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VCE BUSINESS MANAGEMENT UNITS 3/4 (2024) > UNIT 3 AOS3 - SAC 3 > Flashcards

UNIT 3 AOS3 - SAC 3 Flashcards

1
Q

Explain what is Operations.

A

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.
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2
Q

List the key components of operations management.

A
  • Process design and management
  • Managing quality
  • Managing materials
  • Managing capacity to meet customer demand
  • Waste management
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3
Q

Explain Operations and Business Objectives in relation to customers.

A

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

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4
Q

Explain how the Operations can help achieve Business Objectives.

A

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

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5
Q

Explain the operations system.

A
  • 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

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6
Q

Explain inputs.

A

Inputs are the resources used in the process of production. They include:
- Materials
- Facilities, machinery and equipment
- Human resources
- Information
- Time

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7
Q

Explain processes.

A

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

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8
Q

Explain outputs.

A

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.
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9
Q

List the similarities of Manufacturing and Service businesses.

A
  • 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.
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10
Q

List the differences of Manufacturing and Service businesses.

A

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.

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11
Q

Explain Technological developments and list the strategies.

A

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

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12
Q

Define an automated production line.

A

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.

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13
Q

List how an automated production line can improve efficiency, and effectiveness, and its disadvantages.

A

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

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14
Q

Explain robotics.

A

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.
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15
Q

List how robotics can improve efficiency and effectiveness, and its disadvantages.

A

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

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16
Q

Explain Computer-aided design (CAD).

A

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.
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17
Q

List how Computer-aided design (CAD) can improve efficiency and effectiveness, and its disadvantages.

A

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

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18
Q

Explain Computer-aided manufacture (CAM).

A

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.
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19
Q

List how Computer-aided manufacture (CAD) can improve efficiency and effectiveness, and its disadvantages.

A

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.

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20
Q

Explain Artificial Intelligence (Al).

A

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.
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21
Q

List how Artificial Intelligence (Al) can improve efficiency and effectiveness, and its disadvantages.

A

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

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22
Q

Explain Online Services.

A

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.
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23
Q

List how Online Services can improve efficiency and effectiveness, and its disadvantages.

A

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.

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24
Q

Explain Materials in Operations.

A
  • 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

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25
Q

Explain not enough in materials management.

A
  • 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.
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26
Q

Explain too much in materials management.

A
  • 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.
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27
Q

List the strategies to help improve the effectiveness and efficiency of operations in the area of materials.

A
  • Forecasting
  • Master production schedule
  • Materials requirement planning
  • Just in time
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28
Q

Describe Forecasting.

A

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.
29
Q

List how Forecasting can improve efficiency and effectiveness, and its disadvantages.

A

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.

30
Q

Describe a Master Production Schedule.

A

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.
31
Q

List how a Master production schedule can improve efficiency and effectiveness, and its disadvantages.

A

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.

32
Q

Describe a Materials Requirement Plan (MRP).

A

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

33
Q

List how a Materials Requirement Plan can improve efficiency and effectiveness, and its disadvantages.

A

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.

34
Q

Describe Just in time.

A

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.
35
Q

List how a Just in time can improve efficiency and effectiveness, and its disadvantages.

A

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)

36
Q

Explain Managing Quality.

A

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

37
Q

List the Quality Management Strategies.

A
  • Quality control
  • Quality assurance
  • Total quality management
38
Q

Explain Quality Control.

A

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

39
Q

List how Quality Control can improve efficiency and effectiveness, and its disadvantages.

A

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

40
Q

Explain Quality Assurance.

A

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
41
Q

List how Quality Assurance can improve efficiency and effectiveness, and its disadvantages.

A

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.

42
Q

Explain Total Quality Management.

A

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.

43
Q

List how Total Quality Management can improve efficiency and effectiveness, and its disadvantages.

A

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

44
Q

Explain Waste Minimisation.

A

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.
45
Q

List the strategies a business can use for waste management.

A
  • Implementing quality strategies
  • Training employees
  • Changing processes (E.g. implementing lean management)
  • Implementing technology
  • 3 Rs - Reduce, Reuse, Recycle
46
Q

Explain reduce.

A

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

47
Q

Explain reuse.

A

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

48
Q

Explain recycle.

A

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.
49
Q

List how the 3 R’s (reduce, reuse, recycle) improve efficiency and effectiveness and their disadvantages.

A

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

50
Q

Explain how an example business achieves the 3 R’s.

A

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.

51
Q

Explain Lean Management.

A

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

52
Q

List the principles of lean management.

A
  • Pull
  • One-piece flow
  • Takt
  • Zero defects
53
Q

Explain Pull.

A

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.
54
Q

Explain one-piece flow.

A

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.
55
Q

Explain Takt.

A

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.
56
Q

Explain Zero Defects.

A

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.
57
Q

List how efficiency and effectiveness are improved by lean management.

A
  • 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.
58
Q

Explain Corporate Social Responsibility (CSR).

A

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.
59
Q

Explain CSR considerations for inputs.

A

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.
60
Q

Explain CSR considerations for processes.

A
  • 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.
61
Q

Explain CSR considerations for outputs.

A
  • 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.
62
Q

Explain global considerations and list the strategies.

A
  • 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

63
Q

Explain global sourcing of inputs.

A

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.
64
Q

Explain global sourcing of inputs with a business example.

A

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.
65
Q

Explain overseas manufacturing.

A

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.
66
Q

Explain overseas manufacturing with a business example.

A

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.
67
Q

Explain global outsourcing.

A

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.
68
Q

Explain global outsourcing with a business example.

A

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.

VCE BUSINESS MANAGEMENT UNITS 3/4 (2024) (10 decks)

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