Business - Role of operations

• Operations


  Managing the processes that transform and add value to inputs to create outputs of goods and services
• Role of operations management

  • Meet customer needs
  • Strategic role focusing on decisions for achieving long-term goals
  • Improve productivity
  • Improve efficiency
  • Improve quality of outputs
  • Contribute to the strategic direction of strategic plan of the business
  • Maintain good quality
• Cost leadership


  Aiming to have the lowest costs or to be the most price-competitive in the market, gained by offering greater value by means of lower prices, greater quality or by providing greater benefits and service at no extra cost
• Characteristics of cost leadership

  • High degree of standardisation
  • Economies of scale in production and distribution
  • Access to cheaper raw materials
  • Exclusive access to a large source of low cost inputs
  • Developing an efficient scale of operations and economies of scale
  • Using up-to-date technology in production
  • Controlling production and research costs
• Good/service differentiation


  Differing products from competitors, achieved through altering quality, faster delivery, customisation, more features and applications on the physical appearance, improving the service
• Types of goods


  • Standardised (mass produced, uniform in quality, produced with a production focus)
  • Customised (varied according to the needs of the customer, produced with a market focus)
  • Can be reused
  • Hard to modify once manufactured
  • Perishable or non-perishable
  • Tangible product that requires factory/machinery and space
  • Less labour intensive than services