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Decision making to improve operational performance
Operations management
Involves managing the process of converting inputs into outputs. It involves
choices, decisions. + affects all aspects of our lives.
The operations process
Inputs eg land, labour, capital, enterprise -> Transformation process -> outputs
eg goods and services
The operations process is ongoing. If products don’t sell it will reviewed. If
there are quality issues or changes in technology it will be considered and
changed. E.g. the agriculture industry.
Operations decisions:
– Output. Involving investment in equipment and people, managing
complex operations + coping with management growth and the risk -
e.g. cancelled orders.
– Range of products, customer service + flexibility.
– How to produce. Labour or capital intensive
– How best to provide. Sell online or in store or both.
– How they control their supply chain. E.g. moving ‘upstream’ towards
raw materials or ‘downstream’ towards the customer.
Stages of operations
Raw materials -> Manufacturing Transportation -> Retail -> Disposal/ recycling
The operations process can continue by recycling. Business activity
impacts society + stakeholder, they may meet the minimum requirements
or act ethically.
Adding value
Transforming resources with the aim to add value which can be measured
financially or other ways. E.g. a prison preventing reoffending, a charity
saving lives, a football club winning matches. Managers are eager to measure
what is being achieved and how to improve it further.
The nature of operations management
Eg operations can involve:
– Gathering, analysing + distributing info (eg Google)
– Storing and transporting products
– Transforming people (eg plastic surgeons)
– Producing goods
, – Bringing products and customers together (eg IKEA)
Some operations will be labour intensive, eg architecture + advertising or
capital intensive e.g. a bottling process.
These different operations process can be analysed in terms of the 4Vs
model:
The volume of output
Small - Hand made shoes
Large - Coca-Cola bottles
The variety of output
Bottle production - repetitive
Dentists - every patient is different
The visibility of production
Low staff interaction with customers
High staff interaction with customers
The variability of demand
Newspapers - constant
Emergency services - vary
Results of high and low 4V’s
Low High
Volume Likely to be high unit High repeatability. Low
costs. Employees likely unit costs. Capital
to be multi-skilled. Little intensive.
repetition of tasks.
Variation in demand Stable. Routine. Changing levels of
Predictable. High capacity utilisation.
capacity utilisation. Need to try and predict
demand. Need
flexibility.
Visibility Limited customer Good customer service
service skills. Time lag skills needed. Flexible in
between production and terms of info and
consumption. communications to
customers
Variety Routine operations. Flexible. Quite complex
Standardised operations to manage.
processes. Low unit High unit cost. Can
cost. meet customer needs
precisely.
The operations decision-making process
, – Identifying objectives
– Analysing the existing position
– Choosing what actions to take
– Implementing decisions
– Reviewing
This process will be iterative - may move backwards and forwards between
different stages.
Ethics, the environment and operations decisions
– How to reward + treat employees. Increasing workloads puts stress on
employees.
– Where to locate. Exploiting low wages
– Safety features. Should the business avoid adding safety features
because of additional costs?
– The environment. Should the business limit it’s pollution.
Operations, competitiveness and the competitive environment
Competitiveness depends mostly on operations. Operations controls the
value for money. Operations account for the majority of the costs in a
business.
To maintain competitiveness involves on going improvements. If you are not
launching a product, your competitors are so there is a need to keep up. The
paint market doesn’t change much. However, there are thousands of types
because of regular innovation as technology improves. The value of
competitors is constantly improving, pressuring the businesses to review
and develop operations e.g. a school develop its teaching.
Setting operational objectives
They must link to achieve its competitive advantage. It’s operations process
must then be able to deliver this. E.g. breakdown companies - speed of
response. Operations objectives support the competitive strategy of the
business.
Operational objectives
– Costs
– Quality
– Speed
– Flexibility
– Dependability
Quality
Managers have to decide what they think customers want and expect (with
marketing). Eg a quality target for an insurance company - accurate claims. A
quality operation has the resources and systems in place to meet targets
Decision making to improve operational performance
Operations management
Involves managing the process of converting inputs into outputs. It involves
choices, decisions. + affects all aspects of our lives.
The operations process
Inputs eg land, labour, capital, enterprise -> Transformation process -> outputs
eg goods and services
The operations process is ongoing. If products don’t sell it will reviewed. If
there are quality issues or changes in technology it will be considered and
changed. E.g. the agriculture industry.
Operations decisions:
– Output. Involving investment in equipment and people, managing
complex operations + coping with management growth and the risk -
e.g. cancelled orders.
– Range of products, customer service + flexibility.
– How to produce. Labour or capital intensive
– How best to provide. Sell online or in store or both.
– How they control their supply chain. E.g. moving ‘upstream’ towards
raw materials or ‘downstream’ towards the customer.
Stages of operations
Raw materials -> Manufacturing Transportation -> Retail -> Disposal/ recycling
The operations process can continue by recycling. Business activity
impacts society + stakeholder, they may meet the minimum requirements
or act ethically.
Adding value
Transforming resources with the aim to add value which can be measured
financially or other ways. E.g. a prison preventing reoffending, a charity
saving lives, a football club winning matches. Managers are eager to measure
what is being achieved and how to improve it further.
The nature of operations management
Eg operations can involve:
– Gathering, analysing + distributing info (eg Google)
– Storing and transporting products
– Transforming people (eg plastic surgeons)
– Producing goods
, – Bringing products and customers together (eg IKEA)
Some operations will be labour intensive, eg architecture + advertising or
capital intensive e.g. a bottling process.
These different operations process can be analysed in terms of the 4Vs
model:
The volume of output
Small - Hand made shoes
Large - Coca-Cola bottles
The variety of output
Bottle production - repetitive
Dentists - every patient is different
The visibility of production
Low staff interaction with customers
High staff interaction with customers
The variability of demand
Newspapers - constant
Emergency services - vary
Results of high and low 4V’s
Low High
Volume Likely to be high unit High repeatability. Low
costs. Employees likely unit costs. Capital
to be multi-skilled. Little intensive.
repetition of tasks.
Variation in demand Stable. Routine. Changing levels of
Predictable. High capacity utilisation.
capacity utilisation. Need to try and predict
demand. Need
flexibility.
Visibility Limited customer Good customer service
service skills. Time lag skills needed. Flexible in
between production and terms of info and
consumption. communications to
customers
Variety Routine operations. Flexible. Quite complex
Standardised operations to manage.
processes. Low unit High unit cost. Can
cost. meet customer needs
precisely.
The operations decision-making process
, – Identifying objectives
– Analysing the existing position
– Choosing what actions to take
– Implementing decisions
– Reviewing
This process will be iterative - may move backwards and forwards between
different stages.
Ethics, the environment and operations decisions
– How to reward + treat employees. Increasing workloads puts stress on
employees.
– Where to locate. Exploiting low wages
– Safety features. Should the business avoid adding safety features
because of additional costs?
– The environment. Should the business limit it’s pollution.
Operations, competitiveness and the competitive environment
Competitiveness depends mostly on operations. Operations controls the
value for money. Operations account for the majority of the costs in a
business.
To maintain competitiveness involves on going improvements. If you are not
launching a product, your competitors are so there is a need to keep up. The
paint market doesn’t change much. However, there are thousands of types
because of regular innovation as technology improves. The value of
competitors is constantly improving, pressuring the businesses to review
and develop operations e.g. a school develop its teaching.
Setting operational objectives
They must link to achieve its competitive advantage. It’s operations process
must then be able to deliver this. E.g. breakdown companies - speed of
response. Operations objectives support the competitive strategy of the
business.
Operational objectives
– Costs
– Quality
– Speed
– Flexibility
– Dependability
Quality
Managers have to decide what they think customers want and expect (with
marketing). Eg a quality target for an insurance company - accurate claims. A
quality operation has the resources and systems in place to meet targets
