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
