Area of Study 3: The Operations Management Function

1. Area of Study 3: The Operations Management Function Chapter 6: Operations Management function

2. Operations Management • Task of managing the process that transforms resources into finished goods and services • Managing resources to achieve efficient output of goods and services

3. Operations and business objectives

4. Role of Operations Manager • Ensuring that the operations systems meet objectives of the organisation as a whole • Making strategic decisions relating to planning and designing an operating system • Inventory management • Manufacturing • Quality • Maintenance/engineering

5. Operations system • Series of procedures and processes an organisation take in order to create its outputs of finished goods and services through the transformation of inputs.

6. Key Elements of Operations System - INPUTS • Inputs – resources necessary to produce the product • Raw materials and components • Human Resources • Technology • Capital, plant and equipment • Information and knowledge • Times

7. Key Elements of Operations System - PROCESSING • Transformation of inputs into outputs • Plans the process then organises its implementation • Process will vary according to: • types of goods and services produced • Size of the organisation • Number, quality and availability of resources

8. Key Elements of Operations System - OUTPUTS • Final product, the results of the operations process • Outputs are goods or services • Good involves an object changing hands, service involves purchase of labour • Management should ensure output type is responsive to needs of the market

9. How operations management relates to business objectives and strategy • An organisation in its desire to increase its level of business competitiveness will require the operations management functional area to establish objectives such as: • Increasing productivity • Improving quality of processes and output • Adopting a sustainable approach to its operations • These features can help enhance the competitiveness of the business: • Optimal levels of operational efficiency • High standards of quality • Ethical and socially responsible considerations • Being able to measure level of achievement with objectives

10. The productivity objective • Productivity: level of output obtained from a level of input Output (O) (units of production) • Productivity (P) = Inputs (I) (units of raw materials, capital, labour) • Examples of productivity measures: • Units of production produced per employee • Crop tonnage per hectare planted • Number of client attended to per hour or per unit of wage cost • Number of units produced per unit of money • Productivity and quality improvements are key to achieving international competitiveness • Business will attempt to gain competitive advantage based on one or both of these things

11. Factors determining organisational productivity • Technology levels • Research and development • Equipment and facilities • Tasks and processes • Layout of facilities • Communications processes • Workplace safety

12. Evaluation of operations management • Key Performance Indicators appropriate to determining if operations management system is working well: • Efficiency • Level of waste • Productivity • Customer satisfaction (measured by repeat orders or number of returned products. • Profit

13. Activities • Activity 6.3 Case Study p142-143 • Chapter Summary Questions • Examination Preparation Chapter 6 p146