Business Management IB ( MNB 1601)
Chapter 10 Summary – Operations Management
The Operations Function is that function of the business aimed at executing the transformation process.
The importance of operations management:
It can reduce the cost of making products or offering services
It can increase the revenue the business receives for offering its products and services to its
customers/clients
It can reduce them amount of investment (capital) needed to manufacture the type and quantity of
products or to offer the service required/
It can provide the impetus for new innovation by using itsl solid base of operational skills and
knowledge to develop new products and services
Other reasons Op’s Management are important to a business:
Operations management can improve productivity
Operations management can help a business to satisfy the needs of its customers/clients more
effectively
Operations management can be decisive for the general reputation of the business
Defining terms used in operations management:
The operations function is that function in the business primarily aimed at the utilisation of
resources to manufacture products or render services.
Operations management involves operations managers’ activities, decisions and responsibilities
that tie in with the execution of the operations function.
Page 1
, Operation-management strategies and performance objectives:
See diagram pg 251
All businesses formulate business objectives, and if a business intends surviving in the long term, consumers who
are satisfied with the business’s products or services should be a top-priority objective. Although there are
numerous customer needs that can be reduced to 6 main elements:
Higher quality
Lower costs
Shorter lead time (quicker manufacturing or provision of services)
Greater adaptability (flexibility)
Lower variability with regard to specifications (reliability)
High level of service (better overall service).
With these 6 customer/client requirements as a basis, operations management performance objectives can be
formulated to give the business an “operations-cased advantage” over other businesses. Operations management
performance objectives must indicate the specific areas with the domain of the operations function that will be
emphasised when products and/or services are produced or provided. The operations-management performance
objectives are formulated in such a way that they are applicable to both manufacturers and service providers. To
acquire operations based advantages, the following 6 general operations-management performance objectives can
be followed:
Do things right the first time
Do things cost effectively
Do things fast
Make changes quickly
Do things right every time
Do things better
Operations management guideline Positive result
Do things right the first time Higher quality
Do things cost effectively Lower cost
Do things fast Shorter lead time
Changing things quickly Greater Adaptability
Do things right every time Lower variability
Do things better Better service
The transformation model:
The operations function is primarily concerned with using resources (inputs) to provide outputs by means of a
transformation process. Therefore the transformation model comprises 3 main components: Inputs, the
transformation process itself and outputs.
Page 2
Chapter 10 Summary – Operations Management
The Operations Function is that function of the business aimed at executing the transformation process.
The importance of operations management:
It can reduce the cost of making products or offering services
It can increase the revenue the business receives for offering its products and services to its
customers/clients
It can reduce them amount of investment (capital) needed to manufacture the type and quantity of
products or to offer the service required/
It can provide the impetus for new innovation by using itsl solid base of operational skills and
knowledge to develop new products and services
Other reasons Op’s Management are important to a business:
Operations management can improve productivity
Operations management can help a business to satisfy the needs of its customers/clients more
effectively
Operations management can be decisive for the general reputation of the business
Defining terms used in operations management:
The operations function is that function in the business primarily aimed at the utilisation of
resources to manufacture products or render services.
Operations management involves operations managers’ activities, decisions and responsibilities
that tie in with the execution of the operations function.
Page 1
, Operation-management strategies and performance objectives:
See diagram pg 251
All businesses formulate business objectives, and if a business intends surviving in the long term, consumers who
are satisfied with the business’s products or services should be a top-priority objective. Although there are
numerous customer needs that can be reduced to 6 main elements:
Higher quality
Lower costs
Shorter lead time (quicker manufacturing or provision of services)
Greater adaptability (flexibility)
Lower variability with regard to specifications (reliability)
High level of service (better overall service).
With these 6 customer/client requirements as a basis, operations management performance objectives can be
formulated to give the business an “operations-cased advantage” over other businesses. Operations management
performance objectives must indicate the specific areas with the domain of the operations function that will be
emphasised when products and/or services are produced or provided. The operations-management performance
objectives are formulated in such a way that they are applicable to both manufacturers and service providers. To
acquire operations based advantages, the following 6 general operations-management performance objectives can
be followed:
Do things right the first time
Do things cost effectively
Do things fast
Make changes quickly
Do things right every time
Do things better
Operations management guideline Positive result
Do things right the first time Higher quality
Do things cost effectively Lower cost
Do things fast Shorter lead time
Changing things quickly Greater Adaptability
Do things right every time Lower variability
Do things better Better service
The transformation model:
The operations function is primarily concerned with using resources (inputs) to provide outputs by means of a
transformation process. Therefore the transformation model comprises 3 main components: Inputs, the
transformation process itself and outputs.
Page 2
