Operations Management Unit 5 HL/SL

Operations Management Unit 5 HL/SL

1. The Role of Operations Management (5.1)

   • Operations Management and Sustainability
     • Economic Factors/ Economic Sustainability
       • The need to use available resources and raw materials to their best advantage, ultimately ensuring profitability and financial performance
     • Social Factors/ Social Sustainability
       • The need to take human factors into account, both internally (e.g workers) and externally (e.g local communities), when making Business decisions
     • Ecological Factors/ Ecological Sustainability
       • The need to take ecological factors in account when making a Business decision (especially about the nature and ecosystems)
     • Triple Bottom Line
       • The need to take economic, social and ecological factors into account when making Business decisions

2. Production Methods (5.2)

   • Job (Customized) Production
     • Production of a special product made to a specific order
     • Advantages
       • Mark-up is High
       • Clients get exactly what they want
       • Likely to Motivate skilled workers
       • Flexible Production method
     • Disadvantages
       • Expensive, requires skilled workers, and non-standardized materials
       • Time Consuming
       • Possibility of Product Fail
       • Very Labour Intensive and reliant on skilled workerrs
   • Batch Production
     • Production of a group of identical products
     • Advantages
       • Can achieve economies of scale
       • Allows Customers more choice = More Market Share
       • Useful for trialling Products
       • Help Deal with unexpected orders
     • Disadvantages
       • Lose Production Time as machines are recalibrated "Down Time"
       • Need to hold large stock of work
       • Sizes of batches are dependent on the capacity of machinery allocated to them
   • Mass Production
     • Production of High Volume of Identical, standardized products. Flow production
     • Advantages
       • Once set up needs little Maintenance
       • Cater to large orders, achieving economies of scale
       • Labour Costs are Low
       • Business can respond to an increase of orders very quickly
     • Disadvantages
       • Set-up costs are high
       • Breakdowns are costly
       • Business is dependent on a steady demand from a large segment of the market
       • System is inflexible
       • Process can be demotivating for workers doing robotic activities
   • Cellular Production
     • Is a form of mass production in which that flow is broken up by teams of working who are responsible for certain parts of the line

3. Lean Production and Quality Management (HL) (5.3)

   • Lean Production
     • An Approach that focuses on cutting all types of waste in the production process
     • Waste
       • Time
       • Transportation
       • Products
       • Space
       • Inventory
       • Energy
       • Talents
   • Methods
     • Continuous Improvement (Kaizen)
       • A method of lean production based on Continuous improvement
     • Just In Time (JIT)
       • A method of stock control which means avoiding holding stock by being able to get supplies only when necessary and to produce just when ordered
     • Kanban
       • A system of Messages (Written or Electronic) to help manage production flows and JIT Delivery
     • Andon
       • A system of signals and alerts informing workers of a problem that requires immediate attention
     • Just In Case (JIC)
       • Holding reserve of both raw materials and finished products in case of a sudden increase in demand
   • Quality Control and Quality Assurance
     • Can Lead to:
       • Increased Sales
       • Repeat Customers (Brand Loyalty)
       • Reduced Cost
       • Premium Pricing
   • Cradle-to-Cradle Design and Manufacturing
     • A recent approach to design and manufacturing based on principles of sustainable development, especially recycling
   • Quality Circle
     • A formal group of volunteers (Employees from different departments and from all levels of hierarchy) who meet regularly to discuss and suggest ways of improving quality in their organization
   • Benchmarking
     • A tool for Businesses to compare themselves to their competitors in order to identify how they can improve their own operations and practices
   • Total Quality Management (TQM)
     • An approach to quality enhancement that permeates the whole organization (as a wide framework, TQM can include quality circles and benchmarking as well as Kaizen, Kanban, and Andon)
   • Benefits to meeting National and International Standards
     • Enable exports (Market Development Abroad
     • Give a competitive Edge
     • Save on the cost of withdrawing products
     • Act as an insurance
     • Bring better Profit Margins

4. Location (5.4)

   • Factors in Locating a Business
     • Costs
       • Land
       • Labour
       • Transport
     • Competition
     • Type of Land
     • Markets
     • Familiarity with the Area
     • Labour Pool
     • Infrastructure
     • Suppliers
     • Government
       • Laws
       • Taxes
     • National, Regional or International
   • Pull Factors
     • Improved Communications
     • Dismantling of Trade Barriers
     • Deregulation of the World's Financial Markets
     • Increasing Size of Multinational Companies
   • Push Factors
     • Reduce Costs
     • Increase Market Share
     • Use Extension Strategies
     • Use Defensive Strategies
   • Outsourcing
     • The practice of employing another Business to perform some peripheral activities
   • Offshoring
     • The practice of subcontracting overseas, i.e outsourcing outside the home country
   • In-housing/Insourcing
     • The practice of performing peripheral activities internally, within the company
   • Reshoring
     • The practice of bringing back Business functions to the home country

5. Production Planning (HL) (5.5)

   • Supply Chain
     • The system of connected organizations, information, resources, and operations that a Business needs to produce goods and provide services to its customers
   • Stock Control
     • Buffer Stock
       • The minimum amount of stock that should be held
     • Reorder Level
       • The level at which stock has to be ordered
     • Reorder Quantity
       • The amount of stock that is reordered
     • Lead Time
       • The amount of time it takes between ordering new stock and receiving it
   • Capacity Utilization Rate = (Actual Output / Productive Capacity) X 100
   • Productivity Rate = (Total Output / Total Input) X 100
   • Cost to Buy = P X Q
   • Cost to Make = (VC X Q)

6. Research and Development (HL) (5.6)

   • Successful R&D Benefits
     • Give the Business a competitive advantage
     • Extend the life of an existing product
     • Open up new Markets
     • Enhance the Prestige of the Company
     • Motivate the Workforce
     • Lead to improvements in quality
     • Reduce Costs
   • Disadvantages of R&D
     • There may be opportunity costs
     • R&D may be in the wrong direction
     • R&D is time consuming
     • R&D is fiercely competitive
     • R&D can become bureaucratic and non-productive
     • There may be ethical issues involved
   • A form of innovation directly associated with the technical development of existing products or processes, or the creation of new ones
   • Type of Innovation
     • Product Innovation
       • A type of innovation where new products are created or improvements to existing products are made
     • Process Innovation
       • A type of innovation where some parts of the manufacturing or service delivery are improved
     • Positioning Innovation
       • An innovation in the use or perception of a new product or service
     • Paradigm Innovation
       • An innovation so important that it my change the industry itself
   • Forms of Creativity
     • Adaptive Creativity
       • A form of creativity that transfers and applies existing forms of thinking and problem solving to new scenarios or different situations
     • Innovative Creativity
       • A form of creativity that generates new forms of thinking, addressing problems from an unusual perspective
   • Factors affecting R&D
     • Organizational Culture
     • Past Experience
     • Technology
     • The Pace of Change
     • The Level of Competition
     • Finance
     • HR
     • Legal Constraints
     • Ethical Concerns

7. Crisis Management and Contingency Planning(HL) (5.7)

   • Crisis Management
     • Triggered By:
       • Human Activity
       • Industrial Activity
       • Natural Disasters
     • Factors Affecting Crisis Management
       • Transparency
       • Communication
       • Speed
       • Control
     • A systematic steps and efforts by an organization to limit the damage from a sudden Crisis
   • Contingency Planning
     • Factors
       • Cost
       • Time
       • Risks
       • Safety
     • An organization's attempts to put in place procedures to deal with a crisis, anticipating it through scenario planning