© Cambridge University Press 2012 CHAPTER ONE ROLE OF OPERATIONS MANAGEMENT Topic 1 Operations

© Cambridge University Press 2012 Syllabus Agenda Role Of Operations Management –strategic role of operations management – cost leadership, good/service differentiation –goods and/or services in different industries –interdependence with other key business functions

© Cambridge University Press 2012 The creation of goods and the provision of services by businesses The transformation of inputs into outputs or products to be sold. This involves: planning activities purchasing inputs managing inventory selecting and implementing manufacturing processes developing strategies to gain a sustainable competitive advantage. Role of Operations management

© Cambridge University Press 2012 Involves gaining a long term competitive advantage over its competitors, by local and overseas. May also use either a cost leadership or product differentiation strategy. Strategic role of Operations

© Cambridge University Press 2012 Strategic operations decisions focus on: Products to be created How to produce products Capacity or size of operations Organisation of inputs and equipment in operations Location of operations Employees used in operations Quality. Strategic role of Operations (cont.)

© Cambridge University Press 2012 A strategy where a business aims to obtain an advantage over its competitors by being the lowest cost manufacturer within its industry. Cost leadership Operations strategy

© Cambridge University Press 2012 Activity Time Complete the following activity sheets: –Activity 1.1 True FalseActivity 1.1 True False –Activity 1.2 Cloze passageActivity 1.2 Cloze passage –Activity 1.3 Match the definitionsActivity 1.3 Match the definitions

© Cambridge University Press 2012 Creating a low cost basis may be achieved by: Using less expensive inputs Maximising efficiency by minimising waste and saving time Maximising productivity producing more outputs from less inputs Using technology Producing faster Having lower quality outputs Increasing size of operations to reduce the average cost of making each item. Cost leadership Operations strategy (cont.)

© Cambridge University Press 2012 Video: How Its made- chocolate Watch the following video and then answer the following questions :

© Cambridge University Press 2012 How its made - Chocolate - Questions What could they use as less expensive inputs in the chocolate process? What is an example of maximising efficiency and minimising waste and saving time in this video? Are there any ways you can think of that they may have used to maximise productivity producing more outputs from less inputs? Name 2 ways that they could use technology to create a customised output? What did they use to produce a faster product in the video? When would chocolate manufacturers want to have a lower quality output? Would increasing the size of operations reduce the average cost of making each item? Why/Why not?

© Cambridge University Press 2012 Aims to obtain an advantage over its competitors by having outputs that are different to its competitors, unique or leading edge technology. Achieved through having: better quality outputs quicker supply of outputs custom designed outputs and/or more varieties to suit different needs more features, applications and versatility new technology incorporated. Good/Service Differentiation Operations strategy

© Cambridge University Press 2012 Goods outputs physical, tangible can be reused more capital intensive (machinery) can be stored hard to modify once manufactured. Goods and services in different industries

© Cambridge University Press 2012 Services intangible can only be used by one customer once more labour intensive more interaction with customers easier to change and customise. Goods and services in different industries (cont.)

© Cambridge University Press 2012 Mining industry Retailing Education Banking & Finance Construction Tourism Goods and services in different industries (cont.)

© Cambridge University Press 2012 Specialisation – where the business is separated into different functions each of which is highly skilled at its specific task or role. Interdependence – where the different parts of a business must rely on each other to perform their task or role. Interdependence of operations with the other key business functions

© Cambridge University Press 2012 As a result of specialisation, there will be interdependence between the key business functions and a constant flow of information between Operations, Marketing, Finance and Human resources. Interdependence of operations with the other key business functions (cont.)

© Cambridge University Press 2012 Creating Connections Activity OperationsMarketing Finance Human Resources