business U3AOS3

• Operations management

  Coordinating and organising the activities involved in producing goods or services that a business sells to customers
• When operations management is effective

  • Reduces time
  • Fewer resources
  • High quality
  • Sustainable/ethical
• Operations management

  Oversees the transformation of inputs into outputs aiming to maximise efficiency by lowering costs and increasing productivity
• Operations can influence the quality, cost and availability of a business' goods or services. As a result, it has a direct impact on them achieving their objectives
• Using technology can be a lot quicker than humans
• Operations system

  The transformation of inputs into a final output (this can be a good or service)
• Key elements of an operations system

  • Inputs
  • Processes
  • Outputs
• Inputs

  • Labour resources
  • Raw materials
  • Equipment and machinery
  • Time
  • Electricity
  • Information
• Categories of inputs

  • Raw materials
  • Capital equipment
  • Labour
  • Information
  • Time
  • Money
• Processes

  The actions performed by a business to transform inputs into outputs
• Examples of processes

  • Mixing
  • Designing
  • Baking
  • Computing
  • Assembling
  • Constructing
  • Washing
  • Cutting
• Outputs

  The final goods or services produced as a result of a business's operations system which are delivered or provided to customers
• Outputs should be of the desired quality and maximise the company's competitiveness
• Key elements of an operations system

  • Inputs - resources
  • Processes - transformation
  • Outputs - end result
• Processes


  • Manufacturing
  • Extracting
  • Assembly
  • Producing
  • Testing
  • Design
• Outputs

  • Cadbury chocolate
  • Loaves of bread
  • Efficient service - e.g. Telstra customer service
• Tangible goods

  • Can be physically touched or stored (e.g. food, furniture, cars, bikes, etc)
• Intangible services

  • Cannot be touched or stored (e.g. hospitality, legal, financial, research, etc)
• Differences between manufacturing and service businesses

  • Manufacturing business: Tangible products, Production and consumption not linked, Minimal customer contact, Mass production
  • Service business: Intangible products/services, May require customer presence, Labour intensive, High customer contact, Tailored to individual needs
• Services

  • Inputs: Land, raw resources, labour, entrepreneurial skills, capital, time, utilities, information

  Transformation: Medical treatments

  Final good: Treated patients
• Both services and manufacturing businesses aim to optimise their operations to produce high quality outputs at a low cost of production
• Both services and manufacturing businesses deal with suppliers during the process of managing operations to produce goods and services
• Both services and manufacturing businesses can utilise forms of technology in their operations systems
• Both services and manufacturing businesses aim to optimise efficiency and effectiveness in their operations
• Efficiency

  How productively a business uses its resources when producing a good or service
• Effectiveness

  The extent to which a business achieves its stated objectives
• Strategies to improve efficiency and effectiveness

  • Technological developments: automated production lines, robotics, computer-aided design, computer-aided manufacturing, artificial intelligence, online services
• Strengths of technological development

  • Increasing output, Enhancing quality, Reducing waste, Enhancing reputation
• Weaknesses of technological development

  • High cost, Training requirements, Maintenance issues, Job losses
• Automated production lines

  Machinery and equipment arranged in a sequence where the product is developed as it proceeds through each step
• Benefits of automated production lines


  • Efficiency: Speed, Consistency, Resource optimisation

  Effectiveness: Reduced errors, Meeting market demand
• Drawbacks of automated production lines

  • High initial cost, Maintenance issues, Potential for production suspension, Job losses
• Robotics

  Programmable machines capable of performing specified tasks
• Benefits of robotics

  • Efficiency: Increased productivity, Precision, Speed

  Effectiveness: Quality enhancement, Improved safety, Reduced costs
• Drawbacks of robotics

  • High initial cost, Maintenance issues, Potential for production suspension, Job losses
• Computer-aided design (CAD)

  Digital software that aids the creation, modification and optimisation of a design and the design process
• Benefits of CAD

  • Efficiency: Streamlined design process, Improved materials management, Reduced time and labour

  Effectiveness: Develop prototypes, Choose best alternatives
• Drawbacks of CAD

  • Potential design errors, Job losses, High initial and ongoing costs, Training requirements
• Computer-aided manufacturing (CAM)

  Software that controls and directs production processes by coordinating machinery and equipment through a computer
• Benefits of CAM

  • Efficiency: Reduced time and labour, Optimal use of resources

  Effectiveness: Consistent quality, Meet market demand