AOS3 Operations management

• Operations management

  involves coordinating and organizing the activities involved in producing the goods or services that a business sells to customers.
• The relationship between operations management and business objectives 

  Operations managers can contribute to the achievement of business objectives by improving levels of efficiency and effectiveness in a business’s production process. Additionally, they are in charge of implementing strategies that optimize operations, improve business performance, and achieve business objectives.
• Inputs

  Inputs are the recourses used to create goods and services. The goods and services are produced by combining inputs. Inputs are classified as:

  • Raw materials (minerals, fruit, veg)
  • Utilities (water, gas, electricity)
  • Labour
• Processes (transformation)

  Are the actions performed by a business to transform inputs into outputs. These are all the activities used to transform inputs into the final output.

  • mixing
  • designing
  • baking
  • computing
  • cutting
• Outputs

  Output are the finished goods and services which have been produced by the operations system, that are delivered or provided to customers.
• Manufacturing businesses

  Use resources and raw materials to produce a finished physical good.

  • Tangalle good
• Service Business:

  Provide intangible products, usually with the use of specialized expertise.

  • High level of labor intensive (High labor in production process)
  • Intangible products
• Automated production lines (Technological Strategies)

  involve machinery and equipment that are arranged in a sequence and the product is developed as it proceeds through each step.
• Robotics  (Technological Strategies)

  Are programmable machines that are capable of performing specified tasks.
• Computer-aided design (CAD) (Technological Strategies)

  Is digital design software that aids the creation, modification, and optimization of a design and the design process.
• Computer aided manufacturing techniques (Technological Strategies)

  involves the use of software that controls and directs production processes by coordinating machinery and equipment through a computer.
• Artificial intelligence (Technological Strategies)

  Involves computerised systems stimulating human intelligence and mimic human behavior.
• Efficiency

  Is how productively a business uses its resources when producing a good or service.
• Effectiveness 

  Is the extent to which a business achieves its stated objectives.
• Operations management

  involves coordinating and organizing the activities involved in producing the goods and services that a business sells to customers.
• Forecasting (Material strategies)

  Is a materials planning tool that predicts customer demand for an upcoming period using past data and market trends.
• A master production schedule (MPS)  (Material strategies)

  Is a plan that outlines what a business intends to produce, in specific quantities, within a set period of time.
• Materials requirement planning (MRP)  (Material strategies)

  Is a process that itemizes the types and quantities of materials required to meet production targets set out in the master production schedule.
• Just in Time (JIT)  (Material strategies)

  Is an inventory control approach that delivers the correct type and quantity of materials as soon as they are needed for production.
• Quality control (quality strategies)

  Involves inspecting a product at various stages of the production process, to ensure it meets designated standards, and discarding those that are unsatisfactory.
• Quality assurance (Quality strategies)

  Involves a business achieving a certified standard of quality in its production after an independent body assesses its operations system.
• Total Quality Management (TQM) (Quality Strategies)

  Is a holistic approach whereby all employees are committed to continuously improving the business’s operations system to enhance quality for customers.
• Reduce (waste minimization strategy)

  Is a waste minimization strategy that aims to decrease the amount of resources, labor, or time discarded during production.
• Reuse (Waste Minimization Strategy)

  Is a waste minimization strategy that aims to make use of items that would have otherwise been discarded.
• Recycle  (Waste minimization strategy)

  Is a waste minimization strategy that aims to transform items that would have otherwise been discarded.
• Lean Management

  Is the process of systematically reducing waste in all areas of business operations whilst simultaneously improving customer value.

  Four principles of:

  • Pull
  • One-piece flow
  • Takt
  • Zero defects
• Pull (Lean Management)

  Is a lean management strategy that involves customers determining the number of products a business should produce for sale.

  E.g. a bakery may only produce a birthday cake when it receives a customer order prior to its purchase.
• One-piece flow  (Lean Management)

  Is a lean management strategy that involves processing a product individually through a stage of production and passing it onto the next stage of production before processing the next product, continuing this process throughout all stages of production.

  E.g. bakery may have three stages in its production process; baking, icing, and decorating the cake.
• Takt  (Lean Management)

  Is a lean management strategy that involves synchronizing the steps of a business’s operations system to meet customer demand.
• Zero defects (Lean Management)

  Involves a business preventing errors from occurring in the operations system by ensuring there is an ongoing attitude of maintaining a high standard of quality for the final output.
• Corporate social responsibility (CSR)

  Is the ethical conduct of a business going above and beyond the legal obligations, and the consideration of social, economic, and environmental impacts when making business decisions.
• Global sourcing of inputs: (Global Consideration)

  Involves a business acquiring raw materials and resources from overseas suppliers.
• Overseas Manufacturing: (Global Consideration)

  Involves a business producing goods or services outside of the country where its headquarters are located.
• Global outsourcing: (Global Consideration)

  Involves transferring specific business activities to an external business in an overseas country.