Week 1 - What is Operations Management? Flashcards
What is operations management?
A systematic way to organise, plan and improve a process. It is the process behind delivering services and producing goods
What is an operation?
A transformation process that changes inputs into outputs to add value for customers
What indicate a good transformation process?
Effective
Efficient
Economical
Ethical
What are the competitive priorities when it comes to operations management?
Cost
Quality
Flexibility
Dependability
Speed
2 spectrums to quality
Consistency vs customisation
2 spectrums to flexibility
Variety vs volume
2 aspects to speed
Delivery speed vs development speed
If an output has dependability, it is…
On time, always
What are the 5 organisational forms
Simple
Functional
Divisional (product)
Conglomerate
Matrix
What is a simple organisation?
Original founder is in charge of all aspects of business
What is a functional organisation?
CEO employs specialists in their area of business
What is a divisional organisation?
Organised around product categories, customer markets or regions around the world. Each division then has its own resources and functional organisation
What is a conglomerate organisation?
Made up of a variety of different businesses that may or may not have similarities between them. E.g. a big company creating and owning a completely different company alongside their current business.
What is a matrix organisation?
A mix of the four previous forms
What is nature of hierarchy?
How many layers there are in an organisation, between the ‘shop floor’ and the CEO
Tall = lots of layers, harder to communicate with people higher up
Flat = less layers, higher to communicate with people higher up
Trend = make business flatter
What is degree of centralisation?
How power is distributed:
Highly centralised= power held at the centre=CEO make decisions
Decentralised= power more evenly distributed= low-level managers can make decisons
What is the extent of formalisation?
How work is organised:
If it is highly centralised, I.e. decisions have to be passed through a certain individual/point, there are more policies and procedures to follow so there is a high extent on formalisation
What is level of complexity?
How many subunits and the degree of difference between them I.e. making one product = more standardisation
Direct responsibility of an operations manager?
- understand the operations objectives + developing strategy
- develop processes, products and services
- planning + controlling operations resources (people materials + processes)
Indirect responsibility of an operations manager?
Speaking with department managers as part of management team
Broad responsibility of an operations manager?
Social
Technological
Environmental
Globalisation awareness
What are the four Vs?
Volume of output
Variety of products offered
Variation in demand
Variability in product itself
What is volume of output?
The number of a single product produced
What is variety of products offered?
The number of different types of product that are available to the customer.
What is variation in demand?
Whether there is a pattern or trend in the demand for the product or if it is randomly always changing
What is variability in the product itself?
Whether the single product be customised to suit the customer’s individual needs
Where do MPOs sit on the spectrum?
Upstream
Where do CPOs sit on the spectrum?
Downstream
CPOs comprised of what 2 elements?
Customer experience
Process outcome
(these are a.k.a the service concept)
What is the servuction system?
The relationship between all of the customers, physical assets and information (transformation system)
What are the process types for MPOs?
Project
Job shop
Batch
Mass
Continuous
What is project process type? (MPO)
One-off
discrete
take very long
change frequently
What is job shop process type? (MPO)
Precision/craft (low volume but higher than project)
Bespoke and customised
Shared resources
What is batch process type? (MPO)
Used when demand can be predicted (make batches - batch process time)
More than 1
Range of novel products
What is mass process type? (MPO)
Variants within process don’t affect the process function at all
Predictable demand, high volume
What is continous process type? (MPO)
Demand known with certainty
Endless flow
Inflexible
What are the CPO process types?
Professional service
Service shop
Mass service
What is professional service process type? (CPO)
Low volume
High variety
High customer contact
What is service shop process type? (CPO)
More standardised than professional
Less customer contact
E.g. car going through a garage
What is mass service process type? (CPO)
High volume, low variety
Low customer contact
Very standardised
Limited on ways to meet increasing demand I.e. can’t expand shop size to match the volume so other strategies used
Procurement
The agreeing on two-way contractual terms, where a business will source their supplies from (external source). Different suppliers will compete by demonstrating what they have to offer that company.
Inbound logistics
Moving procured material into the operation
Outbound logistics
The movement of the transformed materials, to the consumer
Processes in SCOR model
Plan
Source
Make
Deliver
Return
What is inventory?
Anything that is counted, paid for, controlled and managed in operations to satisfy customer demand
Too much inventory?
Deprofitability
Too little inventory?
Damage customer confidence - change customers opinion on operations dependability (this is an OQ here)
Why hold inventory?
Buying in bulk = cost effective
Excess material = can be sorted so best material is used in operations
Helps short term demand
Dependability = helping get more orders as there are raw materials in stock
Process will flow more smoothly if all material is readily available
Why not hold inventory?
Can account for high percentage of company’s working capital
Reduce profitability
Raw material inventory?
Goods received from suppliers
Work-in-progress inventory?
Partially completed products
Finished goods inventory?
Completed and ready for customer
Inventory by location?
Their location in the processing model
I.e. raw/work-in-progess/finished
Cycle inventory?
Inventory that can meet typical demand in given time period. Usually one or more outputs
E.g. bakery
Buffer/safety stock inventory?
Extra stock held so that when demand increases, supply can match it
Compensates for uncertainty in supply chain
What is pipeline/movement inventory?
Stock that is in transit or in the pipeline for weeks on end
Anticipation inventory?
Predicting increase in demand due to seasonality/ patterns
5 assumptions with EOQ
No limit on what we order
Demand rate is constant
Only 2 costs considered : inventory holding cost + order cost
Decisions for 1 item is independent to others
Lead time = known and constant
