Year 12 Business Studies OPERATIONS REVIEW Role of Operations Management Operations is the key business function concerned with the transformation of inputs into outputs What is the role of the operations manager? Planning production Organising inputs Motivating employees Monitoring and controlling outputs How does effective operations management add to the business? Increasing productivity Reducing costs and improving quality To achieve strategic competitive advantage through lower costs and differentiated goods. Role of Operations Management What is a cost leadership strategy? A business aims to be the lowest cost manufacturer What is a differentiated product? One that has unique features and commands a higher price There is significant interdependence between the key business functions and a constant flow of information between them. In a customer-focused business, operations must produce a product that satisfies the needs and desires of the target market. Influences What is a globalisation? Integration and interdependence through trade, technology, deregulation and global businesses of the economies of different countries, creating a global economy How does globalisation influence business operations? Different currencies Trade agreements Global consumers Technology Different cultures Influences What do legal regulations aim to ensure? Business operations are safe Negative impact on the environment is minimised Product quality and safety standards are met What are business ethics? The rules and principles a business follows to be a good corporate citizen Socially responsible business decisions include promoting human rights, not engaging in corruption, being consultative and improving living standards Businesses are increasingly being held accountable. Operations Processes Inputs are the materials, people and facilities used to make goods or provide services plus time and finance Transformed resources are the materials, information and customers that are changed by the operations process What are transformation processes? Activities that add value to the inputs Businesses that produce in high volumes, low variety and experience little variation in demand will use a high level of capital equipment, technology and materials Low-volume operations will need to have a highly flexible operations process using more skilled labour. Operations Processes What does visibility of operations refer to? How ‘open’ the operations process is to customers More visible the operations, the more customer focused What are scheduling and sequencing tools used for? To identify all steps in the operations process and organise them into the most efficient order to complete (eg. Gantt charts and critical path analysis) Process technology is the improvements in the machines, equipment and devices used to transform inputs into outputs Monitoring, control and improvement to operations are essential if the business is to achieve its performance objectives. Operations Strategy What sort of effect does effective and efficient operations management have? Reduces costs Increases revenue Improves profit What are operations strategies? Objectives, plans and policies used to give the business a competitive advantage and how this advantage will be sustained. Performance objectives for operations strategies are quality, high speed, durability, flexibility in production, low costs and opportunity for customisation. Operations Strategy What is process innovation? The development of the operations function itself to bring benefits to the business What are the aims of supply chain management? Reduce inventory costs Reduce waste Enable faster delivery More satisfied customers What are the three stages of quality management? 1. 2. 3. Quality controls are established Establishment of procedures that will prevent problems or errors Improving quality through TQM. Operations Strategy Overcoming resistance to change in operations requires strategies and management skills to emphasise the long-term contribution to lower costs and better quality. What are the global factors that can influence business operations? Opportunity to source inputs from cheaper sources overseas Opportunity to expand and achieve economies of scale Development of new products for an international market.