operations

• Operations


  The business processes that involve the conversion of inputs (transformed and transforming), into final goods and services, known as outputs
• Strategic

  A long-term direction for all key business operations
• Operations process


  1. Convert inputs into outputs

  2. Create value
• Operations managers


  • Focus on achieving cost leadership
  • Focus on achieving product differentiation
• Cost leadership


  Businesses aiming to have the lowest possible costs, or most price competitive market
• Reducing cost methods


  1. Exploit economies of scale

  2. Produce standardised goods

  3. Engage in supplier rationalisation

  4. Outsource materials and labour
• Product differentiation


  Businesses distinguishing their products from competitors by changing product features, varying product quality or including additional benefits
• Standardised goods


  Mass produced goods where they are uniform in quality and meet predetermined levels of quality
• Customised goods


  Goods tailored to the needs and wants of the customer
• Perishable goods


  Require a high level operation process because of fast-moving consumer groups (FMCG)
• Perishable goods operations


  • High standards of quality and safety
  • Short lead times
  • Appropriate packaging and storage process
• Interdependence


  Mutual dependence the key business functions have on one another
• Key business functions


  • Operations
  • Finance
  • Marketing
  • Human Resources
• Finance ensures there are adequate funds to carry out transformation processes. Financial transactions reflect the true value of business.
• Marketing ensures business meets the needs and wants of customers through market research
• Human Resources effectively deals with employees and employment issues. Deals with employment resourcing, engaging in activities of acquisition, development, maintenance and separation
• Influences on Operations


  • Globalisation
  • Technology
  • Quality expectations
  • Cost-based competition
  • Government Policies
  • Legal regulations
  • Environmental Sustainability
  • Corporate social responsibility
• Globalisation


  Removal of trading barriers between nations. Encourages free trade. Allows the transfer of capital, labour, financial resources, technology and ideas.
• Globalisation allows businesses to

  1. Modify and implement new transformation processes

  2. Provide a new market for businesses while also bringing in new competition with established cost-leadership

  3. Integrate operation processes to meet different needs and wants
• Integrated operation processes


  • Integrating product designs that meet the needs of global consumers
  • Choosing the location for manufacturing facilities
  • Deciding on quality management logistics
  • Assessing quality management logistics
• Supply chain


  The range of suppliers a business has, and the nature of its relationship with those suppliers
• Global web


  Refers to the network of suppliers a business has chosen on the basis of lowest overall cost, lowest risk, maximum certainty of quality, and timing of suppliers
• Businesses ensure that they engage with a predictable and reliable supply chain that is responsive to the changes in demand. Involves engaging in effective sourcing processes to ensure the business is able to minimise their operational costs across a range of suppliers to ensure smooth production
• Technology


  Design, construction and/or application of innovative devices, methods and machinery upon operation processes
• Technology allowed better communication and smoothness in the operations process. Enabled businesses to introduce new and innovative production methods which increase speed, reduce costs, and increase quality
• Quality


  Refers to how well-designed, well-made and functional the goods are, and the degree of competence with which services are organised and delivered
• Expectations of consumers influence how products are designed, created and delivered
• Qualities of goods


  • Durability
  • Quality of design
  • Fitness of process
• Qualities of services


  • Level of customisation
  • Reliability of the service provider
  • Professionalism of the service provider
• Cost-based competition


  Derived from determining break-even points and then applying strategies to create cost advantages over competitors
• Fixed costs


  Costs that do not change
• Variable costs


  Vary in the direct relationship to the level activity of business activity
• Businesses that reduce costs

  • Bulk buy imports
  • Eliminate waste
  • Produce high volume output
  • Achieve economies of scale
  • Automated production systems
  • Standardised products for larger markets
• Government policies and legal regulations significantly affect operations management and guide a business' decision making as they must operate in accordance with the law. Businesses must be aware of changes in policies.
• Businesses comply with laws which allow them to operate in a fair and legal manner. If they fail to comply, they meet compliance costs. Must abide by regulations to ensure the transformation process meets maximum productivity. Anti-discrimination laws in businesses ensure employees are treated with respect.
• Environmental Sustainability


  Operations should be shaped around practices that consume resources today without compromising access for future generations
• Aspects of environmental sustainability

  • Sustainable use of renewable resources
  • Reduction in use of non-renewable resources
• Businesses must ensure environmentally sustainable practices to ensure business longevity.
• Corporate social responsibility (CSR)


  Business actions that are based on respect for people, society and the environment
• CSR is more than complying with laws and regulations. It demonstrates that business values more than financial gains and values community concerns and societal expectations. Known as triple bottom line