Presentation on theme: "Area of Study 3: The Operations Management Function"— Presentation transcript:
1 Area of Study 3: The Operations Management Function Chapter 6: Operations Management function
2 Operations Management Task of managing the process that transforms resources into finished goods and servicesManaging resources to achieve efficient output of goods and servicesNot necessarily just pure production, decrease in Australian on importance of manufacturing, more focus on tertiary businesses so operations management allows for analysis of all businesses, whether primary, secondary or tertiary.
3 Operations and business objectives Level of PlanningDescription of tasks undertakenStrategic Planning-what products to make or services to provide-process and layout-facilities-locationTactical planning-material resourcing-labour resourcing-layout and process design-sourcing technology-quality managementOperational planning-scheduling – what to process and when-sequencing – order of process-loading – amount of work placed onto resources-rostering – who does what and whenAn organisation that effectively manages its production of goods and/or services through wise implementation of operations management strategies will use resources efficiently and keep customers satisfied.
4 Role of Operations Manager Ensuring that the operations systems meet objectives of the organisation as a wholeMaking strategic decisions relating to planning and designing an operating systemInventory managementManufacturingQualityMaintenance/engineering2. Eg design and layout of the factory or workplace, product, process, capacity, location, human resources, quality management ie strategic planningInventory management – determining the levels of stock to be ordered and sorted to ensure customer service requirements are fulfilledManufacturing – determining the production rate required to meet budgets or forecasts, managing direct labour costs, controlling cost of wastage, defects and reworkQuality – determining required standards, documentation of quality procedures, standards and codes of practiceMaintenance/engineering – ensuring equipment is reliable and regularly maintained, controlling maintenance costs and keeping up-to-date and accurate documentation of maintenance records
5 Operations systemSeries of procedures and processes an organisation take in order to create its outputs of finished goods and services through the transformation of inputs.-Production process: process of transforming resource inputs into finished goods and servicesWhile both results from the production process it is important to understand the difference between goods and servicesGoods are: -tangible -production and consumption occur separately-can be stored as inventory-can be standardised/consistent quality-minimal customer contact (eg manufacturer wil deal with wholesaler/distributor, not generally final consumer)-producedServices are: -intangible-production and consumption often occurs concurrently/simultaneously. Eg Patient goes to see a doctor who performs the service ie provides medical treatment at the time of consultation-difficult to store however record of service is maintained e.g. medical history, legal advice on file-Often specifically provided/tailored to meet individual client/customer requirements eg tax advice quality is more difficult to measure-Higher degree of customer contact established-performed
6 Key Elements of Operations System - INPUTS Inputs – resources necessary to produce the productRaw materials and componentsHuman ResourcesTechnologyCapital, plant and equipmentInformation and knowledgeTimes-Raw materials – unprocessed inputs sourced from primary producers. Compontents – processed parts, usually purchased from another producer-Human Resources – labour is human effort expended in a production process. Human resources are employed by organsations to oversee and enact the operations processes that create the output-technology involves computerisation and new developments such as robotics and e-commerce that could potentially improve the efficiency and/or effectiveness of an operations process-capital: any human made object, tool or machine that assists in the production process. Cash is often classified as capital as it can be readily converted into necessary capital items. Plant refers to buildings and non-moveable capital items. Equipment refers to machinery and other tools such as vehicles, computers, furniture and mobile phones-specialised knowledge required in order to enact the production/operations system and to produce the specified goods and services. Such as knowledge of computers, specialised machinery, knowledge of an experience teacher. This category on input is often overlooked y management. Often it is only when an experienced employee leaves an organisation that their experience and specialised knowledge is a major contributor to an operations system’s effectiveness and efficiency. Knowledge can also be obtained from a source external to the organisation, eg statistics from ABS-Time: non-renewable resource which if wasted will add to production costs
7 Key Elements of Operations System - PROCESSING Transformation of inputs into outputsPlans the process then organises its implementationProcess will vary according to:types of goods and services producedSize of the organisationNumber, quality and availability of resourcesWhile manufacturing organisation have more clearly identifiable production systems, service providers nonetheless still have inputs, and a transofrmation process which results in a service output.The transformation stage for services is often not as easy to identify. The transformation stage is important as it is where value can be added to the inputs and productivity gains made due to efficiency in the processes and procedures undertaken.Activity 6.1 questions 1-3Homework: 6.2
8 Key Elements of Operations System - OUTPUTS Final product, the results of the operations processOutputs are goods or servicesGood involves an object changing hands, service involves purchase of labourManagement should ensure output type is responsive to needs of the market4. Must be what the market wants to buy or the service they require organisation needs to seek feedback on the efficiency of their operations and effectiveness in achieving their objectives. As an organisation does not operate in isolation environmental factors must be taken into consideration.6 Groups – comes up with the inputs, processes and outputs for a type of organisation:-travel agency-bus company-clothing manufacturer-large bakery-newspaper company-school
9 How operations management relates to business objectives and strategy An organisation in its desire to increase its level of business competitiveness will require the operations management functional area to establish objectives such as:Increasing productivityImproving quality of processes and outputAdopting a sustainable approach to its operationsThese features can help enhance the competitiveness of the business:Optimal levels of operational efficiencyHigh standards of qualityEthical and socially responsible considerationsBeing able to measure level of achievement with objectivesOptimal levels of operation efficiency (reliable supply chain, minimal wastage, appropriate facilities design and layout, use of technology)High standards of quality built into processesEthical and socially responsible considerations must be taken into accountMust be measureable against the level of achievement of organisational objectives and mission
10 The productivity objective Productivity: level of output obtained from a level of inputOutput (O) (units of production)Productivity (P) = Inputs (I) (units of raw materials, capital, labour)Examples of productivity measures:Units of production produced per employeeCrop tonnage per hectare plantedNumber of client attended to per hour or per unit of wage costNumber of units produced per unit of moneyProductivity and quality improvements are key to achieving international competitivenessBusiness will attempt to gain competitive advantage based on one or both of these things
11 Factors determining organisational productivity Technology levelsResearch and developmentEquipment and facilitiesTasks and processesLayout of facilitiesCommunications processesWorkplace safety
12 Evaluation of operations management Key Performance Indicators appropriate to determining if operations management system is working well:EfficiencyLevel of wasteProductivityCustomer satisfaction (measured by repeat orders or number of returned products.Profit
13 Activities Activity 6.3 Case Study p142-143 Chapter Summary Questions Examination Preparation Chapter 6 p146