Role of Op & Influences.pdf

Operations: HSC study notes Role of operations management: working with & through other people – ensure production deadlines met in effective/efficient manner) Strategic role of operations management – cost leadership, good/service differentiation Operations strategic role = minimising expenses to...

Operations: HSC study notes Role of operations management: working with & through other people – ensure production deadlines met in effective/efficient manner) Strategic role of operations management – cost leadership, good/service differentiation Operations strategic role = minimising expenses to achieve overall business goal of maximising profits → achieving competitive advantage Cost leadership • Strategy implemented maximise profits/ gain competitive advantage • Aims provide customers best value for relatively low price = sustainable competitive advantage • Achieved by reduction costs (input, labour, processing, inventory, quality management) • Business strive be profitable/ avoid inhibiting quality product/service → produce goods/services cheaply, sell at maximum profitable mark-up (interdependence with marketing/ finance) • Economies of scale: cost advantages created as result of an increase in scale of business operations → enables business negotiate better rates with suppliers, take advantage improvements in technology i.e. IKEA & Holden car plant in South Australia Good/service differentiation (product differentiation) Distinguishing products in some way from competitor’s Differentiating GOODS: 1. Varying actual product features One basic model, then others increasing complexity → white bread: 9 grain bread 2. Varying product quality Low-quality model = very affordable, higher-quality reflected in high price i.e. generic, exclusive 3. Varying any augmented features Refers any add-ons/ additional benefits i.e. car manufacturer allowing for capacity fit spoiler, GPS Strategic role of operations management = determine which differentiation strategies undertaken while still maintaining cost leadership. Differentiating SERVICES: 1. Varying amount of time spent on a service a. 2. Varying level expertise a. 3. Experienced trades people generally charge more services as it more specialised Varying qualifications/ experience of service provider a. 4. Time differentiating factor service-providers i.e. 4 hours/1 hour Highly qualified/experienced affect quality service provided i.e. professional/apprentice Varying quality materials/tech used service delivery a. Use CAD, ICT software affect quality service provided Operations management decide service mix used to ensure requirements customer met, while maintaining cost leader focus. BOTH GOODS/SERVICES, DIFFERENTIATION CREATED FROM CROSS-BRANDING OR STRATEGIC ALLIANCES Goods/services in different industries INDUSTRY SECTOR Primary GOODS/SERVICES PRODUCED Includes all those businesses in which production is directly associated with natural resources • Mining, fishing, grazing, forestry Involves taking raw material and making it into a finished or semi-finished Secondary Tertiary Quaternary • Take output of firms in primary sectors (raw materials) and process it into finished, semifinished product • Iron ore, coal → steel (semi-finished product) Performing service for other people • Retailers, dentists, solicitors, banks Includes services that involve the transfer and processing of information and knowledge • Telecommunication, property, computing, finance, education Includes all services that have traditionally been performed in the home Quinary • Hospitality, tourism, craft-based activities, childcare ROLE OPERATIONS MANAGEMENT Responsible for: • • • • Obtaining resources Supply chain management Quality of outputs Meeting deadlines Interdependence with other key business functions Finance collect/analyse financial performance op Marketing will specify product design, development based op capabilities/ limitations human resources provide suitable staff based op's requirements OPERATIONS Influences on operations management Globalisation, technology, quality expectations, cost-based competition, government policies, legal regulations, environmental sustainability INFLUENCE EXPLANATION Globalisation • Movement around globe goods, people, capital, financial resources, technology, facilitated by reduction/ removal trade barriers → opportunities/ threats for business IMPACT ON OP MANAGEMENT • Significantly affect op in terms SUPPLY CHAIN → business needs very predictable, reliable supply chain highly responsive changes in demand. • GLOBALISATION = opportunity enter global web: aims achieve costleadership principles by locating reliable suppliers close manufacturing facilities • Relocating production overseas = cost advantage through low cost employment i.e. Bonds, Shell IMPACT QANTAS • • • Outsourced functions (maintenance) & IT → lower costs Access new markets overseas Launch new airlines Asia, cost minimisation be more internationally competitive Technology • • Quality = how well designed, made and functional goods are, and degree of competence with which services organised/delivered. • Customers have expectation goods/service purchase good quality/ value for money • Allow business gain competitive advantage i.e. savings human resources (staff replacements) Management consider: technology used by competitors, staffing implications, cost technology & how financed (interdependence) CAD = 3-D diagrams emailed clients anywhere in world (create wide client base) CAM = links design to manufacturing process through computers → less wastage, lean prod. Operations completed basic minimum standard (satisfy customers) Goods: quality of design, fitness for purpose, durability Services: professionalism, reliability, level customisation Derived determining break-even point, then applying strategies create cost advantages over competitors Business apply cost leadership reduce fixed/variable costs BY: achieve economies scale, reduce waste, bulk buy inputs, produce standardised products larger market, produce high volume output, use automated production services • Design, construction and/or application of innovative devices, methods and machinery upon operations processes • • • • Quality expectations Cost-based competition • • • • • • • Adoption, continued upgrading tech. inherent Qantas → maintain cost leadership, competitive advantage Newer planes, newer operational processes, more training required Customers make purchase on expectation quality Qantas ensure customer expectations fully met → arriving/ departing on time, comfort based features (online check in, flight entertainment) Ongoing focus cost minimisation Achieve lowest competitive cost → intro technology, restructure, outsource Balance between quality + cost Government policies All business operating Australia subject to policies applied by three levels government – local, state, territory or federal • • Legal regulations Environmental sustainability Range laws which businesses comply collectively termed ‘compliance’. Businesses must ensure operations use resources in a manner that does not compromise future generations access to those resources • • • • Government policies impact business operations i.e. OH&S → changes to business operations such as installation of safety equipment Operations managers need be fully aware contemporary government policies and what they comprise All aspects business MUST abide by law OHS → alterations business operations i.e. safe, healthy working conditions must be provided, safety equipment • Need integrate long-term sustainable view of resource management into business planning/practice Recycle water, reduce carbon footprint • • • • Economic policies (monetary, fiscal) → level economic activity → demand for services Fed Gov’t new policy Fair Work Act → increased operating costs Subject regulatory control of Civil Aviation Authority Worker’s Health & Safety Act; antidiscrimination Boeing 787 and Airbus A380 more fuel efficient than ones replaced Impact globalisation/ technology on operations strategy • • • Technology driver of globalisation → technological advances encouraged/ facilitated global expansion Both significantly shaped contemporary operations strategy Globalisation → supply chain management (enabled business to source products in global market based on cost-leadership principles i.e. purchase inputs Asian market due to low cost goods, cheap labour) • • • • Relocating production overseas → supply raw materials easier, cheaper Forces businesses pitch product at global consumers i.e. high quality, standardised Supply chain management → cost leadership principles integral selection suppliers (global web strategy aims achieve this locating suppliers close manufacturing facilities) Technology → allows businesses access increased technology → gain competitive advantage Identify breadth of government policies that influence operations management • • • • Every business impacted government policies Occupational Health & Safety (OH&S) standards, environmental regulations, employment relations, trade industry policies significantly impact operations → operations managers need be aware of, fully understand policies Federal government provision tax breaks, grants to businesses that export → facilitated global expansion many Australian businesses around globe Qantas likely face hundreds millions dollars in expenses as result Government new environmental policy (Carbon Tax) → $22.00 per tonne Investigate how business operations can operate positively for environmental sustainability • • • • • Environmental sustainability – using natural resources in a manner that will not compromise future generations access to resources Businesses increasingly need consider their role in sustaining high standards living future generations Operations managers can implement environmentally friendly practices within business i.e. reduce, reuse, recycle natural resources i.e. water Governments implementing initiatives to reduce impact development i.e. Carbon Trading Scheme July 2012 → Australia’s biggest polluters have pay every tonne carbon pollution they emit → hoped reduce carbon pollution by at least 160 million tonnes a year by 2020, equiv. taking 45 million cars off road Boeing 747, Airbus A380 fuel efficient than ones replaced → Qantas support, participate renewal process Corporate social responsibility environmental sustainability and social responsibility Corporate social responsibility (“triple bottom line”) Corporate responsibility focuses doing right by organisation’s stakeholders • • Refers open/accountable business actions based respect for people, community/society and broader environment. It involves businesses doing more than just complying with laws/regulations Starts with company’s vision, ethics, values → extends way products manufactured, marketed, priced, distributed Explain why corporate social responsibility is a key concern in managing operations of large business Difference between legal compliance and ethical responsibility Legal compliance → complying all applicable laws/regulations Ethical responsibility → sees businesses meeting all legal obligations and taking it further by following intention and ‘spirit’ of law Nicole’s Dog Washing Pty Ltd is a business that pays all of its workers the appropriate wages, as outlined by law, as well as reasonable working hours, pay for various forms of leave and workers compensation when required. Jake’s Farmhand Service Pty Ltd, however, pays all of these costs too, and has also introduced a code of ethics and has published and communicated code of ethics to all staff. This allows business to satisfy economic, stakeholders and social and environmental change within business to be perceived as an “ethically responsible” business. Within the business, staff is also given two days paid leave to devote to community projects i.e. magazine distribution by the jobless and homeless. To improve Nicole’s Dog Washing Pty Ltd ethical responsibility which, in turn, will provide the business with a positive reputation, could develop a new product of service that would allow the business to assist those in need, whilst also adhering to legal regulations. i.e. Body and Soul has developed a tea tree oil that they allow the Aboriginal Community to sell. Investigate the role of ethics and corporate social responsibility in a large business