CHAPTER 11.docx

**CHAPTER 11 -- NOTES** **Operations Management** **CHAPTER OUTLINE** - Introduction - An operations-management model - The classification of process types for manufacturers and service providers - Operations design - Operations planning and control. - Operations improvement...

**CHAPTER 11 -- NOTES** **Operations Management** **CHAPTER OUTLINE** - Introduction - An operations-management model - The classification of process types for manufacturers and service providers - Operations design - Operations planning and control. - Operations improvement - Summary **INTRODUCTION** - Operations management is one of the 8 functions of business, namely, Administration, finances, general management, Human resources, marketing, **OPERATIONS,** public relations and purchasing. - The operations management uses resources to ensure that products produced for consumers and services rendered to clients **are of good quality** and that are in a standard to **compete with other business and gain competitive advantage.** - Basically, the operations management is responsible for. - Producing high quality goods and keeping costs as low as possible. - Improve the operations of the business. - Meeting consumer expectations. **bTHE IMPORTANCE OF OPERATIONS MANAGEMENT** - It reduces the costs **(errors are diminished/avoided)** - Increase revenue **(produces quality products which will attracts more customers)** - Reduce the amount of investment (capital employed) **necessary to produce the goods and services by being effective in a use of resources.** - Provide the impetus/motivation for new innovation **(use an innovative approach to produce goods).** **OTHER REASONS** - It improves productivity in the production process, - It helps satisfy the needs of the customers, - It helps in building the reputation of the business. **DEFINING THE TERMS USED IN OPERATIONS MANAGEMENT.** 1. **Operations function** - The operations function refers to all the activities that focus on producing goods and services for the customers. - It includes the production process of converting raw material into final products. - It helps to reduce costs and make process improvements. 2. **Operations Managers** - An operations manager is a key leadership role within an organization responsible for overseeing and managing the day-to-day operations of a business. 3. **Operations Management** - Operations management (OM) is the administration of business practices to create the highest level of efficiency possible within an organization. - Involves operations manager's activities, decisions and responsibilities that tie in with the execution of the operations function. **AN OPERATIONS-MANAGEMENT MODEL** - This is a system used by managers to produce high quality goods, it includes the management strategies, objectives and the activities that influence the transformational process to produce output. - It focuses on the customers' needs and it continually formulate strategies and objectives to maintain, strengthen and expand competitive position and growing the customer base. **MODEL** **Six main elements of customer/client needs:** - Higher quality - Lower costs - Shorter lead time - Greater adaptability (flexibility) - Lower variability regards to specifications (reliability) - High level of service **Guidelines in obtaining positive results.** **THE TRANSFORMATION MODEL** The transformation model is then presented. This forms the basis of the operations function in that resources (inputs) are transformed into outputs. This transformation model is discussed under the following headings: - Inputs - The transformation process. - Outputs. The general model of the operation can be found in Figure 11.1 (p 316) The transformational model can be found in Figure 11.3 (p. 320).  Four **distinctive characteristics** of operational processes are then identified and discussed -- volume, variety, variation, and visibility (the four Vs). **Volume** -- The number of units that a company can produce over a period of time. **Quantity produce**, ***this has implication on cost of production*.** **Variety** - It refer to the number of different types of products or services that a company offers. **Size, shape, and colour.** **Variation** - Particular demand pattern -- Seasonal products *(Compares the actual overhead costs per unit that were achieved to the expected or budgeted cost per item).* **Visibility -** It focuses of customers experiences. (Is the experience tangible or non-tangible). The next section focuses on the classification of operational processes for manufacturers and service providers and highlights the difference between the transformation processes for products and services. The classification of operational processes for manufacturers identifies the following five main categories: Process types for manufacturers - Five main categories are identified: **Project processes**: - It is referred to a product or service-based production system, they are highly individual and unique, but are normally tackled on a large scale. (Airports, bridges, and shopping malls). - Processes that produce high variety and low volume products are termed projects. - Project processes are used to make a one-of product to a customer specification. It generally requires unique resources such as staff and equipment. **Jobbing processes:** - It is a process of manufacturing small amount of a variety of product and each item has it unique process of production. (Jewellery). **Batch processes (job lots):** - Batch production is a method whereby a group of identical products are produced simultaneously (rather than one at a time). (Samsung appliances) - Batch production occurs when many similar items are produced together. Each batch goes through one stage of the production process before moving onto next stage. **Mass processes:** - It is a process of manufacturing where both machines and humans work together to produce products of a similar type in huge quantity. **Continuous or repetitive systems:** - It a manufacturing process where production system is continuous 24/7 and all over the years. The classification of operational processes for service providers considers three main categories: - **Professional services** - It is a term that refers to any business, department, or individual whose core output is a service or expertise rather than a manufactured product. - **Service shops** - Service processes that are positioned between professional services and mass services, usually with medium levels of volume and variety. - **Mass services. -** **Service processes that have a high number of transactions**, often involving limited customization, for example mass transportation services, call centres, etc. The chapter then continues with operations design. This topic is broken down into numerous sections and subsections. The first section addresses the nature of operations design. The next section looks at the design of products and services. This is broken down into the following components: - The competitive advantage of good design - The components of products and services - The stages in the design of products and services. The design of operational processes is then discussed, focusing on the following issues: - - - - Operations planning and control is the next topic. This involves putting the design elements into operation. The nature of the operations planning and control process is firstly discussed, followed by capacity planning and control. The following aspects are considered: - Defining capacity - The nature of capacity planning and control - Techniques and methods used during capacity planning and control. The nature of operation planning and control can be found in Figure 11.8 (p. 337). Inventory and supply-chain planning and control follow. Quality planning and control is another issue that falls under the heading of operations planning and control. The following aspects are discussed: - Defining quality - The nature of quality planning and control - The steps in quality planning and control. The chapter concludes with a thorough discussion on operations improvement, which focuses on improving performance and preventing failure. The main issues addressed in this section include: - The nature of operations improvement - Different types of performance standards - Priorities for improvement - Approaches to improvement - Failure prevention and recovery - Types of failures - Failure detection and analysis - Systems-reliability improvement - Recovery of failures - Total quality management (TQM) - Defining total quality management - The ISO 9000 quality standard for quality systems - The implementation of total quality management.