Operations and Strategic Roles

Operations

• The term refers to business processes involving transformation or production.
• This includes transforming resources and raw materials into outputs or finished goods.
• In the service sector, operations refers to supplying or carrying out a service like a gardener or doctor.
• Operations involves value adding, which enhances inputs using skills, knowledge, and customer preferences.

Roles of Operations

• Operation management has a strategic role through cost leadership plus goods & service differentiation
• Other roles include managing goods and services across different industries
• Operations is interdependent with key business functions

Strategic Roles

• Effective operations should minimize costs.
• Productivity as well as quality should be improved
• Products need to be differentiated

Competitive Advantage

• Waste Minimization: Reducing production costs and minimizing harmful waste using resources effectively
• Fair Value for Labour: Promoting workers' rights by treating employees appropriately, letting them join unions
• Ethical Sourcing: Acquiring production materials from ethical suppliers, considering legal & labor standards, and environmental concerns
• Cost Minimization: Maximizing customer demand with high levels of profit through minimizing production costs
• Sustainability: Reducing negative environmental impacts of production and promoting reusable resources
• Changes should be reflected: Businesses being unique in practice, as well as being innovative in products, is key

Cost Leadership

• Cost leadership is achieving the lowest costs to be price-competitive.
• This enables businesses to function in an economy of scale, where operations scale increases cost effectiveness
• Supplier Rationalism: Loyalty results in discounts from fewer suppliers
• Capital-Labour Substitution: Increasing productivity and decreasing unit costs by replacing workers with machines

Competitor Differentiation - Goods

• "Same" product varying in features like basic and complex options
• Varying quality, like cheaper models
• Expanding features, such as comfort options

Competitor Differentiation - Services

• Varying amount of time spent, e.g., same day dry cleaning versus next day
• The level of expertise is different in specialized services e.g., Telstra salesperson versus technician
• The qualifications and experience of the service provider are important e.g., a haircut from a salon
• The quality of materials or technology is important within service delivery e.g., best hospital equipment

Products in Different Industries - Goods

• Operations decides goods that are either standardized (mass) or customized (catered)
• Goods are either perishable or non-perishable, where perishable means high quality and long lasting or short usage span
• Intermediate goods are able to be processed and value is added multiple times

Products in Different Industries - Services

• Services are enabled to be standardized, as well as customized
• Standardized service: theme parks are generic

Customised Services

• An example includes self-service checkouts, enabling customers to purchase products in their own way of personalization of groceries

Interdependence

• Working in a coordinated manner enables all key functions to have a mutual reliance on each other, helping achievement and sustainability
• Operations involves transformation or ‘production’
• Marketing meets consumer needs and wants through goods and services at market prices
• Finance records and summarizes financial transactions into reports
• Human resources deals with employees issues

Influences of Operations

• Globalization involves quality expectations, technology, cost based competition and government policies
• The key difference is between legal compliance plus ethical & corporate responsibility
• Corporate Social Responsibility (CSR) comes with more profits from customers

Globalization

• A ban of trade restrictions between nations is made possible due to globalisation
• Rising integration occurs within global markets as capital, labor, intellectual ideas, financial resources, and technology becomes more important
• Businesses that are global aim at target markets that are worldwide, thereby quality management is critical
• A global standardisation that reflects the scale is needed for the production of services

Technology

• Innovative devices are manufactured, apart of the operations process
• Organisation, planning, decision making, and overall operational function-control are all aided by technology

Quality Expectations

• One of the key goals in the operations function is quality
• Goods: quality of design, fitness for purpose and durability
• Services: professionalism, reliability and level of customisation

Cost-Based Competition

• Strategies applied at the break even point is where cost advantages over competitors is created
• A focus on minimizing costs involves maintaining margin profits
• Fixed costs = do not change dependent on business activity (set)
• Variable costs = there is change upon business activity (changing level of production)
• Automating production, economies of sales, and eliminating waste minimizes costs

Government Policies & Legal Regulations

• Political decisions dictate rules and regulations
• Policies change, depending on reflecting social expectation
• Taxation rates are great taxation rates
• Laws act as a secondary measure, being delegated

Environmental Sustainability

• Business consumes resources now but needs to consider generations to come
• Reducing and minimizing waste, recycle and reduce carbon footprint

Corporate Social Responsibility (CSR)

• Open and accountable business actions are based on community and environmental respect
• 'Going beyond laws enables achieving reputational capital
• Considering the financial profit, the social and the enviromental impact is key
• Legal responsibilities are meeting obligations and following the ‘spirit' of the law, in that morals come before pure profits
• Negative society/environment impacts are minimized by CSR principles
• Outsourcing involves outside specialist services
• Onshore outsourcing is use of domestic businesses
• Offshore outsourcing involves outside countries
• Inputs need to be appropriately sourced so the suppliers adhere to standards
• Following international labor standards (ILO) is hard to measure how to be ethical
• Processes must minimise environmental damage and waste

Operations Process Inputs

• They are the resources used in transformation or production
• Types of inputs: labour, energy, raw materials, machinery & technology
• These are inputs that are converted in transformed

Transformed Resources

• Raw materials and intermediate goods consist of basic material elements such as goods with plastic or copper etc
• Information from instruction, investigation and research becomes knowledge that increases understanding
• Sourcing the business is done internally or externally, using KPI reports, market or media reports.
• Knowing consumer preferences ensures customer satisfaction

Transforming Resources

• Enabling good job designs, extensive training, flexible work practices and communication ensures business objectives are possible

Facilities

• They are considered through the design layout, number of facilities, and their capacity and location

Transformation Processes

• Converting inputs-resources into outputs-goods & services

Physical Change

• An goods business is usually more automated
• Service conversion relies on customer interaction

The Four V’s

• Volume: The quantity/level of goods or services that need to be made
• Lead time: The order fulfillment from the moment it is made
• Variety: How many products are available to consumers
• Mix flexibility: Variety or mix made through more variation via operations

Variation Demand

• Customer base and degree for what changes demand levels
• Predict market demand so it can be acted on during business year
• The degree that is required to engage customer shapes what businesses produces
• Direct or indirect engagement of customer

Sequencing and Scheduling

• The order in which activities within operation occurs
• The length of time activities take operations take

Gantt Charts

• Display completed and scheduled work over time, planning and tracking
• A clear measure for any time process which goes through several steps and activities

Critical Path Analysis

• The method used to determine what tasks have to be completed and what order plus how long they will take
• The critical path is the shortest time to complete tasks

Technology

• Significant due because it assists performance, utilization and is cost effective

Office Technology

• Inclusive of computer or tablet, phones, and communications

Manufacturing Technology

• Robotics, computer aided design (CAD) and computer aided manufacturing (CAM)

Computerised Design Tool

• A computer tool for designing product from a series of parameters of outputs

Tasks Design and Process Layout

• Success tasks for workers and completion is made easier by classifying job activities
• Skills and shorts are determined through skills audit performed through recruitment and training
• Machines and equipment are arranged and grouped together based on function/process
• High variety, volume deals with variety in low process volumes
• The equipment relates to the task manufacturing
• Project Production deals with project layout for equipment for house buildings
• In fixed layout there is an existing arrangement for employees to be accessible
• The set up of work stations and office desks
• All need area considerations

Monitoring, Control and Improvement

• Measuring the actual performance is monitored with results compared against planned performance
• KPI scores need measured against required actions
• Improvement requires waste reduction and elimination

Outputs

• These are goods and services provided to consumers
• Customer care is the goal
• Customers is what a busines meets or expects
• Warranties fix problems

Operations Strategies

• Quality, speed, dependability, flexibility, customisation, and cost are objectives
• E-commerce plus logistics is key
• Established technology is key
• Holding stock pros and cons

Operations Performance

• The quality and needs plus wants
• Service and specifications standards
• Being fast is fast from a time perspective
• Consistent and reliable is important
• Responding to process changes in the markets is flexibility
• Innovation and design

Customization

• Meeting unique needs is what custimisation is

Business

• Its about being cheaper where possible
• Designing from consumer expectations
• The usefulness and utility is key

Supply Chain

• A flow of supplies to meet customer needs

Logistics

• Transportation, storage, security

B2B and B2C

• Manage supply via online systems
• Sell to business and consumers

Sourcing

• Purchasing inputs for transformation, minimising costs
• Purchasing from merges
• Outsourcing is a flexible way of organisation
• Sourcing from abroad is cheaper

The Business

• Lower gas used less water and waste produced from ALDI
• Outsourcing is hiring external parties
• Simplication, efficency and savings happen, though payback and communication get hard
• Innovation is created from that

Technolgy

• Leading technology helps processes
• Managing POS and AID is critical

Business Management

• Sold at reduced prices
• costs associated is low

Stock

• Relate to gains and losses from that
• FIFO last and first over
• JIT is limited but lower sold

Managment

• In process plus interventions
• Meeting the required business of delivery

Change Involves

• Purchases layoffs and retaining personnel

Innovation

• Involves speeds and production consistency
• High skills
• Less psychological inertia, adapting to changes
• Evaluate and communicate changes
• Global sourcing benefits and markets are huge