Unit 3: Area of Study 3 - Operations Management Flashcards
Operations Management
Is all the activities in which a Manager engages in to produce Goods or Services Efficiently
Operations Management and Business Objectives
If the Operations Team is able to work Efficiently and Effectively, it allows the business to achieve objectives
Operations System
Is the transformation of Inputs into the final output; The Good or Service
Stages of an Operations System
- Inputs
- Processes
- Output
Stage of an Operations System: Inputs
Are the resources that are used in the Production process
Examples of Inputs (List 4)
- Raw Materials
- Facilities
- Equipment
- Employees
- Time
- Information
- Capital (Money)
Stage of an Operations System: Processes
Is the conversion of Inputs into Outputs
Stage of an Operations System: Outputs
Is the finished Good or Service that has been produced
Characteristics of a Manufacturing Business
- Transforms Inputs into Tangible Outputs
- The products can be stored and sold later
- The products are generically made, not specified to Customer wants
- There is very little Customer involvement in production
- Production usually occurs through an Automated Production Line
Example of a Manufacturing Business
Yakult
Characteristics of a Service Business
- Transforms Inputs into Intangible Outputs
- The services cannot be stored
- The Service is usually specified to customer desires
- There is a high level of Customer involvement when the Service is being delivered
Example of a Service Business
Hairdresser
Efficiency
Is how well a business uses its resources to achieve its Business Objectives
Effectiveness
Is the degree to which a business has achieved its stated objectives
Strategies to Improve the Efficiency and Effectiveness of Operations Related to Technological Development
- Automated Production Lines
- Computer-Aided Design (CAD)
- Computer-Aided Manufacturing (CAM)
- Website Manufacturing
Automated Production Lines
Is where equipment and machines are arranged into a sequence and is controlled by computers to automatically perform tasks
Advantages of Automated Production Lines (List 2)
- Minimises waste
- Increases productivity
- Improves workplace safety
Disadvantages of Automated Production Lines (List 2)
- High set-up costs
- Can lead to Redundancy
- Requires technical training to use
- Costly to maintain or replace
- If the Production Line breaks down, production stops
Computer-Aided Design (CAD)
Is software that creates product possibilities from a series of parameters
Advantages of Computer-Aided Design (List 2)
- Allows the business to view the end product without building it
- Allows the end product to be tested and quoted before going into production
- Allows the business to make changes to the product to customer desires before producing it
- Allows the business to produce the product at a faster rate at a reduced cost
Disadvantages of Computer-Aided Design (List 2)
- The costs of software can be expensive
- This strategy can lead to job losses, as fewer Employees are needed
- It is expensive and timely to train staff to use Computer-Aided Design (CAD)
Computer-Aided Manufacturing (CAM)
Is the use of software that allows that Manufacturing Process to be controlled by computers
Advantages of Computer-Aided Manufacturing (List 2)
- Allows a business to produce products at a faster rate
- Allows a business to produce products at a reduced cost
- Ensures greater product consistency
- Ensures that products are produced with greater accuracy
Disadvantages of Computer-Aided Manufacturing (List 2)
- It is initially very expensive
- Requires technical training to use Computer-Aided Manufacturing (CAM)
- May lead to Redundancy
- If the software crashes, production stops
- It is expensive and timely to train staff and use Computer-Aided Manufacturing (CAM)
Website Development
Is the creation and/or improvement of a business’s website
Advantages of Website Development (List 2)
- Reduces the costs of labour
- Allows Customers to purchase products, 24 hours a day, 7 days a week
- Can be used to deliver messages to Customers and Suppliers
- Can be used to gain Customer feedback
Disadvantages of Website Development (List 2)
- It is initially very expensive
- Can lead to Redundancy
- Requires technical training to use and maintain the website
- If the website crashes, production is stopped
Materials Management
Is the strategy that manages the use, storage and delivery of materials to ensure the right amount of Inputs are available when required in the Operations System
Materials Management Strategies
- Forecasting
- Master Production Schedule (MPS)
- Materials Requirement Planning (MRP)
- Just in Time (JIT)
Materials Management Strategy: Forecasting
Is where past data and trends are used to predict future demand, so informed decisions around materials can be made
How Forecasting Improves Efficiency (List 1)
- Improves productivity because production does not need to wait
- Reduces overstocking, which reduces wastage
How Forecasting Improves Effectiveness
It ensures that the business has enough materials on hand to meet production needs, ensuring Customer demand is met
Materials Management Strategy: Master Production Schedule
Outlines what is going to be produced, in what quantities and when it is going to be produced
How the Master Production Schedule Improves Efficiency
It helps the business plan the exact amount of materials needed, so the correct materials can be ordered, preventing overproduction whilst reducing wastage
How the Master Production Schedule Improves Effectiveness
It enables the business to have a clear picture on what needs to be produced to meet customer demand
Materials Management Strategy: Master Requirement Planning
Is an itemised list of all the materials that are needed to meet specific orders
How Master Requirement Planning Improves Efficiency
It prevents overstocking, which reduces wastage
How Master Production Planning Improves Effectiveness (List 1)
- It ensures that production has a continuous flow, without the need to wait for materials
- Ensures that there are enough materials on hand to meet demand
Materials Management Strategy: Just in Time
Is a strategy that ensures that the right amount of materials arrive only as they are needed for production
How Just in Time Improves Efficiency
- Reduces storage costs
- Reduces wastage
How Just in Time Improves Effectiveness (List 2)
- Aims to have a continuous flow
- Businesses can use extra space to maximise production
- The money saved can be used in other areas of the business
Quality
Is how good, a Good or Service is and to what extent they fit their stated purpose
Quality Strategies
- Quality Control (QC)
- Quality Assurance
- Total Quality Management (TQM)
Quality Strategy: Quality Control
Is a procedure that aims to ensure that a manufactured Good or performed Service adheres to a set of quality criteria by performing checks at regular intervals
Quality Strategy: Quality Assurance
Is a system where the business meets a set of predetermined quality standards, often set by an independent body
Quality Strategy: Total Quality Management
Is a system of management based on the principle that every member of Staff must be committed to maintaining high standards of work in every aspect of a business’s operations
Lean Management
Is an approach to business that reviews all processes with the aim to maximise customer value while reducing waste
Seven Wastes of Operations
Transportation
Inventory
Motion
Waiting
Overproduction
Over processing
Defects
Seven Wastes of Operations: Transportation
Is reducing any unnecessary transport because it doesn’t transform the product that is being carried
Seven Wastes of Operations: Inventory
Is avoiding the excess storage of inventory because it doesn’t create value and comes with a lot of waste and cost
Seven Wastes of Operations: Motion
Is reducing the movement of workers, parts and products because by itself, it doesn’t create value, so it’s waste
Seven Wastes of Operations: Waiting
Is reducing the time between processes because waiting for people or machinery is wasteful
Seven Wastes of Operations: Overproduction
Is making more products than is needed, which is wasteful because the product sits around, taking up storage
Seven Wastes of Operations: Over Processing
Is removing the processes that add little value to the product, which is wasteful because it doesn’t add value to the product since the Customer isn’t paying for it
Seven Wastes of Operations: Defects
Is reducing the Defects and errors because Customers don’t want them and are not willing to pay for them, leading to wastage
Corporate Social Responsibility in Operations: Inputs (List 2)
- Ensuring that suppliers provide materials that come from socially responsible sources
- A business could purchase Inputs from local Suppliers, rather than from overseas, to reduce emissions as a result of transportation
- Part of the transformation process can involve recycling and remanufacturing of materials or waste
- Inputs should be environmentally sustainable. For example, recyclable materials could be used, a business might use green energy to reduce carbon emissions, and energy efficient equipment could be used to reduce energy use
Corporate Social Responsibility in Operations: Processes (List 1)
- Facilities and technology should contribute to the health and welfare of Staff and go above and beyond what is required by legislation
- A business could conduct production locally. In doing so, it can show its concern for local
communities - All employees should have ongoing access to training, as well as fair pay and work conditions, above and beyond what is required by legislation
Corporate Social Responsibility in Operations: Outputs (List 1)
- Focus on creating high-quality products that provide real value, products that are fit for their
intended purpose - A business could make use of environmentally friendly packaging. For example, packaging could be minimised to reduce the amount of material and energy used as well as to reduce waste, and recyclable or biodegradable packaging could
be used - A business must ensure that its product is safe and reliable and not defective, so the consumer is not harmed
Global Considerations in Operations Management
- Global sourcing of Inputs
- Overseas manufacturing
- Global outsourcing
- Supply Chain Management
Global Considerations in Operations Management: Global Sourcing of Inputs
Is a strategy where a business sources its Inputs from countries outside its place of origins
Advantages of Global Sourcing of Inputs (List 4)
- Reduces costs
- Gives the business the opportunity to learn how to do business in a potential market
- Allows the business to access skills or resources that are not available domestically
- Allows the business to develop alternative suppliers
- Increases the business’s capacity of total supply
- Allows the business to source higher quality Inputs
- Allows the business to acquire cheaper materials
- Allows the business to acquire cheaper labour
- Allows the business to make use of the lower taxes available in other countries
Disadvantages of Global Sourcing of Inputs (List 2)
- There are hidden costs associated with different cultures and time zones
- There is exposure to potential high risks, financially and politically
- There are long lead times for manufactured goods
- There is the risk of ports shutting down and interrupting supply
- It is difficult to monitor the quality of Inputs
Global Considerations in Operations Management: Overseas Manufacturing
Is where a business produces its Goods in a country that is different to the location of its headquarters
Disadvantages of Overseas Manufacturing
- There may be hidden costs associated with operating in different cultures and time zones
- By producing products in other countries, businesses exposes itself to risks both financially and politically
Global Considerations in Operations Management: Global Outsourcing of Inputs
Is where a part of a business’s operations is handed over to another person or business that is located in a different country
Advantages of Global Outsourcing (List 2)
- Improves the quality because of the access to expert knowledge and high quality service
- The business is able to focus on its core activities
- Costs can be reduced
- Production may be quicker as the outsourced provider should be able to focus on the task they specialise in
Disadvantages of Global Outsourcing (List 2)
- Management may have less control over the production process
- It may be difficult to maintain quality
- There will be a loss of jobs and career prospects, which may result in low morale in the workforce
- There may be security and confidentiality issues
- There may be communication issues that lead to customer service problems
Global Considerations in Operations Management: Supply Chain Management
Is the process of managing the flow of supplies from the Supplier, through the Operations System and to the end Customer
Disadvantages of Supply Chain Management
- At times, the management of the supply chain can be very expensive to implement
- A supply chain can be complex and
specific parts of the chain may be difficult to manage.
