Operations Syllabus dot points PDF

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Comprehensive syllabus dot points for operations...

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HSC BUSINESS STUDIES TOPIC 1: OPERATIONS ROLE OF OPERATIONS MANAGEMENT -

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Operations is a key business function where by transformed and transforming inputs are used in the production process to be transformed into either a final or intermediate product. This process involves the transformation and value adding to these resources. o Applies to manufacturing and services sector Operations is an intrinsic aspect of business processes and is interdependent to all other business functions Operations- Inputs and outputs o Inputs  Transformed: Itself is changed, ie ( raw materials, information, customers feedback)  Transforming: Facilitates change ie, ( Facilities including, HR, capital machinery)

Strategic role of operations management - Strategic: Affecting all key business operations (BIG PICTURE) - As all aspects of a business incur cost but not all directly generate revenue, different parts of a business are divided into profit and cost centres o Profit centres: Aspects of the business that directly source income o Cost centres: Those that do not directly source income but incur cost o The operations function is a cost centre and thus a strategic aspect of management in operations is cost management - Cost leadership in the operations function o Involves operations managers aiming to have the lowest costs and be the most price competitive in the market while still being profitable. o Must balance cost and quality o Economies of scale – cost advantages that can be created due to an increase in scale of business operations - Product Differentiation

Involves distinguishing products from competitors in the market through different methods o Standardisation involves making products homogenous or identical Goods and services in different industries - Standardised goods: Those that are mass produced o Uniform in quality, meet a predetermined quality - Customised goods: Varied according to the demand of customers o Market focus rather than production process o Usually cost more due to increased effort in production process - Layout of operational processes depends on whether products are undifferentiated or not - Final goods and services o Perishable goods: goods with a short life span and are consumed quickly (foods)  High standards of quality  Quick distribution time  Appropriate packaging and appropriate production and distribution climate o Non- perishable goods: More durable goods that last longer - Intermediate goods o Goods that become inputs into further processing in another function o Final or intermediate goods depend on whether the product is purchased for consumption or retail - Services in different industries o Fast food industry standardises services o Accounting, dental, medical legal and other services are usually customized o Self service Interdependence with other key business functions - Interdependence: Mutual dependence that the key business functions have with one another - Must work together for the business to function effectively as a whole - Operations o Production - Marketing o Meeting the needs and wants of consumers through provision of products at prices that the market is prepared to pay - Finance o The function concerned with recording and summarising financial transactions and interactions into reports - Human Resources o Deal with the people the business employs and the issues arising from their employment o

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INFLUENCES

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Globalisation - Definition: The removal of barriers trade between nations

Involves an increased integration between economies and the transfer of resources including capital. Labour, intellectual capital, financial resources and technology - Provides an increased source of market opportunities but also increases competition - Globalisation and operations management o Large businesses are increasingly accommodating to the global market due to its increased market opportunity o Features businesses need to accommodate for to target global markets  Choice of location for manufacturing facilities  Product design  Management of quality  Logistics and inventory management process o Markets:  European  North American  Middle east and Africa  South American  North Asian  South Asian and Oceania o Supply chain management (SCM) and the global web  Supply chain: The range of suppliers a business has and the relationship with these suppliers  Must be predictable and reliable supply chain that is responsive to the change in demand by business  Integration of multiple suppliers for international businesses is sometimes called a global web  Depending on the proximity of the suppliers in the global web, businesses may opt to create the centre of operation processes near these suppliers Technology - Design, construction and/or application of innovative devices, methods and machinery upon processes - Technology can be seen not only as devices but also enabling processes and applications o Technology and operations management -

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Technologies can be applied to and integrated with processes in operations

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Quality expectations - Expectation of Quality - ‘The totality of features and characteristics of products that that bears its ability to satisfy stated or implied needs’ - In business, quality must be specific to how well designed, made and functional products are + overall degree of competence with which services are organised and delivered - Quality expectations and operations management o The expectations that people have of businesses determine the way that products are designed, created and delivered to customers. o Operations must follow particular procedures to meet the minimum

expected standard Cost-based competition - Derived by determining by the breakeven point and applying strategies to have a cost advantage over competitors - Cost based competition realises prices cannot keep increasing; thus reducing prices can be a more effective way to maximise profitability - Mass customisation enables cost based competition even when products are differentiated rather than standardised e.g (coke vanilla) o Turns into a standardised product (don't mention in essay) - Cost based competition and operations management o Cost based competition occurs when businesses employ cost leadership approaches to operations o Focus on keeping costs to a minimum while maintaining profit margins o Fixed costs: Costs that are not dependent on the level of operating activity in a business

Variable costs: Costs that vary in direct relationship to the levels operating activity of a business Government policies - Political decisions affect management of businesses - Taxation rates, required materials handling practices, OHS Legal Regulation - Compliance cost: Expenses associated with meeting legal requirements - Legal regulation and operations management o Work health and safety (WHS) o Training and development o Fair work + anti discrimination laws o Environmental protection o Public health Environmental stability - Sustainable use of renewable resources - Reduction in the use of non-renewable assets - Precautionary principle: Where environmental impacts are uncertain, businesses take actions least likely to cause the environment harm - Environmental sustainability and operations management o Environmental sustainability is an important part of business planning and practice due to business image and ethical reasons Corporate social responsibility (CSR) - Open and accountable business actions based on respect for the greater community - Involves with businesses going further than just complying with laws and regulations - Operations management must not only look to achieve profitability but also reflect the community concerns and social expectations - The difference between legal compliance and ethical responsibility o Legal requirements require businesses to follow them by law, Ethical responsibility expects this as well as going further to follow the ‘spirit’ of the law o As businesses are going further than compliance costs, expenses are increased even more showing that businesses value something more than profit maximisation o Legal compliance and business operations:  Labour law compliance (minimum wage, award wages, working hours, breaks etc)  Environmental and public health compliance (illegal dumping, waste disposal, hygiene)  Licencing requirements (training, zoning, disclosure restrictions)  Taxation (levies, duties, superannuation)  Trade practices and fair market dealings (fair trade)  Migration laws for skilled labour o

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Financial and accounting regulations  Fiduciary: Person in position of financial trust with respect to others money  Corporations law (Duties of those in responsible positions in corporations)  Human rights o Outsourcing  Outsourcing: Contracting out business functions involving the use of third part business specialists  To reduce the compliance costs of the above regulations, businesses will employ outsourcing to reduce costs  Onshore and offshore outsourcing  Used to lower compliance costs by employing in areas with less regulation than their own (raises ethical questions)  Sometimes breaches of compliance is blamed on the party contracted and not the contractor o Ethical Responsibility  Sometimes ethical decisions may be unclear and businesses may confer with interest groups or follow guidelines set by international bodies  ILO (International Labour Organization)  Raises matters of importance to workplaces and employee rights at annual meetings Environmental sustainability and social responsibility o Economic growth should not be pursued at the cost of polluting the environment o Growing consumer expectation for businesses to be environmentally friendly  Adopt greenhouse reduction methods  Encourage the development of long term sustainability strategies o Socially responsible business aims to: Expand the business as well as providing for the greater good of society 

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PROCESSES

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Inputs - Resources used in the production process - Common Direct Inputs o Labour  Human effort, mental and physical that is expended in the production process o Energy

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 Energy, in the form of electricity or fuels Raw materials  The basic component for manufactured goods Machinery and technology  Capital  Required for transforming raw inputs into final or intermediary goods  Capital-labour substation: The process over time of capital intensive production processes taking over labour ones. (automation)

Transformed resources (transformed inputs) o Inputs that are changed or converted in the operations process; transformed by the production process (materials, information, customers) o Materials  Raw materials  Intermediate goods: Goods manufactured to be used in further manufacturing or processing o Information  Knowledge gained from research, investigation which increases understanding  External info o Info that is from independent sources (Government reports, academic articles, comparative studies etc)  Internal info o Comes from within the business and includes financial reports o Key performance indicators (KPI’s)- lead times, inventory turnover rates, production data o Customers  Generally thought of as being relevant outputs not inputs

Customers become transformed resources when their choices shape inputs  Customer relationship management (CRM) programs refer to programs that involve maintaining good customer contact - Transforming resources (transforming inputs) o Inputs that carry out the transformation process o Enable the change and value adding to occur o Human resources  As labour is said to be the most important resource in a business, maintaining productive and efficient workers is an important task for HR and can determine the success of the transformation and value adding process  Attracting, retaining and motivating staff o Facilities  Plant (factory or office) and machinery used in the operations process  Major decisions include:  Whether facilities should be located in 1 or two large sites or multiple smaller ones  Zoning restrictions  Special conditions (energy, water)  Efficient plant design  Optimum layout Transformation process - Transformation processes and value adding o The additional cost incurred by the production process adds value on top of the initial costs of the products o As inputs are added and processed into final goods for consumption, value is added o In the services sector value is added through knowledge, skills and expertise o The expense leads to the creation of value (cost is often related to value) - The influence of volume, variety, variation in demand and visibility (customer contract) VVVV o Key aspect to operations processes is how much  How much to make  How much variation – what range of outputs  How much variation in demand will there be and how quickly can the operations processes respond to changes in demand  How much customer contact should there be and what role should it have on transformation processes o The influence of volume  Volume: how much of a product is made  Volume flexibility refers to how quickly the production process can adapt to increases and decreases in demand 

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 Essential to managing lead times (the time it takes for an order to be fulfilled from the moment it is made) o Influence of variety  The mix of products (or services) through the transformation process is called mix flexibility  Product range or variety of choice  The greater the variety, the more operations process needs to allow for variationw o The influence of variation in demand  Increase in demand requires increased inputs from suppliers, increased HR, increased energy us and increased use of capital and tech  Maybe be difficult to meet due to  Suppliers cannot supply quick enough  Labour shortage or shortage in skills  Capital shortages or failure  Energy and water requirements  Predicting demand  Businesses try to predict changes in demand so that operations processes can be adjusted accordingly (e.g Christmas, public holidays) o The influence of visibility (customer contact)  Customer feedback can directly affect transformation processes  E.g surveys, interviews, warranty claims, letters, online forums or word of mouth Sequencing and scheduling – Gantt charts, critical path and analysis o Sequencing and scheduling assist with organisation of the transformation process o Gantt charts  Plans the amount each task will take over a period of time schedule

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Force the manager to plan the steps needed to complete a task and specify the time required for each task

Critical path analysis (CPA)  Shows what tasks need to be done, how long they take and what order is necessary to complete those tasks  Critical path is the shortest length of time it takes to complete all tasks  Non-critical path is the path where some processes can be done simultaneously  Allows managers to see what order activities need to be done as well as what tasks can be done at the same time Technology, Task Design and process layout o Technology  Office technology  Increases workplace productivity, allowing more tasks to be completed in less time  Allows workers to work from a great distance from the office  Telecommute – work from home  Manufacturing technology  CAD (Computer-aided design), CAM (computer-aided manufacturing), CIM (Computer intergraded technologies) RIM (Rapid Manufacturing)  CAD is software that allows businesses to create product possibilities from a series of input parameters  Generates 3D designs  CAM is software that allow the manufacturing process to become computer controlled  Robotics: specialised form of technology capable of complex tasks  Allows transformation processes to be very high quality, consistently high standard, efficient and minimise waste  Robots are used in engineering and specialised research as well as assembly line work  Allow a degree of precision that human labour cannot as well as work in dangerous jobs that humans cannot o Task design  Classifying job activities in ways that make it easy for employees to successfully complete o

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Appropriate workers need to be used to best fit the task design: Task designJob descriptionPerson specificationRecruitment Selection  Skills audit: A formal process of identifying the present level of skilling in a business’s workforce and any skill shortfalls that need to be added through recruitment or upskilling Workplace layout: Process layout, product layout, fixed position layout  The layout of factors contributing the production process will depend on the type of manufacturing operations or services performed by the business  Process layout: Arrangement of machines such that the machines and equipment are grouped together by function they perform.  Process production: high variety, low volume production (each product has a different sequence of production)  Product layout: Equipment arranged to match sequence of production  Product production (mass production) Most common type of layout for this is assembly line  Fixed position layout: Where the production takes place in one geographical location due to the size/weight/bulk of the project  Project Production: Layout requirements for large scale production (infrastructure) 

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Office layout: Enable work to be performed efficiently  Usually revolves around workstations Monitoring, control and improvement o Monitoring  Process of measuring actual performance vs planned performance  Involves measuring all aspects of operations, from SCM and use of inputs through to transformation processes and outputs  Usually measures KPI’s (key performance indicators) o Control  Control occurs when KPI’s are assessed against 

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predetermined targets and corrective action is taken if required  Compares what is intended to happen vs what actually happens  Operations managers should have strict controls over operations and should take corrective actions if requirements are not met or if problems arise o Improvement  Systematic reduction of inefficiencies and wastage, poor work processes and elimination of bottlenecks.  Bottleneck: One aspect of the operation process that slows down the overall production speeds  Continuous improvement  Ongoing commitment to achieving perfection  Kaizen: Japanese saying meaning continuous improvement which is the motto for Toyota Outputs o The final good or service delivered or provided to the consumer o Previous distinction between service and manufacturing operations but in many cases businesses will carry out both.  Mazda Australia separates its vehicle manufacturing operations from its customer service operation o Customer service  Inputs, transformation processes and outputs are all aimed at meeting or exceeding customer expectations  This is customer service and refers to how well a business meets and exceeds the expectations of customers in all aspects of operations  Businesses that provide superior customer service can  Charge an average of 10% more for the same goods and services  Grow twice as fast as their competitors  Increase their market share and profits  Must go above and beyond – exceeding customer expectations o Warranties  A promise by a business that, given a period of time, they will rectify and flaws in a product that arise due to an issue with the transformation process  A good way to measure customer service is the amount of warranty claims – the more claims usually means the more flaws in the production process

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Performance objectives (KPI’s) - Quality o Quality of design  Consumer preference  Design determines the inputs and transformation process  Quality vs Cost o Quality of conformance  How well the product meets the standard of a prescribed design with certain specifications  Conformance (complian...