mnb1601-summary-for-exam

CHAPTER 11 OPERATIONS MANAGEMENT 11.1 Introduction A business transforms inputs from the environment into outputs to the environment Operations function – that function of the business aimed at executing the transformation process Operations management (the operations function and the management thereof) are directly concerned with creating products and providing services in order to realise the objectives of the business 11.1.1 The importance of operations management An effective and efficient operation can give a business four types of advantages: o Reduce the costs of making the products or offering services o Increase the revenue the business receives for offering its products and services o Reduce the amount of investment (capital) needed to manufacture products or services o Provide the impetus for new innovation by using its solid base of operational skills and knowledge to develop new products and services Other reasons why operations management is considered important: o It improve productivity o It can help a business to satisfy the needs of its customers/clients more efficiently o It can be decisive for the general reputation of the business 11.1.2 Defining terms used in operations management Operations management is concerned with the management of the transformation process (the operations process) whereby products are manufactured or services rendered Concepts defined operations management: o The operations function is that function in the business aimed at the utilisation of resources to manufacture products or render services o Operations managers are the personnel in the business who is directly responsible for managing the operations function o Operations management involves operations managers’ activities, decisions and responsibilities that tie in with the execution of the operations function 11.2 Operations-management model The most notable elements of the operations-management model are the operations-management strategies and objectives, and the management activities that influence the transformation process that produces outputs 11.2.1 Operations-management strategies and performance objectives Consumer who are satisfied with the business’s products or services should be a top-priority objective Six main elements to customer/client needs: o Higher quality o Lower costs o Shorter lead time (quicker manufacturing or provision of services) o Greater adaptability (flexibility) o Lower variability with regard to specifications (reliability) o High level of service (better overall service) Downloaded by Ngokwana Masipa () lOMoARcPSD| Six operations-management performance objectives to achieve customer/client needs: o Do things right the first time – the operations function should not make mistakes o Do things cost effectively – ensuring an acceptable profit for the business o Do things quickly – time between demand and delivery be as short as possible o Make changes quickly – adapt or change activities if necessary o Do things right every time – error free products and services o Do things better – providing a better product or service than the competitors Fig11.2: Positive results obtained by the application of operations-management guidelines Operations-management guideline Positive result Doing things right the first time → Higher quality Doing things cost effective → Lower cost Doing things fast → Shorter lead time Changing things quickly → Greater adaptability Doing things right every time → Lower variability Doing things better → Better service 11.2.2 The transformation model The operation function is primarily concerned with using resources (inputs) to provide outputs by means of a transformation process Three main components: o Inputs • Material • Customers/clients • Information • Human resources • Equipment and facilities • Technology o The transformation process • Convers inputs into outputs o Outputs • Assume the form of products or services Different operations have different characteristics: o The volume of output may differ o The variety of output may differ o The variation of output may differ o The visibility of output may differ 11.3 The classification of process types for manufacturers and service providers In manufacturing, the most common classification system classifies different operations processes according to the volume of output (scope) and the variety of products 11.3.1 The classification of process types for manufacturers Five main categories: o Project processes Projects represent operational processes that are highly individual and unique, normally tackled on a large scale, e.g. construction projects, development projects or upgrading projects