What is the relationship between operations management and business objectives
Most business’ exist to generate a profit, which goes to the owners or is distributed to shareholders.
A business that effectively manages its production of goods and/or services productively and efficiently, the ratio of outputs should exceed the cost of inputs. If achieved, this will enable a business to deliver lower prices, subsequently gaining a competitive advantage over its competitors, and thus increasing profits.
Define Operations Management
Operations management is the coordination of inputs, processes and outputs within an organisation. It is concerned with converting materials and labor into goods and services as efficiently and effectively as possible to maximize the profit of an organisation
Define productivity in relation to operations management
Productivity is the ratio of output produced compared to the cost of inputs requires.
Define Business competitiveness
Business competitiveness is the ability for one company to out perform its rivals in the industry. If successful, this is known as having a competitive advantage.
What are factors which affect productivity
- technology
- equipment
- Training
- worker motivation
How can a business increase productivity
To improve productivity, the operations manager must ensure the most efficient use of the organisations inputs. - decrease the cost of materials
- decrease the amount of wastage in the system
- decrease number of errors made
- decrease the time it takes to provide the services
- decrease the cost of labour
what are key elements to the operations system
Inputs
Processes
Outputs
What are inputs
Inputs are the resources that go into producing the good and/or service.
What are examples of inputs
- raw materials
- component parts
- facilities
- machinery
- time
What are processes
The actual methods and procedures that transform the inputs into finished outputs.
What are examples of processes
- melting
- mixing
- blending
- packaging
- checking
Define outputs
Outputs are the final product presented to the customer either as a good or a service. This output can either be to the final end customer or to another business who may sell it.
What are the 7 characteristics of operations in a manufacturing business
Output is a good Output is tangible Production and consumption are separate Can be easily stored Can be mass produced and standardised Minimal customer contact Mainly capital intensive production
What are the 7 characteristics of operations in a service business
Output is a service
Output is Intangible
Production and consumption occur at the same time
Difficult to store
Often customised to fit the customers needs
High degree of customer contact
Mainly labour intensive production
What are similarities between the operations of a service and manufacturing business
Use techonology Aim to make a profit Deal with customers Deal with supplier Aim to produce quality output Aim to reduce cost Aim to reduce waste
Define CSR
CSR is the continued commitment by a business to contribute to economic development while taking into account an approach that is both ethical and socially responsible. It expresses a concern for how a business treats the environment, society and workers beyond what is required by law.
How does CSR relate to operations
While the goal of the operations function is to produce an good and/or service in the most effective and efficient way, many business’ also aim to achieve this by ensuring that its production has a positive social and environmental impact. It is important the operations manager understands the CSR objectives of a business so they can align strategies to help achieve these objectives. For example, if the business has an objective to mimosa its impact on the environment
How can a business apply CSR to inputs
- ensure suppliers are behaving in a socially responsible manner
- Supplies which are environmentally sustainable
- workers conditions are satisfactory
- renewable energy
- reduce carbon footprint
- simplify supply chains
- use local suppliers
- local employees
How can a business apply CSR to processes
- minimise waste during production
- recycling resources
- Treating staff with respect during procedures
- Staff are not strained by duties
- implementing quality systems
How can a business apply CSR to outputs
- Recycle any end products not sold
- minimise packaging
- good value for money
- ethical dealings with customers in terms of returns/defects/replacements
- honest marketing
What are global considerations in operations
- global sourcing of inputs
- overseas manufacture
- global outsourcing
What is global sourcing of inputs
Utilising globalisation to obtain inputs such as raw materials, machinery, and labour from overseas in an aim to reduce costs.
Why might a business globally source their raw materials from overseas
Raw materials may be cheaper than if they were to be sourced locally. In addition, if the quality is comparable to local materials then it is logical to source from overseas suppliers. This cost savings can help improve productivity and competitiveness for local business’ by lowering prices, and increase profitability.
Why might a business globally source their machinery from overseas
- Although it may be costly to obtain equipment and ship it to australia, often it may be ‘state of the art’ that can greatly improve quality and productivity
