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CHAPTER 7 Operations Management for Business Start-ups - Coggle Diagram
CHAPTER 7
Operations Management for Business Start-ups
Synopsis
Basic knowledge to start business or small business. Managing inputs, processes and outputs that involve planning of product design, process design, location choice and layout design, production capacity planning and management of production schedule and cost,
inventory and quality management
Objectives
introduce operations management
discuss product design, process design, location choice and layout design, production capacity planning and management of production schedule and cost, inventory and quality management
Learning outcomes
Discuss basic operations management, especially for small business start-ups
Discuss and apply knowledge on operations management to their entrepreneurial practicum project
Topics
Location Planning
Good location for good result in
higher sales
lower operating cost
higher profit
Choice of location
Close proximity to customers
High number of potential customers and high population growth
Close proximity to raw materials
Availability of good infrastructures and facilities
Availability of manpower
Good visibility and easier accessibility
Low crime rate and availability of facilities and services such as hospitals, schools, banks and sport facilities
Process Design, Sourcing of Equipment and Layout Planning
Produced in small quantity and fulfill customers needed
Tools and machines used are designed to perform specific isolated tasks
Choose suitable machines in terms of quality, price, quantity, after-sales service and maintenance
Layout planning and positioning of the machines must be designed to achieve
efficient process flow
safe operation
effective and convenient
process control
Production Planning and Capacity Management
Design adequate production facilities to fulfil sales forecast
Made on the type, quality and number of machines or equipment and manpower required for the plan production
Choose to use a fully automatic, semi-automatic or manual production system
Inventory Management
Manage inventory effectively
Adequate inventory helps entrepreneurs to meet market demand
Inadequate inventory will cause discruption to operations and incur missed sales opportunities
Too much inventory means high inventory costs and reduce business profit
All capital must managed effectively and efficiently
Business has
too much inventory will increase holding or storage
too little inventory may cause stock shortage and affect customer service
Determine optimum inventory level that is suitable for the business
General rule of thumb
Fast-moving items should be adequate stocked
Slow-moving items should be few but adequate
Quality Management
Definition
How close a product or service conforms to standards and specifications
Benefits
Remain competitive
Retain market share
Acquire profitability
Achieve customer satisfaction and customer loyalty
Produce high quality products/services
Reduce operational costs (reduced quality problems, scraps, yield loss, wastages)
Cost of Non-quality
very high
External costs involve poor reputation, loss of repeat customers, and rejected or returned product costs
Internal costs involve wasted cost on material and labour, rework costs and low morale among workers
Eliminate defects and seek the causes of these defects
defective methods
materials
manpower
equipment
management procedures and systems
layout and work place
Identify quality defects and causes before working out a suitable solution
Operational Costs and Product Costing
minimize the cost per unit of production to sold at a competitive price
Direct materials and labour include the money spent on materials and labour directly used
Overhead costs include other indirect costs such as wages for administrative, marketing and finance staff; rental, utility, transportation, maintenance, depreciation of assets (equipment) and interest
Introduction
Can be defined as the management of resources (inputs), organizing and designing the transformation process (production processes) to produce products and services (outputs) to achieve objectives of cost, quality, quantity, time and safety
Summary
basic operations to start a new business - choose locations, planning and cost per unit -
choose locations, planning and cost per unit -
meet the operational objectives of quality, quantity, delivery time, cost and safety