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.