1. Unit 5: Operations Management

2. Content 5.1 The role of operations management
Operations management and its relationship with other business functions
Operations management in organizations producing goods and/or services
Operations management strategies and practices for ecological, social (human resource) and economic sustainability
5.2 Production Methods
The following production methods: job/customized production, batch production, mass/flow/process production, cellular manufacturing
The most appropriate method of production for a given situation
5.3 Location
The reasons for a specific location of production
The following ways of reorganizing production, both nationally and internationally: outsourcing/subcontracting, offshoring, insourcing

3. 5.1 The role of operations management
Operations management and its relationship with other business functions
Operations management in organizations producing goods and/or services
Operations management strategies and practices for ecological, social (human resource) and economic sustainability

4. Operations Management
Operations refer to the fundamental activities of organizations: what they do and what they deliver i.e. how they produce the goods and services that meet consumers’ needs and wants
The art of managing production to get the best end product is called operations management
Operations can be described as the “how to” of business management
Therefore, it is an integral part of the organization and its decision-making process

5. Triple Bottom Line
When making operational decisions, economic, social, and ecological factors must be taken into account. That is the Triple Bottom Line.
Economic sustainability: the need to use available resources and raw materials to their best advantage
Social sustainability: the need to take human factors into account, both internally (workers) and externally (the local communities)
Ecological sustainability: the need to take ecological factors into account (especially about nature and ecosystems)

6. 5.2 Production Methods
The following production methods: job/customized production, batch production, mass/flow/process production
The most appropriate method of production for a given situation

7. Production Methods Production Method Type of Product Advantages
Disadvantages
Job (customized) production
Special/custom order
Example: custom made car with personalized accessories
High mark-up
Clients get what they want
Flexible production
Expensive to produce
Time consuming
Product might fail
Relies on skilled workers
Batch production
Groups of identical products
Example: car models with differing features for each model
Economies of scale
Allows more choice
Useful for product trials
May lose production time (for recalibration)
May need to hold large stocks of work (in case of unexpected orders)
Mass production
High volume of standardized products
Example: cars made to a standard design
Low maintenance needed
Labor costs are low
Quick response to unexpected orders
High set up costs
Costly breakdowns
System is inflexible
Demotivating work environment

8. 5.3 Location The reasons for a specific location of production
The following ways of reorganizing production, both nationally and internationally: outsourcing/subcontracting, offshoring, insourcing

9. Location of Production
Organizations must consider several factors to decide where to start up or where to move to
our office

10. Factors in locating a business
Costs
Include cost of land, labour and transport
Competition
A balance needs to be made between finding a gap in the market and setting up not too far from the direct competitors
Type of Land
Different types of land vary in suitability for the business in question for example ski resort needs to be in a place where it snows
Markets
Set up close to their customers, if a physical store
Familiarity with the area
Owners should be familiar with the area
Labour Pool
Type of workers available in the location should be suitable to business operations
Infrastructure
Existing networks for people and products (i.e. roads, available power and water, housing, etc.)
Suppliers
Availability of a range of good, local suppliers
Government
Includes both laws and taxes

11. Offshoring is outsourcing outside the home country
The practice of employing another business (as a third party) to complete part of the work
Offshoring is outsourcing outside the home country

12. Reshoring is bringing back business functions to the home country
In-sourcing
The practice of performing outside activities internally within the company
Reshoring is bringing back business functions to the home country