Role of operations management - created from Mind Map

Strategic role of operations management'Strategic'- affecting all key business areas while contributing to the strategic direction/plan of the business.In order to increase profit the business should focus on: -revenue/income -cost/expenses -costs of operations functions -input costs (capital, land, resources, installation) -labour costs (types of employees, overtime) -processing costs (machinery, maintenance) -inventory costs (storage, insurance, theft) -quality management costs (training, planning, inspection etc)-Cost leadershipA business strategy that involves the business trying to compete in the market and increasing profit by having lower prices than competitors. -economies of scale and cost management: cost advantages from buying cheaper inputs as a result of buying a large quantity (lower price per unit) and from more efficient and improved technology and machinery. -good/service differentiationDistinguishing products in some way from its competitors.This can be done by: Goods:  -varying product features (e.g. new features in the market) -varying product quality (e.g. better quality for less price) -varying any augmented features (e.g. additional features to a product, like a built in gps in a car)Services:  -varying the amount of time spent on a service (e.g. time is a factor that differentiates between service providers) -varying the level of expertise brought to a service (e.g. more expertise results in more specialised service) -varying the qualifications and experience of the service provider (e.g. results in better quality) -varying the quality of materials/technology used in service delivery (e.g. largely affects quality and modern reputation of the business)-Cross branding  Differentiation may be created from cross branding or strategic alliances. This may add value to products. E.g. Woolworths and Caltex

Goods and/or services in different industriesThe strategic role of operations management is to make the product stand out on the basis of the chosen attributes.-Goods are tangible outputs of the production process. They can be seen and felt such as cars or books. They may be standardised or customised.-Intermediate goods have gone through one set of operational processes, then become inputs into further processing. e.g. tiny screws-A key issue is getting balance between material inputs, human labour and machinery right, to produce goods as efficiently as possible.-Services are outputs that consist of the performance or an activity or task for the customer. e.g. teaching and hairdressing-Human labour and knowledge is converted into a service to provide to customers. -Services cannot be stored but are completely used up when they are performed. Harder to guarantee consistency of quality each time. Different industries: -agriculture-banking and finance-construction and engineering-education-food and beverage manufacturing-healthcare-infrastructure and utilities (gas and electricity for homes)-insurance-information technology -legal-leisure and gaming-media-manufacturing-mining and energy-property-retail-small businesses-telecommunications-tourism-transport and logistics

Interdependence with other key functionsOperations and marketing:Marketing can often drive sales. For example, Apple's 1984 Superbowl TV commercial became famous and had a massive impact on Apple's demand for their product. So operations was forced to expand rapidly in order to meet the consumer's demands.Operations and finance:Operations is dependent on finance as without funding operations cannot occur or grow. For example, Google allowed for a vast expansion in operations through an Initial Public Offering which helped raise US $23 billion. This capital enabled Google to purchase the resources and equipment needed for the Android mobile. Operations and human resources: Human resources and the cost of labour makes up most of the cost of operations. When operations costs are too high, employees must be reduced. For example, Telstra cut 12,192 jobs between 2005 and 2010 to reduce costs.  

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