AOS 3 - Operations Management

• Inputs: the resources used by a business to create their good / service

  
  

  The types of resources are Natural, Capital, and Labour
• Processes refer to the actions taken to transform inputs into outputs
• Outputs refer to the final good or service that a business provides to their customers
• A Service Business provides an intangible product to their customers

  e.g. hairdressers, mechanics, personal trainers, taxi drivers
• A Manufacturing Business provides a tangible product to their customer

  e.g. supermarkets, clothing stores, car dealers
• Technological Developments

  • Automated Production Lines
  • Robotics
  • Computer-Aided Design (CAD)
  • Computer-Aided Manufacturing (CAM)
  • Artificial Intelligence (AI)
  • Online Services
• Automated production lines involve use of technology such as robotics and machinery to create an output, with minimal human intervention
• Robotics are are programmable machines that are capable of performing specified tasks
• Computer-Aided Design refers to computer programs that facilitate creation and modification of product designs
• Computer-Aided Manufacturing involves the use of computer software to provide to programmed instructions to machinery
• AI involves using computerised systems to simulate human intelligence and mimic human behaviour
• Online Services are tools and features that businesses offer their customers via the internet. Common examples include online shopping or online chat help functions
• Materials Management Strategies

  • Forecasting
  • Master Production Schedule
  • Materials Requirement Planning
  • Just-In-Time
• Forecasting involves analysing data and past trends to determine the materials that will be needed to meet future production requirements.
• A master production schedule is a statement of what quantity a business intends to produce over a period of time, based on predicted customer demand
• Materials requirement planning is a computer-based inventory management system that stores data to assist with scheduling and ordering of materials needed for production
• Just-In-Time is a system designed to minimise level of storage (for inputs and the product), where supplies arrive as they are needed for production
• Quality Management focuses on strategies a business can use to ensure consistent and high standards of their products

  • Quality Control
  • Quality Assurance
  • Total Quality Management
• Quality Control involves performing regular checks at different stages of production to ensure product meets standards set by the business
• Quality Assurance involves getting an external organisation to audit the production processes of the operations system against predetermined standards
• Total Quality Management is a system based on the principle that every member of staff is committed to maintaining high standards of work in all aspects of operations
• Waste minimisation is a concept that aims to increase the sustainable use of resources in a business’ production process, mainly through a reduction in resources they dispose of

  • Reduce
  • Reuse
  • Recycle
• Reduce is a waste minimisation strategy that aims to decrease the amount of resources used and discarded of during production
• Reuse is a strategy that aims to make extended or alternative use of items that would otherwise be discarded
• Recycle is a strategy that involves disposing of materials in a sustainable manner so that they can be reprocessed for alternative use
• Lean Management is an ongoing management philosophy where the business seeks to reduce wastage in each area of the business while still providing quality and value to customers

  • Pull
  • One-Piece Flow
  • Takt
  • Zero Defects
• The pull principle states that a business should aim to only produce the required quantity of products as demanded by customers
• The one-piece flow principle state that a business should process one product at a time, as this will help reduce starts and stops in production and minimise wasted time
• The Takt principle refers to having a synchronised pace and rhythm of production, where a continuous flow is achieved
• The Zero Defects principle states that the business should establish a culture that strives for perfection to help prevent defects/errors in a product. This will reduce the level of wastage from faulty products
• CSR refers to a business going above minimum legal requirements in their consideration of the community and other stakeholders
• Global sourcing of inputs refers to acquiring raw materials and resources used in production from an overseas supplier
• Overseas manufacturing involves a business producing their item in a country outside of where their headquarters are located
• Global Outsourcing refers to hiring an overseas company to complete a task that is non-core (i.e. any activity that isn’t sourcing if inputs or manufacturing)