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Overview of Operations Management Concepts

Jun 3, 2025

Lecture Notes on Operations Management

Role of Operations Management

  • Operations management refers to processes involving transformation or production.
  • Involves transforming resources/raw materials into outputs/finished goods.
  • Also includes value-adding; applying skills, knowledge, and catering to customer wants.

Achieving Competitive Advantage

  • Effective operations aim to:
    1. Minimise costs
    2. Improve productivity
    3. Improve quality
    4. Differentiate products

Competitive Advantage Strategies

  • Waste minimisation/Lean production: Reduce inefficiencies, improve quality, and reduce environmental harm.
  • Fair value for labour: Ensure fair treatment and wages for employees, influenced by union movements and fair trade.
  • Ethical sourcing: Acquire resources from suppliers engaging in ethical practices.
  • Affordability: Maximise profit while offering lower costs to consumers.
  • Environmental sustainability: Adopt renewable resources and reduce greenhouse emissions.
  • Reflect trends: Innovate and update products based on changing consumer preferences.

Cost Leadership

  • Aim for lowest costs while maintaining quality and profitability.

Differentiation of Services

  • Vary time and expertise levels in services.
  • Quality of materials/technology used.

Operations in Different Industries

  • Management differs for goods vs. services.
  • Considerations for standardised vs. customised goods.

Intermediate Goods

  • Goods that undergo multiple transformation processes.

Influences on Operations (Q EGG LTC CSR)

  • Globalisation: Increases market integration.
  • Technology: Impacts production efficiency.
  • Quality Expectations: Align with consumer expectations.
  • Cost-based Competition: Maintain competitive costs.
  • Government Policies & Legal Regulations: Compliance with laws and regulations.
  • Environmental sustainability: Minimise negative environmental impacts.
  • Corporate Social Responsibility: Maintain positive societal and environmental actions.

Operations Processes

  • Inputs ➔ Transformation Processes ➔ Outputs

Inputs

  • Transformed Resources: Materials, information, and customers.
  • Transforming Resources: Human resources and facilities.

Transformation Process

  • Value Adding: Increase product value through materials, information, or resources.
  • Influences: Volume, variety, demand variation, and customer feedback.

Sequencing and Scheduling

  • Tools like Gantt charts and CPA help organise operations processes efficiently.

Technology

  • Tools like robotics, CAD/CAM boost production efficiency.

Task Design

  • Break down tasks for easy employee execution.

Process Layout

  • Arrangement based on function or product.

Monitoring, Control, and Improvement

  • Monitoring: Measure performance against plans.
  • Control: Make corrective actions for discrepancies.
  • Improvement: Reduce inefficiencies and improve quality, speed, dependability, flexibility, and cost.

Outputs

  • Must meet customer demands.
  • Customer service: Key for long-term relationships.
  • Warranties: Ensure product quality meets legislative standards.

Operations Strategies

  • Set goals and develop strategies to improve operations.

Performance Objectives

  • Quality, Speed, Dependability, Flexibility, Customisation, Cost.

New Product/Service Design and Development

  • Involves consumer approach and technological innovation.

Supply Chain Management

  • Managing inputs, transformation, and outputs to meet customer needs.

Outsourcing

  • Consider cost, efficiency, and strategic fit.

Technology

  • Distinguish between established and leading-edge technologies.

Inventory Management

  • Balance inventory levels to meet demand without excess.

Just-in-Time

  • Keep inventory to a minimum while maximising responsiveness.

Quality Management

  • Processes to ensure product safety, reliability, and fitness.

Overcoming Resistance to Change

  • Strategies to manage financial and psychological resistance.

Global Factors

  • Embrace global sourcing, economies of scale, and scanning/learning.

Case Studies

  • Qantas: Utilises technology and global strategies.
  • Tiffany & Co: Emphasises ethical practices.