often determined by an external body.
- QA is focused on the processes in the business that leads to the end good/service.
- A common OA standard is the ISO 9001:2015
List how Quality Assurance can improve efficiency and effectiveness, and its disadvantages.
QA can improve efficiency by:
- Improving the processes in the business, leading to improved use of resources.
- Fewer errors created, leading to less wastage.
QA can improve effectiveness by:
- Focusing on prevention rather than detection.
- Improved consistency - greater customer satisfaction.
- Improved image - greater loyalty and market share.
Disadvantages include:
- Can be costly and time consuming to implement.
- May require a change in culture.
Explain Total Quality Management.
Total quality management (TQM): is a whole business approach to quality that focuses on continuous improvement.
- HOLISTIC
- All employees play a role in improving quality.
- A strategic approach that is focused on the customer and continuously improving.
Employees are empowered to solve problems and find new ways of improving quality:
- Small groups are used to look at ways to improve quality - known as Quality Circles.
List how Total Quality Management can improve efficiency and effectiveness, and its disadvantages.
TQM can improve efficiency by:
- Reducing waste
- Fewer errors (using fewer resources)
- Continuous improvement in all areas of the business
TQM can improve effectiveness by:
- Improved customer satisfaction
- Greater customer loyalty, improved market share
Disadvantages include:
- Requires commitment from all employees
- Can be expensive to implement (e.g. employee training)
- Requires a change in culture
Explain Waste Minimisation.
Waste minimisation: is the process of reducing the amount of resources that are unused/discarded in a business.
- Resources cost the business money. Fewer resources being discarded can improve operational costs and environmental impact.
List the strategies a business can use for waste management.
- Implementing quality strategies
- Training employees
- Changing processes (E.g. implementing lean management)
- Implementing technology
- 3 Rs - Reduce, Reuse, Recycle
Explain reduce.
Reduce: is a strategy aiming to limit the amount of waste produced in the first place.
This can be achieved in many ways. For example:
- Changing processes to use fewer materials
- Removing unnecessary packaging
- Implementing just-in-time
- Using higher-quality materials
- Implementing technology
Explain reuse.
Reuse: is a strategy focusing on finding new uses for items that would otherwise become waste.
This can be achieved in many ways. For example:
- Repairing broken equipment
- Repurposing items, E.g. plastic containers
- Implementing multi-use items instead of single-use items
- Using waste from one product as raw materials for another
- Donating equipment for future use
Explain recycle.
Recycle: is the process of converting waste materials into new products.
- When waste cannot be avoided, recycling can often reduce the environmental impact by conserving resources and reducing the need for landfill space.
- Reduce and reuse should occur first, as recycling often requires a significant amount of energy and resources to collect, sort and process the waste.
- Businesses often partner with recycling services.
List how the 3 R’s (reduce, reuse, recycle) improve efficiency and effectiveness and their disadvantages.
3 Rs can improve efficiency by:
- Using fewer resources to produce products.
- Focusing on reducing and reusing can lead to more efficient processes.
3 Rs can improve effectiveness by:
- Lowering long-term costs
- Reducing impact on the environment
- Enhanced reputation
Limitations include:
- High initial cost and complexity of implementation
- Increased energy with recycling
Explain how an example business achieves the 3 R’s.
CSR Limited = Australian building products company.
Reduce
- Works to reduce the amount of packaging used for its products.
- Works with suppliers to reduce the packing of supplies.
Reuse
- CSR works with customers to retrieve timber pallets from building sites and reuse them in the future.
Recycle
- Up to 80% recycled glass in their glasswool
insulation.
- Recvcles 550 tonnes of aluminium each year.
Explain Lean Management.
Lean Management: is a methodology that focuses on minimising waste while simultaneously maximising productivity and value for the end customer.
- Lean management can be used for all businesses, manufacturing or services.
Businesses can look to reduce waste in 7 key areas: TIMWOOD
- Transportation
- Inventory
- Motion
- Waiting times
- Over-processing
- Overproduction
- Defects
List the principles of lean management.
- Pull
- One-piece flow
- Takt
- Zero defects
Explain Pull.
Pull: is where customer demand determines the rate of production. Products are only produced when a customer places an order.
- Opposite of producing products and pushing them to the market.
- The pull principle prevents overproduction.
- Waste is reduced as finished products that exceed customer demand do not need to be discarded.
Explain one-piece flow.
One-piece flow: is where work-in-progress moves smoothly from one operation to the next, one piece at a time.
- This reduces the time it takes for a product to move through the production process.
- Reduces waiting times and ensures a continuous flow in production.
- Quality can also improve as errors are easier to identify and rectify quickly.
Explain Takt.
Takt = where the production rate aligns with customer demand. It’s the available production time divided by customer demand.
- It is a measure of the maximum allowable time to produce a product in order to meet customer demand.
- Provides clear production targets for businesses.
- Reduces wastage caused by excess inventory and overproduction.
Explain Zero Defects.
Zero defects: is striving to eliminate errors throughout production or rectifying an error before the product moves to the next stage.
- It is about fostering a culture that aims to eliminate errors through preventative actions and continuous improvement.
- This improves quality as well as speeding up production.
- Costs are reduced as fewer resources are spent on rework, repairs and waiting.
List how efficiency and effectiveness are improved by lean management.
- Efficiency is improved as wastage in all areas of the business are reduced.
- Products are made with faster with fewer resources.
- Effective lean management can lead to increased profits.
- Customer value is also improved.
Explain Corporate Social Responsibility (CSR).
CSR: is the commitment of a business to go above and beyond their legal obligations to operate in an economically, socially and environmentally sustainable manner.
- Being a good corporate citizen can lead to businesses benefiting society while boosting their own brand.
- Operating a business in a socially responsible way can at times increase operating costs, however, it can build greater connections with those in the community, improving reputation.
Explain CSR considerations for inputs.
Environmental sustainability of inputs:
- Opting to use renewable energy for its facilities.
- Implement water-saving measures in its factories.
- Utilising local suppliers - supports local economy.
- Procurement of Ethical Sources. For example, a coffee shop chain could make a commitment to only buy fair-trade, organic coffee.
Explain CSR considerations for processes.
- Minimising the amount of waste generated.
- Keeping processes local.
- Offering employee training and development.
- Going above legal obligations to ensure employees are safe during the processes.
- Reducing emissions generated during production.
Explain CSR considerations for outputs.
- High-quality goods/services.
- Producing a product that can be recycled after its lifespan.
- Socially conscious goods or services.
- Minimising packaging or using sustainable packaging.
Explain global considerations and list the strategies.
- Businesses today often operate in a global market that transcends traditional geographic boundaries.
- Businesses are able to make use of global resources to improve their efficiency and effectiveness.
Businesses can consider a range of global strategies such as:
- Global sourcing of inputs
- Overseas manufacturing
- Global outsourcing
Explain global sourcing of inputs.
Global sourcing of inputs: is where the business purchases inputs from suppliers in other countries.
- Reasons for doing so are often based on factors such as cost, quality, speed, and reliability.
- Businesses need to consider factors such as exchange rates, logistics, communication barriers, ethical considerations, political issues, delivery times and quality.
Explain global sourcing of inputs with a business example.
Treasury Wine Estates
- Treasury Wine Estates is an Australian-based global winemaking and distribution company.
- Source grapes from Australia, the United States, New Zealand, and Italy.
- Allows them to produce a variety of wine styles and labels, meeting global consumers’ varied preference.
- Also reduce risks associated with climate conditions in one region.
Explain overseas manufacturing.
Overseas manufacturing: is where a business produces goods in a foreign country.
- Allows the business to take advantage of lower labor costs, tax incentives, strategic location for distribution or specialised skills.
- However, it also introduces challenges, including regulatory compliance, cultural differences, potential quality control, and potentially longer lead times.
- Businesses also need to consider local labour laws and ensure they are ethical in their treatment of foreign workers.
Explain overseas manufacturing with a business example.
ResMed
- ResMed produces devices like continuous positive airway pressure (CPAP) machines, masks, and other products designed to manage sleep apnea and other sleep conditions.
- Although ResMed’s headquarters is in Sydney, they have significant manufacturing operations in Singapore and the United States.
- Manufacturing in Singapore allows ResMed to access the Asian market more effectively, and it provides a strategic location for global distribution.
Explain global outsourcing.
Global outsourcing: involves contracting out business processes or services to third-party providers in foreign countries.
- Outsourcing can apply to a wide range of services, from customer support and software development to accounting and human resources.
- Benefits can include cost savings, access to specialised expertise, and the ability to focus on core business activities.
- Can be issues with service quality, data security, cultural differences, loss of control, and legal compliance.
Explain global outsourcing with a business example.
Telstra
- Telstra outsources a range of services, including customer service operations and software development, to other countries like India and the Philippines.
- This allows them to access specialist skills, reduce operating costs, and focus on their core business activities.
