Unit 5: Operations Management Flashcards
Operations Management
the administration of business practices to create the highest level of efficiency possible within an organisation. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize an organisation’s profit
Job/customised production
Product customisation and focus on quality - a business models that performs or created custom products for a specific client
Cell production
Mass production in trend with a focus on quality and responsibility
Mass production (also flow and line production)
High volume of standardised products using a continuous flow.
Batch production
Production in stages - blending of customisation and standardisation
Job/customised production example
Wedding cake of a particular size or shape
What is job/customised production about?
Designing and producing a special product that precisely fits the customer’s requirements
Job/customised production pricing
The mark up and prizes are high since it is more expensive and complex to produce as opposed to flow production
Who executes job/customised production?
Typically performed by skilled experts to a high standard and usually allow for considerable flexibility and customisation in the finished product
Advantages job/customised production
Customisation is possible; improving customer satisfaction, employees may be motivated by the variety of tasks, there may be a sense of craftsmanship and pride in the final product
Disadvantages job/customised production
Labour force needs to be highly skilled, equipment is costly, products can’t be produced in bulk, economies of scale aren’t attainable, production is labour intensive, time consuming, and expensive
Focuses of mass production
Standardisation, automation, quantity - the greatest quantity of items while using the fewest resources (eg: labour or time)
Mass production example
Fast food restaurants - a series of employees in a line adding one element to the food being prepared (eg: sandwich)
How is mass production executed?
Usually with an automated assembly line which because prominent in the 1900s although the process embodies principles of efficiency which have been around much longer
Why is batch production used?
Instead of mass production, batch production can offer customised products while using a range of standardised options. Eg: cars, clothes, technology
Example of batch production
Baking cookies since this occurs in stages/parts. First, dough is made, placed onto baking sheets, then into the oven
What happens in batch production?
Items are produced in consignments and undergo a stage of the production prose together. The whole consignment is moved to the next production stage where another task is performed. The process can then be repeated in bathes can can not be completed using a flow production method (eg: continuous stream) because of limitation in the number and size of equipment - (eg: mixing bowls or ovens)
Impact of cell production
Allows organisations to move away from traditional hierarchical organisational structures, allows businesses to interfere many non-financial rewards (eg: job rotation, job enrichment, teamwork, etc)
Process of cell production
Adjusts the mass production process so workers can work in teams and be responsible for a certain part of the production line. mass production only allows workers to carry out 1 specific task
Advantages Mass production
Easier to respond to increase in orders (more growth potential), Once established the system should need little maintenance, Easier to automate and therefore, reduce costs per unit (economies of scale)
Disadvantages Mass production
Initial costs can be high, difficult to alter the process to meet the needs/tastes of individual customers, demotivating to workers as work can be quite monotonous
Batch production advantages
Reduces unit cost compared to job production but can still be partly personalised, allows organisations to address specific consumer needs (eg: size, weight, style) compared to mass production, specialist machinery increases output
Cell production advantages
Often improve quality, increase productivity, and reduce production costs, workers are more motivated than mass production even though a similar production process is taking place
Lean production aims
Reduce waste in the production process and maximise the efficiency of the production process
Lean production methods
Andon, Just-in-time, Kanban, Kaizen
Andon
A Japanese name for a visual production control device (usually a lit overhead display) that continuously shows the changing status of the production line and sounds alert if problem imminent
Just in time
An inventory strategy companies employ to increase efficiency and decrease waste by receiving good only as they are needed in the production process, thereby reducing inventory costs
Kaizen
This is a Japanese term for a gradual approach to ever-higher standards in quality enrichment and waste reduction. This is achieved through small and continual improvements involving everyone from the CEO to the lowest level workers. It utilises just in time production and quality circles
Quality control focus
The end product, and detecting product defects after it has been produced
Approach of quality control
A reactive rather than proactive approach. A certain rejection/wastage rate is often set eg: a reject rate of 1% means that 99/100 products must pass the quality check. The checks apply per job and not the whole production process
Process of quality control
In many cases, inspection is performed by a manager, department, or external organisation
Quality assurance
Organisations aiming for 100% success rate with no rejects. Therefore, organisations must focus on every step of the production process and not just the end product. This is proactive rather than reactive
Quality assurance impact
When an error is identified, production is stopped and the process is corrected - this aligns with the ideas of lean production
Total quality management (TQM)
Many managers attempt to have the entire organisation embrace this culture of quality, affecting attitudes and actions of all employees. Every department must think of those they work for as customers. Emphasis on customer service, great ion and production of high quality products, and zero defect policies hence getting everything right first time.
TQM impact
Quality is higher whole costs are reduced
Quality circles
A participative management technique within the framework of a company wide quality system in which small teams of (usually 6-12) employees voluntarily form to define and solve quality and performance related problems
Role of quality circles internationally
In Japan, (where quality circles originated), they are an integral part of enterprise management
Benchmarking
A measurement of the quality of an organisation’s Policies, products, programs, strategies, etc. and their comparison with standard measurements or similar measurements of its peers
The 3 objectives of benchmarking
- To determine what and where improvements are called for. 2. To analyse how other organisations achieve their high performance levels. 3. To use this information to improve performance
Advantages to implementing quality management
Charge higher prices, differentiate organisation from competitors and attract new customers, maintain existing customers, motivate current employees, recruit future employees, reduce waste and Costa in the long run, expand both nationally and internationally
Disadvantages of implementing quality management
Certification, compliance, inspection and/or training costs, benefits tend to be mostly long term, the challenge of changing the entire culture of the organisation and getting all employees and management on board
Outsourcing (or sub contracting)
Refers to the strategy of transferring internal business activities to an external organisation
Offshoring
When business activities are moved abroad
Restoring
The exact opposite of offshoring, bringing back production from overseas
In-housing
Conducting production within a company instead of relying on outsourcing
Advantages of outsourcing and offshoring
Reduced labour costs and overall production costs (eg: rent), improved efficiency, increased expansion into foreign markets, reduced government regulations and taxes
Disadvantages of outsourcing and offshoring
Complex to set up, organise, and administer, loss of jobs in original location leading to a lack of job security for remaining employees, loss of quality control, reputation at risk, ethical concerns of exploiting foreign workers in LEDCs
Advantages of cell production
Can reduce production costs and cause better worker motivation
Disadvantages of cell production
Production could be slower, decreasing output levels
Batch production advantages
Allows organisations to address specific customer needs. One element can be focused on and corrected at one time
Batch production disadvantages
If one element of the production is delayed, this can delay the production of the entire product
Andon advantages
Workers are notified of issues quickly meaning that only a minimal batch of product would have been made incorrectly and/or not up to standard
Andon disadvantages
Fixing production issues could be timely and set back production
Kanban
A system using cards which controls and ensures that certain supplies are ready to be produced at a certain time (regulating components)
Kanban advantages
Stock-holding costs should reduce as companies do not have to hold as much stock such reduces storage costs
Kanban disadvantages
Delays in one area of production could cause a ripple effect within other components (eg: lack of materials)
Just-in-time advantages
Improves the amount of wasted products, specifically if the company was to discontinue a product. Staff become more careful when ordering stock
Just-in-time disadvantages
It is highly dependent on a business, it’s audience, and its products, requires strong relationships which depends on chosen distribution methods
Kaizen (continuous improvement)
Focuses on conducting a series of company meeting where employees are able to bring forward their ideas for the business and its products
Kaizen (continuous improvement) advantages
Involves staff members within the brainstorming and decision making process to make them more involved and aware within the company
