OPERATIONS

• Operations


  Focus on production and the transformation of inputs into outputs (these can either be semi-finished or finished products)
• Operations


  Affected by costs - the aim in finding ways to minimise costs in order to make the product affordable for the customer
• Strategic role of operations management

  • Cost
  • Leadership
  • Goal/service differentiation
• Strategic role of operations management

  Operations managers contributing to the strategic direction or strategic plan of the business
• Strategic affects all key business areas
• Key aspects businesses focus on to maximise profits

  • Revenue or income
  • Costs or expenses
• Strategic role of operations at McDonalds

  • Operate the business ethically
  • Give back to local communities
  • Grow the business profitability
  • Strive for continual improvement
• Cost leadership


  The aim of having the lowest costs or to be the most price-competitive within the market with still being profitable
• A business can aim to be the lowest cost-manufacturer within their industry. A key aspect is to be the most price-competitive in the market, while maintaining profitability
• Basic products


  Fewer features with lower quality by either using low-cost (or no) packaging
• Economies of scale


  Cost advantages that result in an increase of sale of business operations
• Economies of scale


  • Being able to purchase lower cost per unit of input and efficiencies created through improved use of technology and machinery
• Standardised goods


  Mass produced on an assembly line that are uniform in quality and meet a predetermined level of quality. These products are produced with a production focus
• Customised goods


  Varied according to customer needs. These products are produced with a market focus rather than a production focus
• Product differentiation - goods

  • Varying product features
  • Varying product quality
  • Varying augmented features
• Product differentiation - services

  • Varying amounts of time spent on a service
  • Varying level of expertise brought to a service
  • Varying qualifications/experience of the service provider
  • Varying quality of materials/technology when delivering the service
• Issues to be aware of

  • Competitors adopt the same strategy, achieving lower costs
  • Product may be considered a lessor product to competitors
  • Technological developments can change consumer preferences - requires investment in new technology
  • Consumers preferences change - low-cost, low quality products vs environmentally sustainable products
  • Aggressive pricing from competitors - impact sales/profitability
  • Larger competitors may be able to afford substantial research and development - innovation
• Types of goods in different industries

  • Perishable - products that deteriorate over time due to their characteristics
  • Non-perishable - products that are safe for consumption for long periods of time before expiring
  • Intermediate - goods that can be used to produce the final product or the consumer product
• Interdependence


  When each key business function is committed to the same business goals and work in a coordinated effort to achieve them
• Having 'synergy is crucial'. This is, that the 'whole is greater than the sum of all the individual parts'
• Corporate social responsibility (CSR)

  Open and accountable business actions based on respect for people, community/society and the broader environment. Triple bottom line - financial profitability, social impact and the environmental impact of a business.
• Compliance areas


  • Labour law compliance
  • Environmental and public health compliance
  • Business licensing rules
  • Taxation
  • Trade practices and fair market dealings
  • Migrations and rules around using offshore skilled labour
  • Intellectual property
  • Financial and accounting regulations and corporations law
  • Human rights
• Outsourcing


  Different aspects of the business are conducted by outside parties (contracted out)
• Outsourcing types


  • Onshore - involves the use of domestic businesses as the outsourcing provider
  • Offshore - involves taking the activities to a provider in another country
• There are differences in laws and regulations between countries, it can be hard to be ethical in given business situations. International bodies set guidelines for businesses.
• The international labor organisation is the international body setting guidelines for rules and work including: safe practices and working conditions, rights for working women, maternity protection
• Environmental sustainability


  Businesses to evaluate full environmental effects of their operations
• Growing consumer expectation that products should be 'clean, green and safe', which may change the management practices in businesses
• Stakeholder expectations


  • Adopt greenhouse reduction measures
  • Encourage development of long-term sustainable strategies
• Socially responsible businesses


  Achieve two goals simultaneously: expanding the business and providing for the greater good of society
• Mitigate


  Reducing risk of loss from the occurrence of any undesirable events
• Operations processes


  A set of input resources used to transform something into outputs of goods and services. Operations processes are directly involved with the transformation of inputs - outputs
• Roles in the transformation process

  • Inputs into transformation processes
  • Actual process of transformation
  • Outputs of the transformation process
• Transformed resources


  • Materials
  • Information
  • Customers
• Transforming resources


  • Human resources
  • Facilities
• Transformation


  The conversion of inputs (resources) into outputs (goods and services)
• Transformation = value adding
• Transformation process differs between manufacturing and serving businesses
• Relevant operations processes


  • Influence of volume, variety, variation in demand and visibility
  • Sequencing (order) and scheduling (timing) through the use of a gantt chart and critical path analysis (CPA)
  • Technology - manufacturing and office technologies, task design (for labour), plant (office/factory) layout
  • Monitoring of processes, control and improvement of all operations processes
• Volume


  Refers to how much of a product is needed to be produced