Roles of Operations Management
Operations: The business processes that involve the conversion of inputs (transformed and
transforming), into final goods and services, known as outputs.
Strategic: A long-term direction for all key business operations.
● During the operations process, businesses convert inputs into outputs and are also
involved in the creation of value. Value adding refers to the added value as inputs are
transformed into outputs.
● Operations managers focus on achieving:
○ Cost Leadership
○ Product differentiation
Cost Leadership: Businesses aiming to have the lowest possible costs, or most price
competitive market. Businesses need to aim to streamline costs across the whole operations
process. Allows higher profits and competitive advantage
● Reducing cost methods:
○ Exploit economies of scale
○ Produce standardised goods
○ Engage in supplier rationalisation
○ Outsource materials and labour
Product differentiation: involves businesses distinguishing their products from its
competitors. They do this by changing product features, varying product quality or including
additional benefits. For services they improve the level of expertise brought to a service,
time or qualifications of service provider.
Standardised goods: Mass produced goods where they are uniform in quality and meet
predetermined levels of quality.
Customised goods: Goods tailored to the needs and wants of the customer.
● Perishable goods require a high level operation process because of fast-moving
consumer groups (FMCG). Therefore, high standards of quality and safety, short lead
times and appropriate packaging and storage process.
Interdependence: mutual dependence the key business functions have on one another
Operations
Finance Ensures there are adequate funds to carry
, out transformation processes. Financial
transactions reflect the true value of
business.
Marketing Ensures business meets the needs and
wants of customers through market
research
Human Resources Effectively deals with employees and
employment issues. Deals with employment
resourcing, engaging in activities of
acquisition, development, maintenance and
separation
Influences on Operations:
● Globalisation
● Technology
● Quality expectations
● Cost-based competition
● Government Policies
● Legal regulations
● Environmental Sustainability
● Corporate social responsibility
Globalisation: Removal of trading barriers between nations. Encourages free trade. Allows
the transfer of capital, labour, financial resources, technology and ideas.
● Globalisation allows businesses to modify and implement new transformation
processes. Provides a new market for businesses while also bringing in new
competition with established cost-leadership
● To meet different needs and wants, businesses must integrate operation processes
such as:
○ Integrating product designs that meet the needs of global consumers
○ Choosing the location for manufacturing facilities
○ Deciding on quality management logistics
○ Assessing quality management logistics
Supply chain: the range of suppliers a business has, and the nature of its relationship with
those suppliers
Global web: Refers to the network of suppliers a business has chosen on the basis of
lowest overall cost, lowest risk, maximum certainty of quality, and timing of suppliers
● Businesses ensure that they engage with a predictable and reliable supply chain that
is responsive to the changes in demand. Involves engaging in effective sourcing
Operations: The business processes that involve the conversion of inputs (transformed and
transforming), into final goods and services, known as outputs.
Strategic: A long-term direction for all key business operations.
● During the operations process, businesses convert inputs into outputs and are also
involved in the creation of value. Value adding refers to the added value as inputs are
transformed into outputs.
● Operations managers focus on achieving:
○ Cost Leadership
○ Product differentiation
Cost Leadership: Businesses aiming to have the lowest possible costs, or most price
competitive market. Businesses need to aim to streamline costs across the whole operations
process. Allows higher profits and competitive advantage
● Reducing cost methods:
○ Exploit economies of scale
○ Produce standardised goods
○ Engage in supplier rationalisation
○ Outsource materials and labour
Product differentiation: involves businesses distinguishing their products from its
competitors. They do this by changing product features, varying product quality or including
additional benefits. For services they improve the level of expertise brought to a service,
time or qualifications of service provider.
Standardised goods: Mass produced goods where they are uniform in quality and meet
predetermined levels of quality.
Customised goods: Goods tailored to the needs and wants of the customer.
● Perishable goods require a high level operation process because of fast-moving
consumer groups (FMCG). Therefore, high standards of quality and safety, short lead
times and appropriate packaging and storage process.
Interdependence: mutual dependence the key business functions have on one another
Operations
Finance Ensures there are adequate funds to carry
, out transformation processes. Financial
transactions reflect the true value of
business.
Marketing Ensures business meets the needs and
wants of customers through market
research
Human Resources Effectively deals with employees and
employment issues. Deals with employment
resourcing, engaging in activities of
acquisition, development, maintenance and
separation
Influences on Operations:
● Globalisation
● Technology
● Quality expectations
● Cost-based competition
● Government Policies
● Legal regulations
● Environmental Sustainability
● Corporate social responsibility
Globalisation: Removal of trading barriers between nations. Encourages free trade. Allows
the transfer of capital, labour, financial resources, technology and ideas.
● Globalisation allows businesses to modify and implement new transformation
processes. Provides a new market for businesses while also bringing in new
competition with established cost-leadership
● To meet different needs and wants, businesses must integrate operation processes
such as:
○ Integrating product designs that meet the needs of global consumers
○ Choosing the location for manufacturing facilities
○ Deciding on quality management logistics
○ Assessing quality management logistics
Supply chain: the range of suppliers a business has, and the nature of its relationship with
those suppliers
Global web: Refers to the network of suppliers a business has chosen on the basis of
lowest overall cost, lowest risk, maximum certainty of quality, and timing of suppliers
● Businesses ensure that they engage with a predictable and reliable supply chain that
is responsive to the changes in demand. Involves engaging in effective sourcing
