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Operations Management
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- 1Operations management (production):concerned with providing the right goods and services in the right quantities and at the right quality level in a cost-effective and timely manner.
- 2Key aspects of operations management Methods of production
Size, scope and timing of production
Production planning
Quality control systems
Research and development and innovation. - 3Factors of productionland, labor, capital and enterprise
- 4Five Msmaterials, manpower, money, machines and management.
useful tool in devising both marketing and production plans. They care combined in a cost-effective way to ensure that there is value-added during the production stage of transformation process. - 5- Ecological sustainability The capacity of the natural environment to meet the needs of the current generation without jeopardizing the ability of future generations to meet their needs.
- 6- Social sustainability Examines social interactions and structures that are necessary for sustainable development.
- 7- Economic sustainability Development that meets the economic needs of the present generation using existing available resources without compromising the ability of future generations to meet their needs.
- 8Job Production/ Customized productioninvolves customizing an individual product from start to finish, tailor made to meet the specific requirements of the client
- 9Advantages of Job production- Quality of production: highly skilled labor is used.
- Motivation
- Flexibility: accustomed to the customer
- Uniqueness: adds value to the production process
- Customization of job production: creates a variety of choice for the customer. - 10Disadvantages of Job production- Relatively time consuming
- Tends to be labor intensive
- Relatively long working capital cycles
- Few economies of scale
- Irregularity of orders: can cause cash flow problems - 11Batch Productioninvolves simultaneously producing a limited number of identical products. Work on each batch is fully completed before production switches to another batch using the same staff and machinery.
- 12Advantages of batch production- Economies of scale
- Specialization
- Variety of products
- Reduced risks. - 13Disadvantages of batch production- Storage: can result in a high amount of stock (increase production cost)
- Can lead to boredom
- Inflexibility exists
- High production cost: machinery - 14Mass Productionmanufacturing large amounts of a standardized product.
- Involves the assembly of individual components, with parts from other companies.
- Tends to be capital-intensive with many tasks relying on automation (relatively low unit costs of production). - 15- Specializationspecialized capital equipment and people are used at each work station to carry out a different function essential to the overall production process, resulting in high levels of productivity.
- 16Flow Productionfocuses on a continuous production process of manufacturing products that are standardized in large quantities.
- Differs from mass production in that production occurs on a much larger scale, with production assembly lines often kept running 24 hours a day to maximize output and to eliminate waste.
- It relies entirely on automated systems with very few workers required. - 17Advantages of flow production- Capital intensive -> large scale output.
- Most cost-effective methods of production
- Technical economies of scale
- Standardized quality
- Specialized workers: low defect rate
- Low labor costs as unskilled workers are required. - 18Disadvantages of flow production- Monotonous work
- Inflexibility
- Methods are capital intensive. Involves huge set-up costs, running costs and replacement costs.
- Any breakdowns will cause major problems for the business.
- Impossible to rework as it will bring the operations to a halt.
- Need effective storage system. - 19Cellular Manufacturingsets of task are completed by teams by splitting the production process into a number of self-contained units.
- 20Advantages of cellular manufacturing- Some autonomy in decision-making as a team
- Team members have collective responsibility for their production targets and are held accountable for the quality of the items.
- Positive impacts on motivation from team working and autonomy in decision making
- Specialization - 21Disadvantages of cellular manufacturing- Result in lower output compared with tradition mass and flow production methods
- Cells are not equally productive or efficient
- Capital intensive: high purchase, maintenance and replacement costs.
- Conflict within teams or with other teams can cause production problems.
- Capacity utilization of machinery is lower than mass and flow production (average fixed costs tend to be higher). - 22Advantages of labor intensive production methods- Ability to offer a personalized service.
- 23Disadvantages of labor intensive production methods- Higher proportion of costs attributed to its workforce than its capital structure.
- Higher average cost of production - 24Advantages of capital intensive production methods- Improved levels of output and productivity
- Reduced average cost of production - 25Disadvantages of capital intensive production methods- Need sufficient demand for the product
- Products are homogeneous – no USP
- Lower profit margins
- High fixed costs - 26Locationgeographical position of a business. It has profound implications on the profitability and survival of the business.
- 27- Quantitative reasons for a specific location of production Availability, suitability and cost of land
Availability, suitability and cost of labor
Proximity to the market (customers)
Proximity and access to raw materials
Government incentives and limitations
Feasibility of e-commerce - 28Bulk increasing/ weight-gaining industriescommonly found in businesses that assemble components, the product’s weight increasing during the production process.
- 29Bulk-reducing businesses/ weight-losing industriesthe weight or size of the finished product is less than that of the raw materials used to produce it.
- 30- Qualitative reasons for a specific location of production Management preferences
Local knowledge
Infrastructure (e.g. transportation networks, communication networks, support networks etc.)
Political stability
Government restrictions and regulations
Ethical issues
Comparative shopping (clustering): firms locating near other businesses that cater for similar or complementary market. - 31- Outsourcing/ subcontracting:practice of transferring internal business activities to an external organization to reduce costs and increase productivity.
- 32Advantages of outsourcing- Activities that are not core of the business can be outsourced and this allows them to concentrate on its core activities.
- Quality output can occur despite the business lacking specific skills
- Helps to cut production costs for the contractor. - 33Limitations of outsourcing- Mutual trust between the business and the subcontractor.
- Quality of the outsourced service.
- Influence on the reputation of a firm can potentially disastrous.
- It still requires effective two-way communications an careful coordination
- Cause uncertainty among the workforce due to restructuring and staff redundancies. - 34- Offshoring:extension of outsourcing. Involves relocating business functions and processes overseas (can be operated overseas or outsourced to an overseas organization)
- 35Advantages of offshoring- Activities that are not core of the business can be outsourced and this allows them to concentrate on its core activities.
- Quality output can occur despite the business lacking specific skills
- Helps to cut production costs for the contractor.
- Help businesses to avoid trade protectionist measures used by governments.
- Job creation - 36Limitations of offshoring- Mutual trust between the business and the subcontractor.
- Quality of the outsourced service.
- Influence on the reputation of a firm can potentially disastrous.
- It still requires effective two-way communications an careful coordination
- Cause uncertainty among the workforce due to restructuring and staff redundancies.
- Often been associated with unethical practices (difficult quality assurance)
- Vulnerable to external influences such as economic and political instability. - 37- Insourcinguse of an organization’s own people and resources to accomplish a certain function or task which would otherwise have been outsourced.
- 38Reasons for insourcinga) Business had previously outsourced a particular function or task but is no longer satisfied with the quality of work being done
b) No longer cost-saving benefits from using a subcontractor and the function or task can be assigned to people in-house to cut costs. - 39 Industrial inertiaproblems with location and hence reluctance to relocate.
- 40 Potential limitations of relocationa) Relocation costs
b) Lower morale and higher anxiety caused to the workforce
c) Damage to the corporate image (if the firm is seen to value profits over its people).
d) Loss of skilled and loyal workers
e) Likely need to find new customers and suppliers
f) Lost of strong links with the existing local community
g) Redundancy payments - 41Footloose organizationbusiness that does not gain any cost reducing advantages from locating in a particular location. Hence, the firm can locate in almost any location
- 42Clusteringa business loates near other organizations that operate in similar or complementary markets
- 43Assisted areas/ enterprise zonesRegions identified by the government to be suffering from relatively high unemployment and low incomes, so are in need of regeneration through financial assistance.
- 44Standardizationproducing identical or homogeneous product in large quantities
- 45Labor intensiveproduction relies heavily on labor input, so the cost of labor accounts for the largest proportion of the firm's overall production costs.
- 46Capital intensivemanufacturing or provision of a product relies heavily on machinery and equipment, such as automated produciton systems.
- 47value-addedoccurs during the production of goods or services because the value of the output is greater than the costs of production.
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- Business Management (Topic 5 :: Operations Management) Karteikarten am Operations Management, erstellt von Jianna Park am 26/02/2019.
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