Ops

• Operations function

  • Efficiency in production methods
  • Ensuring the quality of the product
  • Selecting suppliers and inputs that need to be used
  • A substantial proportion of wages paid to workers who produce the items the firm sells
  • Deciding on who (who are the consumers), where (sourced), and how products should be produced
• Bonds


  • Australian brand originally sourced in Australia now made externally - China
• Operations function

  • Ensuring that the company is using the most up-to-date cost-effective technology and processes to ensure they start ahead of the competition
• Cost leadership

  • Aiming to have the lowest costs or to be the most price-competitive in the market
  • Running the lowest cost and most efficient operations department
  • Low costs - wages
  • Strong machinery + technology (efficiency)
• Economies of scale

  • Cost advantages that can be created as a result of an increase in the scale of business operations
  • Savings caused by buying in bulk
  • Bigger firms can afford more specialised technology and equipment which can produce more cheaply
  • Larger firms have a greater ability to engage in new R&D which can lead to further efficiency
• General expense minimisation

  • Looking at fixed and variable costs taking actions to reduce these to their lowest levels possible while still ensuring sufficient profitability of the company
• General expense minimisation

  • Ikea
  • Amazon
  • Bunnings
• Good/service differentiation

  • Distinguishing products from competitors in ways that could give the business a competitive advantage
  • Varying product features
  • Varying product quality
  • Varying service expertise
  • Varying service delivery
• Benefits of Good/service differentiation strategy

  • Higher price at the point of sale because of superior qualities and features of the product
  • Increased market share because of the unique features of your product
  • Increased sales due to the superior quality of the product
  • Higher costs of production are associated with increased quality and superior features of a product
• Good/service differentiation

  • Tesla
  • Bentley
  • Aston Martin
• Typical costs involved in the operations function

  • Input cost
  • Labour costs
  • Processing costs
  • Inventory costs
  • Quality management
• Quality management


  1. Prevention of loss through quality planning and training

  2. Sampling and inspection of goods and processes

  3. Error and remediation through warranty claims, sales returns and complaints

  4. Machining errors, injury and machine downtime
• OPS relies on marketing

  • Conduct market research
  • Guides operations + production of goods and services
• OPS relies on finance


  Provide funds necessary for technology + machinery to maximise volumes quality and efficiency
• OPS relies on HR


  To attract, train, maintain and grow their workers to ensure that the production of goods and services is produced
• Marketing relies on OPS to


  • Produce quality products that meet specific claims
  • For a car warranty of 3 years - ops have to coincide with these and produce according to claims
• Finance relies on OPS to

  • Produce high-quality products at the lowest cost to maximise profitability
  • Revenue is received by finance and redistributed to parts of the economy
• HR relies on OPS


  • Provide information about the nature and composition of the work and No. of workers needed
  • The selection process for recruitment (subject matter experts)
• Globalisation

  Define: refers to the removal of barriers to trade between nations. Globalisation is characterised by an increasing integration between national economies and a high degree of transfer of capital, labour, intellectual capital and ideas, financial resources + technology. 
• Globalisation main Impacts

  Opportunity to become a global business using a global web of operations

  The opportunity to reduce costs through establishing a global supply chain

  Access to the global market to see the outputs of operations (exporting)

  Acquiring new technology from global markets
• Technology the design, construction and/or application of innovative devices methods and machinery upon operations processes
• Technology used in OPS processes

  • CAD - computer-aided designs 
  • CAM - computer-aided manufacture
  • Large machinery plants such as assembly production lines 
  • Robotics (great precision) 
  • CIM - computer-integrated manufacturing 
  • RM - rapid manufacturing
• Quality expectations

  Quality: may be understood to be specific to how well designed made and functional goods are and the degree of competence with which services are organised and delivered 
• Quality expectations

  Customers: 

  • Have inherent belief (expectations) in what the quality standards should be for products. 
  • Businesses that fall short of these will suffer long-term damage to their reputation

  Influence customer expectations:

  • High starting expectations can lead to low final expectations 
  • reputability of a business
• Cost-based competition

  • Influence of actions of competitors and the say such competitors price their products 
  • As competitors drive down costs → other businesses are forced to compete 

  Strategies that help businesses lower costs 

  • Economies of scale
  • Negotiations with sellers + banks 
  • Greater R&D 
  • Automated production systems 
  • High volume outputs
  • Bulk buying 
• Government policies

  • All businesses operate in a political-legal environment 
  • Political decisions affect rules and regulation → directly affect the management of key business functions 
  • Government policies change in accordance with social expectations
• Areas gov. Policy effects ops. 

  1. WHS - work health and safety
  2. Taxation 
  3. Material handling practices
  4. Industry training requirements
  5. The environment 
  6. Public health 
• Legal regulation

  Laws are established to ultimately protect consumers and entire businesses are not engaged in unconscionable conduct that could compromise fair competition and public health
• Environmental sustainability

  Define:

  Business operations should be shaped around practices that consume resources today without compromising access to these resources for future generations
• CSR

  
• Legal compliance

  Obeying the law
• Ethical responsibility


  Doing what is right, even if it is not required by law
• The difference between legal compliance and ethical responsibility
• Environmental sustainability


  Business operations should be shaped around practices that consume resources today without compromising access to those resources for future generations
• Environmental sustainability

  • Renewable sources
  • Reduction in the use of non-renewable resources
• Social responsibility

  A socially responsible business recognises that its activities impact society
• Social responsibility

  • Expanding the business
  • Providing for the greater good of society
• Inputs

  Define: are the resources used in the transformation (production) line

  Labour

  • Workers

  Energy

  • Solar panels (CSR)

  Raw materials

  • Global sourcing

  Machinery and technology

  • Robotics → imported state-of-the-art technology

  Capital labour substitution: making workers redundant for their jobs to be taken over by robots
• Transformed resources (materials, information, customers)

  These are inputs that are changed or converted into outputs

  E.g. silicon, copper, oil, coal
• Transfromed resources: Materials 

  • Raw materials: unprocessed (natural or raw) state; iron, ore, minerals 
  • Intermediate goods: goods manufactured and used in further manufacturing or processing; steel bars, tyres, windscreens
  • In service-based businesses, items such as stationary, computers, furniture and tools of trade are outputs of other businesses but become essential inputs to the delivery of services 
  • Claims to use 100% Australian-sourced and processed beef