UNIT 3 AOS 3 - Operations management (Strategies to improve the efficiency…
UNIT 3 AOS 3 - Operations management
Relationship between operations management and business objectives
How operations management is carried out will directly affect the businesses quality of goods and services, influence product costs and quantity of goods. Good management is likely to lead to greater competitiveness, greater market share and higher profit and success
Key elements in the operations system
The actions performed on the inputs to transform them into the finished product, including baking, cutting, transporting, cleaning
The finished product.
Resources necessary to make the final product, including raw materials, machinery, internet, electricity, money, factories, workers, managers ect.
Tangible goods, need to be stored, consumption is not linked to the manufacturing
Intangible services, do not need to be stored anywhere, production and consumption occur simultaneously (haircut, doctors)
Strategies to improve the efficiency and effectiveness of operations
Computer aided manufacturing
Using computer software to control and manage manufacturing machinery. Software controls size of proaction including units, sizes ect.
Computer aided design
Using computers to designer as opposed to drafting by hand. Allows businesses to experiment with greater variation and with less time and effort required
Creating or improving the businesses website. Allows the business to sell products online as well as allowing more people to become aware of the business
Automated production lines
Mechanised production lines results in less human interference, increased speed of production and increased accuracy
Disadvantage - expensive to set up, if it breaks it will effect the whole business, staff jobs may be made redundant
Advantage - Once set up the costs are reduced for the business, staff gain new skills to operate machinery, less inputs required for outputs
Master production schedule
A document that describes what is to be produced, in what quantity, and when. Must be accurate.
Materials requirement planning
Must be done after a master production schedule. It is an itemised list of all materials involved in production, including times required by suppliers, the exact number of inputs and the amount of stock currently within the business
Just in time
An approach used to ensure the business is keeping their stock at minimum. Maximises profits.
A tool that allows the business to evaluate data from the past and present and make future predictions of sales and demand. Allows the business to match their levels of supply and increase their effectiveness in production
An approach that attempts to eliminate waste and improving quality. Businesses analyse each stage of production and remove any inefficiencies that do not add value to the product
Avoiding overproduction and stockpiling
The rate of production needed to meet customer demand
One piece flow
Eliminating waste time or idle time
The business strives for perfection
The use of an external third party audit that checks the businesses company against their own set standards. For example iso9000, third party is more reliable and is proactive. However, it can be costly for the business and time consuming.
Total quality management
An ongoing organisation-wide commitment that applies to all aspects of the business. Can help the business increase their competitiveness and product quality. However it may take time for employees to change their attitudes and their ways of thinking
The use of inspections at various points in the production process to check for problems and defects. Prevents poor quality products from reaching the customers. However, it is 'reactive' and does not fix the source of the problems
Making the best possible use of resources
Achieving stated goals and objectives
Corporate social responsibility considerations
Environmental sustainability of inputs
Inputs should be from a sustainable source where employees/suppliers are treated fairly with fair working conditions
Waste generated from processes
Processes should not cause pollution, or waste produced should be recycled or given to the community
Management of outputs
Goods an services produced should benefit society and enhance our lives. They must be reliable, safe, and be environmentally packaged
Global sourcing of inputs
Purchasing and importing inputs from overseas. Businesses can access cheap labour, cheap inputs and inputs that cannot be found domestically.This can be cheaper for the business. However, it is difficult to monitor the quality of inputs and the time for the inputs to be deceived can be lengthy with can affect the business.
Refers to the production of goods or services overseas. Advantages and disadvantages similar to global outsourcing
Refers to a business moving the business or aspects of the business overseas. Can result in lower costs and more products being produced. However, the business can gain a bad image if people see them as taking away jobs from Australians, and is harder for the business to monitor quality of products overseas
Supply chain management
The supply chain is the range of suppliers from which the business purchases inputs and materials.It is good to develop a good relationship with suppliers so they are more likely to be willing to help if something goes wrong. The business should also ensure workers are being paid and treated fairly.