MNB1601 SUMMARY STYDY NOTES 2022

MNB1601 SUMMARY
STYDY NOTES 2022

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MNB1601 NOTES

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 the 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 its 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.

Operation-management strategies and performance objectives:

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


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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.

Inputs:

Inputs used in the transformation process comprise both the resources that are to be
transformed (processed, changed or converted) and the resources required to make the
transformation possible. The resources to be transformed include the following:

 Material
 Customers/clients
 Information

The resources required to make transformation possible include:

 Human Resources
 Equipment and facilities
 Technology

The Transformation Process:

The transformation process converts inputs to outputs. The nature of the process is
determined by what input is predominantly being processed.



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Outputs:

The ultimate goal of any transformation process is to transform inputs into outputs. Outputs
assume the form of products or services.

Characteristics of products and services:

Products produced by manufacturer Services produced by service provider

 Physically tangible and durable  Intangible and perishable
 Output kept in stock  Output not kept in stock
 Little customer contact  Plenty of client contact
 Manufactured before use  Provision and consumption
simultaneous
 Long response time  Short response time
 Local & International markets  Mainly local markets
 Large production Facilities  Small service-provision facility
 Capital-intensive production  Labour intensive
 Quality easily measurable  Quality difficult to measure


Different operations have different characteristics:

While the basic purpose of all operations is similar in that they transform inputs into outputs,
the processes may differ fundamentally in 4 ways:

 The volume of output may differ (amount)
 The variety of the output may differ (range)
 The variation of output may differ (demand pattern)
 The visibility of output may differ (refers to how much of the operations activities the
customers experience themselves or are exposed to)

The classification of process types for manufacturers:

In manufacturing the most common classification system classifies different operations
processes according to the volume of output and the variety of products. According to the
classification system 5 main categories are identified:

 Project Processes: Projects represent operational processes that are highly individual
and unique, but that are normally tackled on a large scale. It can take several months or
years to complete such projects (i.e. constructions projects, upgrading or building of
airport, road, bridge etc.)
 Jobbing Processes: Jobbing normally represents operational processes conducted on
a small scale with a low volume of output. The nature of the work is the same
throughout, but the specific requirements differ from 1 task to the next. (Egg goldsmith
manufacturing jewellery, each piece is usually unique)
 Batch Processes (job lots): In batch production a limited range of products are
manufactured by the business and production occurs in batches. Similar to jobbing but
doesn’t have same degree of variety. i.e. batch production of domestic appliances such
as kettles, toasters, irons etc.


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