OPERATIONS

OPERATIONS

1. 1. Role of Operations Management

   • 1.1 Strategic Role of operations management
     • Strategic role: make sure that the processes help achieve the business's goals 
     • Cost leadership
       • aim to be most price-competitive Strategies: Economies of Scales  Control costs (production & other) technology 
     • Goods/services differentiation
       • distinguishing products in some way from its competitiors  focused on: Goods: features, design, quality and add ons/ additional benefits Services: time, level of expertise, qualifications/ experience and quality of materials/ technology
   • Goods/services in different industries
     • Goods: Standardised - mass produced Customised - varies to customer wants/needsIntermediate good - has been created to become an input to create soemthing else perishable/non-perishable Services: customised - specialised e.g. legal/ medical Self service - e.g. checkout at coles/woolworths
   • Interdependence with other key business functions
     • each business function depends on one another and must interact in order to achieve business goals - mutual dependence 

2. 2. Influences

   • 2.1 GGET QCL
     • Government Policies
       • affect management decisions source of change: can become laws and regulations
     • Globalisation
       • Removal of barriers of trade between nations characterised by:- increasing integration with national economies - high degree transfer of capital:labour, intellectual capital & ideas, financial recourses & technology- global web: integration of a range of suppliers creates a network
       • Affects:  - consumers seek global brands - large/ TNC business's - organisational design & supply chain
     • Environmental Sustainability
       • business operations shaped around practices that consume resources today without compromising access to those resources for future generations
       • - intergenerational equity  - sustainable use of renewable resources  - reduction use non-renewable resources - rise climate change awareness: need integrate long-term sustainable approaches  - environmental sustainable practices reduce carbon footprint
     • Technology
       • design, construction & application of innovative devices, methods & machinery upon operations processes
       • Used in: Administration: organisation, planning and decision making  Processing: (all aspects) manufacturing, logistics, distribution
     • Quality expectations
       • Standard of excellence customers believe is suited for product goods: - quality of design  - fit for purpose - durability  Services: - professionalism of the service provider - reliability of service provider  - level of customisation 
     • Cost-based competition
       • derived from determining break-even point and applying strategies to create cost advantages over competitors
       • reducing fixed and variable costs to maximise profits without decreasing quality 
     • Legal regulation
       • compliance costs: expenses with meeting requirements legal regulation avoid compliance costs via outsourcing 
       • WORK HEALTH AND SAFETY (WHS): use of machinery and interacting with business environment, safe and healthy working conditions, appropriate safety training, protective equipment
       • FAIR WORK AND ANTI-DISTRIMINATION LAWS: employees treated with diginity and respect 
   • 2.2 Corporate Social Responsibility
     • open and accountable business actions based on respect for people, community/ society and broader environment 
     • - involves more than complying with laws and regulations - tripple bottom line: placing value on financial returns, social responsibility and environmental sustainability  - lean production: minimising waste in operations and becoming more efficient by lowering costs, reducing errors and defects and minimising underuse of labour  
     • the difference between legal compliance and ethical responsibility
       • Legal compliance: business abiding by law  Ethical responsibility: encompasses broader integration of social, community and environmental concerns
     • Environmental sustainability and social responsibility
       • Environmental sustainability: economic, social and environmental performance of a business social responsibility: business's management of social, environmental, political and human consequences of its actions

3. 3. Operations processes

   • 3.1 Inputs
     • Transformed Resources
       • transformed resources: Materials, information and customers
     • Transforming Resources
       • Transforming resources: human resources and facilities
   • 3.2 transformation processes
     • influences 4 V's
       • Volume
       • Variety
       • Variation in demand
       • Visibility
         • (customer contact)
     • Sequencing and Scheduling
       • sequencing: order in which activities occur Scheduling: length of time activities take within operations process
       • Gantt Charts
         • a bar chart that shows both the sheduled and completed work over a period of time
       • Critical path analysis
         • scheduling method shows what tasks need to be done, how long they will take and what order is necessary to complete the tasks 
     • Technology, task design & process layout
       • technology: application of science/ knowledge enables people to do new things/ perform established tasks in new and better ways administrative technology: Email, Skype, phone calls Manufacturing technology: robotics, computer-aided design (CAD), computer-aided manufacturing (CAM)
       • task design: classifying job activities so employees can successfully perform and complete tasks - involves job analysis and can be done after a skills audit has been conducted  - plant (office/factory) layout: planning arrangement of workplace to streamline transformation processes
       • Process layout: Machines and equipment grouped together by function they perform e.g hospitals - dedicated to different types of medical care (maternity wards) Product layout: machines and equipment relates to sequence of tasks performed in manufacturing product e.g. assembly line fixed position layout: employees and equipment come to product e.g. car repair business office layout: workstations e.g. service based sectors
     • Monitoring, control & improvement
       • Monitoring: measuring actual performance against planned performance key performance indicators (KPI): predetermined variables measured so appropriate control to operations processes can be made e.g. lead times, inventory, turnover rates, cost analysis
       • control: corrective action taken if there is a discrepancy with performance and goals - can be done by setting reasonable performance targets - regular performance review: indicates intervention/ corrective action may need to be taken
       • improvement: systematic reduction of inefficiencies and wastage, poor work process and elimination of any bottlenecks Bottleneck: transformation process which slows overall processing speed or creates an impediment causeing backlog of incompletely processed products
   • 3.3 outputs
     • the end result of business efforts - good or service provided or delivered to customers 
     • Customer service
       • how well business meets and exceeds expectations of customers in all aspects of its operations
       • needs review is customer expresses dissatisfaction: - defective - not meeting quality expectations - lead times too long - warranty claim 
     • Warranties
       • promise by business will correct any defects in goods/ service they produce/ deliver
       • - effectiveness operations seen by number of warranty claims  - can improve transformation process: identifying fault in manufacturing and rectifying it

4. 4. Operations Strategies

   • 4.1 performance objectives
     • Come Do Speed Quickly  Cause Fun
     • quality
       • Design: how well a good is made of service is delivered  Conformance: How well Good/ Service meets prescribed design with certain specification  Service: how reliable, suitable and timely service delivery is   
     • speed
       • time it takes for production and operations processes to respond to changs in market demand 
     • dependability
       • how consistent and reliable business's goods/ services are 
     • flexibility
       • how quickly operations processes can adjust to changes in market 
     • customisation
       • creation individualised goods/services to meet specific needs of customers 
     • cost
       • minimisation expenses so operations processes can be conducted cheap as possible 
   • 4.2 New product or service design and development
     • - market research -product concept - specification developement - product design - prototype development - prototype testing inc. market testing - product refinement - production processes refined - production product launch - distribution 
     • Product:  develop either: - consumer preferences  - changes and innovations in technology  important factors: -quality  - supply chain management  - capacity management  - cost
     • service:  intangible: consumed as produced  explicit: application of time, expertise, skill effort  Implicit: feeling of being looked after
   • 4.3 supply chain management
     • management and flow supplies throughout all input, transformations processes and outputs
     • factors influencing choice of suppliers: - consumer demand - quality inputs required - flexibility and timeliness supply  - cost
     • logistics
       • physical distributions and transportation of products  storage: secure location hold stock until required  Warehousing: warehouse for storage, protection and later distribution of stock Distribution centres: not intended for long-term storage materials handling and packaging 
     • e-commerce
       • buying and selling goods and services via internet e-procurement: use online systems manage supply, allow suppliers direct access to business's level supplies  B2B: business source products from suppliers online  B2C: customers direct access to products 
     • global sourcing
       • purchasing supplies/ services without being constrained by location
       • buying from wherever suppliers are best meet sourcing requirements  allows:  - cost and expertise advantages  - access new technologies and resources  challenges: - increased cost logistics, storage and distribution - managing different regulatory conditions between nations 
   • 4.4 outsourcing
     • advantages
       • - provides capacity to focus on core competencies thus improving performance  - efficiency and cost savings  - access to new skills/ resources 
     • disadvantages
       • - huge start-up costs  - communication and language barriers  - loss of control of standards and information security - resistance to change form employees afraid of losing jobs 
   • 4.5 technology
     • leading edge
       • most advanced/ innovative any point in time  can help to: - create more products quickly and higher standards  - reduce waste - operate more effectively 
     • established
       • widely accepted and used  can help to: establish basic standards for productivity and speed 
   • 4.6 inventory management
     • advantages & disadvantages of holding stock
       • advantages: - ability respond quickly changes in demand - prevent consumer seeking to buy alternative business - reduces lead times between order and delivery - increasing customer satisfaction, hence likelihood of a second purchase - stocks are an asset and of value to business - reflect well on balance sheet  - older stock can be sold at reduced prices and encourage cash flow
       • disadvantages: - costs of storage, spoilage, insurance, theft and handling - tying up of money could be applied elsewhere  - cost of obsolescence if stock remains unsold 
     • LIFO
       • (last-in-first-out) assumes last goods purchased are first sold 
     • FIFO
       • (first-in-first-out) assumes first goods purchased are the first sold
     • JIT
       • (just-in-time) ensures exact amount of material inputs arrive only as they are needed in the operations process
   • 4.7 quality management
     • control
       • - inspections at various points in production process to check for problems and defects  - testing to access quality of prducts/ processes against standards
     • assurance
       • - system to ensure set standards are achieved to production - applicaiton of international quality standards (e.g. ISO 9000 series 
     • improvement
       • - continuous improvement  - Kaizen: continuous improvement in all business areas - total quality management: commitment and responsibility of every employee of business 
   • 4.8 overcoming resistance to change
     • Managing change effectively:  - successful managers must anticipate and adjust to changing circumstances rather than being passive  - must be proactive not reactive  - changes must occur at steady pace to be integrated into business - create a culture of change - using change agents: somebody who initiates/ facilitates the change process  - setting achievable goals SMART Specific Measurable  Achievable Realistic  Timely 
     • financial costs
       • purchasing new equipment
         • - improves operations  - recuperate costs though value adding in transformation process
       • redundancy payments
         • loss of work arising from job skills no longer required 
       • retraining
         • - reorganisation of business's internal hierarchy or new technology - change in job roles - acquire different work skills
       • reorganising plant layout
         • - long-term greater efficiencies 
     • Psychological costs
       • inertia
         • Psychological resistance to change: feel: - job prospect threatened - loss career opportunities  - find new technology/  equipment intimidating 
   • 4.9 global factors
     • Global sourcing
       • - purchasing supplies/ services without being constrained by location  Benefits: - purchase supplies/ services without constrained by location  - cost advantages  Challenges: - increased cost logistics, storage and distribution  - managing different regulatory conditions between nations  - financial (exchange rate fluctuations) Contractual (language and cultural differences)
     • economies of scale
       • business selling to global market - achieved as scale of production increases - decrease in cost per unit - increasing profits 
     • scanning & learning
       • help managers adopt best/ suitable practise to business operations 
     • research & development
       • - influence level innovation, quality and competitive advantage  - govt. encourages through taxation incentives and grants - assist businessinvest and allocate resources into R&D - Ascertaining what consumers want and assisting to create products that meet their needs