Operational Objectives

• Operations Management is the management of processes, activities and decisions relating to the way goods and services are produced.
• Key tasks of operations management includes: Add Value, Operate efficiently, manage resources, coordinate supply chain and ensuring quality.
• Operations management runs the transformation process
• Transformation process is what happens inside the business. Where value is added to inputs to create outputs.
• Added value is when a business converts raw materials into a finished product creating a product which can be sold at a greater price than the cost of the raw materials.
• Key Operational objectives include: Cost Volume, Quality, Efficiency and flexibility and environmental responsibility
• Cost and Volume objectives

  Ensuring that operations are cost effective
• Cost and Volume objectives

  Cost effectiveness measured by unit costs
• Unit Costs

  Total Cost / Total Units
• Cost and Volume objectives

  High productivity and efficiency
• Cost and Volume objectives

  Lower unit costs in order to compete
• Lower Unit costs enable business to increase competitiveness by being able to offer the lowest price and make the highest profit margin at the average industry price
• Quality is one of the most important challenges facing a business
• Markets are highly competitive meaning customers are more knowledgable, Demanding and prepared to complain about poor quality.
• Businesses need to ensure that they produce high-quality products or services as this will give them a competitive advantage over their rivals.
• The importance of quality can be seen through customer loyalty which leads to repeat purchases and word of mouth recommendations.
• Customer satisfaction is essential if businesses want to retain existing customers and attract new ones.
• Quality Objectives

  Reliability: How often something goes wrong, average lifetime use.
• Quality Objectives

  Customer satisfaction: measured by customer research.
• Quality Objectives

  Increase percentage of on time delivery
• Quality Objectives

  Increase Customer Loyalty
• Efficiency looks at how effectively the assets of a business are being utilised
• Flexibility measures how responsive a business can be to short term or unexpected changes in demand
• Efficiency and flexibility are key determinants of unit costs
• Measuring Efficiency and Flexibility

  Labour productivity
• Measuring Efficiency and Flexibility

  Output per time period
• Measuring Efficiency and Flexibility

  Capacity Utilisation
• Environmental Objectives are becoming increasingly an important focus of operational objectives as businesses face more stringent environmental legislation
• Examples of Environmental Objectives: Use of energy efficiently and Supplies of raw materials from sustainable sources
• Innovation is about putting a new idea or approach into action.
• Innovation is commonly described as ‘the commercially successful exploitation of ideas’
• Invention is the formulation of new ideas for products or processes
• Product Innovation is the launching of new or improved products (or services) on to the market
• Process innovation is finding better or more efficient ways of producing existing products or delivering existing services
• Benefits of product innovation

  ‘First mover advantage’
• Benefits of product innovation

  Higher prices and profitability
• Benefits of product innovation

  Added value
• Benefits of product innovation

  Opportunity to build early customer Loyalty
• Benefits of product innovation

  Enhanced reputation as innovative company
• Benefits of product innovation

  PR (Eg. news coverage)