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SECTION 4: DECISION MAKING TO IMPROVE OPERATIONAL PERFORMANCE - Coggle…
SECTION 4: DECISION MAKING TO IMPROVE OPERATIONAL PERFORMANCE
OPERATIONS OBJECTIVES
unit costs
reducing costs
greater capacity utilisation
improved productivity
better supplier terms
quality
better products
greater reliability
lower wastage
lower returns
fewer complaints
flexibility and speed
enhanced reputation
enhanced sales
mass customisation
the production of consumer tailored goods or services to meet customers diverse and changing needs
reliability/ dependability
reliable
consistent quality
environmental
minimising packaging
minimising waste
sustainability
pollution control
external influences
political or legal influences
e.g. health and safety legislations
economic influences
the economic cycle is the natural fluctuation of the economy between periods of expansion and contraction
global production
technological influences
computer aided design CAD and computer aided manufacture CAM has resulted in speedier innovation and production and better quality
consumers are more aware and demanding of price, quality and customer service
competitive influences
competition now coming from home and overseas
internal influences
finance
the availability of capital
marketing
likely determines what has to be produced and the quantities
human resources
the skills of the workforce determine both what can be produced and its quality
OPERATIONS DECISIONS
efficiency and labour productivity
an increase in efficiency and labour productivity is likely to lead to a reduction in the unit costs and the business can be more cost competitive
investment in technology
improvements in training and motivation
job redesign
reduction in the labour force
difficulties
cost
quality may drop
resistance of employees
quality
importance of quality
provides a USP and gives consumers a reason to buy the product
allows a business to charge a higher price, increasing profit margins
enable a business to create more sales
enhance reputation and brand loyalty
methods of improving quality
quality assurance
a system for ensuring the desired level of quality in the development production and delivery of products or services
total quality management
there is a culture of quality throughout the organisation
a focus on customer needs and contimuous improvement
employee involvement and empowerment and managing supplies
kaizen
culture of small continuous improvements by the employees
drawbacks
the business has to bear the cost
employees can be resistant to change
consequences
the cost of scrapping or reworking products
the costs of resulting damage to the business reputation
inventory and supply chain
just in time management
receiving goods only as they are needed for production
benefits
reduced waste in terms of damaged stock
reduced space and staff due to less warehousing
greater flexibility in terms of responsiveness to changes in taste or fashion
improved motivation due to greater involvement of the workforce in the process
lower costs
drawbacks
risks running out of stock
no opportunities to cut costs buy bulk purchasing discounts
dependant on the relationship between supplier and the company
inventory
the stock a business holds in the form of raw materials, components, work in progress and finished goods
supply chain
the process of getting a good to a consumer
the supply of materials to the manufacturer.
the manufacturing process
the distribution of the finished goods to the consumer
managing supply
flexible workforce
mutli skilled workforce
zero-hour contract
increase capacity
product to order
outsourcing
influences on the amount of inventory held
nature of the product
nature of production
nature of demand
opportunity cost
influences on the choice of suppliers
dependability
flexibility
quality
price and payment terms
ethics
capacity
it is important for operations to run at an optimal level of capacity
as close to 100% while leaving sufficient spare capacity to cope with new orders and be able to make maintainance
optimal mix of resources
land
labour
capital
enterprise
capital intensive
high level of capital equipment used and a lower emphasis on labour
labour intensive
greater emphasis on labour and less on capital equipment
utilising capacity efficiently
increase sales
reduce capacity
alternative uses
outsourcing
investment
reducing demand
technology
types of technology
more advanced computer systems
the internet to promote and sell and communicate
CAM and CAD
benefits
reduces unit costs of production
offers the opportunity to charge a premium price until competition catches up
consistent standard
may enables employees to work more productively
may allow access to new markets e.g. selling worldwide
can reduce waste
drawbacks
can drain an organisations capital
requires extensive training and possibly recruitment of new employees both of which are costly
may be met with opposition especially if jobs are threatened
outsourcing
the subcontracting of non-core activities of an organisation in order to free up cash, time, personnel and facilities thereby concentrating on other areas in which it has a competitive advantage
benefits
enables quicker response to demand
greater dependability for customers
lower cost
drawbacks
quality may suffer
reliability is not guaranteed
OPERATIONS THEORIES
quality assurance
a system for ensuring the desired level of quality in the development production and delivery of products or services
total quality management
quality of supplies and components is constantly monitored
workers at each succesive stage of the production are effectively 'customers' of the previous production stage. they expect work in progress to be high quality and reject any sub-quality products
by checking throughout all processes customer satisfaction is guaranteed
the aim is zero defects
inventory control chart
highlights issues relating to inventory management such as the re-order level, re-order quantity, usage rates and lead time
buffer level of inventory
the minimum amount of inventory held
reorder level
the level of inventory at which a new order is placed
lead time
the time between an order being made and its arrival to a business
maximum stock level
the highest amount of inventory a business is able to hold
reorder quantity
the amount ordered
OPERATIONS CALCULATIONS
capacity utilisation
the actual production of a business in a given time period as a percentage of the maximum capacity
actual output in time period / maximum possible output per period x 100
unit costs
the cost of producing one unit of output
total costs/ units of output
labour productivity
the efficiency of individual workers in a given time period
output per time period / number of employees
capacity
total or maximum amount a business can produce in a given time period when working flat out
