9.1 Main role of operations & Areas of interface with Finance Flashcards
1
Q
Definition of operations: (pg 225)
A
- Operations involves the activities around the acquisition of raw materials (inputs), their conversion (transformation) into finished products (output) and the supply of finished product to customer
- includes service operations and manufacturing operations
2
Q
Definition of operations management:
A
- it is the activities involved in designing, producing and delivering products and services that satisfy the customers requirements
3
Q
Definition of processes:
A
- all operations consists of a collection of processes
- these are the building blocks of operations and connect with each other to form a network
- the processes transform the input resources to output g&s
4
Q
Operations processes differ in a number of ways, particularly the 4V’s will have an impact:
A
- Volume of inputs and outputs (high volume vs low will be more capital intensive and greater specialisation of labour skills)
- Variety of inputs and outputs (wide range vs more restricted basic range)
- Variation in demand (may vary from one season to another or or have periods of peak / low demand vs a fairly constant level of demand)
- Visibility to customers (if highly visible employees will need good communication and interpersonal skills to deal with customers)
- These impact how operations will be organised and managed
- high volume, low variety, low variation and low visibility will help keep processing costs down
5
Q
Porters value chain model is based (pg 229)
A
- around activities rather than traditional functional departments
it considers the activities that create value and drive costs - these are the activities the org should focus on improving
- many of these activities relate to operations function
6
Q
Porters value chain activities are split into:
A
- primary activities
- secondary (support) activities
- each activity is looked at to see if they give a cost advantage or a quality advantage
- a profit will be made if the customer is willing to pay more for the g/s than the sum of the costs of all the activities in value chain
- linkages connect the interdependent elements of value chain together (eg: better quality could reduce after sales service)
7
Q
Primary activities:
A
- directly concerned with creation or delivery of g/s
- the customer interacts with these and can see the value being created
- such as:
- Inbound logistics (receiving, storing and handling of raw inputs)
- Operations (transformation of raw inputs into finished g/s)
- Outbound logistics (storing, distributing and delivering of finished goods)
- Marketing and sales - customer made aware of g/s
- After sales service (after point of sale - enquiries, returns, repairs)
- operations management is concerned with all except marketing and sales
8
Q
Secondary activities:
A
- necessary to support the primary activities
- and helps improve the efficiency and effectiveness of primary activities
- such as:
- Infrastructure (how firm is organised)
- HR management (how people contribute to competitive advantage)
- Technology (how firm uses technology)
- Procurement (purchasing of materials, supplies and equipment)
- Operations management is directly concerned with procurement and some elements of firm infrastructure and technology development
9
Q
Process design is the
A
- method by which individual specialists seek to understand bus processes and ensure they are designed to be as efficient and effective as possible
- the design of processes will go hand in hand with design of new g/s
10
Q
A process map provides
A
- a visual representation of the steps and decisions involved in processing a product or transaction
- it provides a detailed analysis of existing processes which along with the org mission, goals and customer needs, needs to be understood before any changes are made to processes
11
Q
Advantages of process maps:
A
- Management understanding - allows a better understanding of basic processes and gives management an overview of responsibilities and key stages in operations
- Role understanding - allows workers to understand what their job is and how their work fits into whole process, and can help with role reallocation
- Standardisation - highlights where opportunities exist to standardise processes
- Highlights inefficiencies - visually highlights areas of waste by analysing queues, value and location
- Supports corporate initiatives - mapping can be used as a tool as part of a corp initiative such as customer satisfaction improvement programmes
12
Q
Product and service development stages:
A
- Consider customer needs (high quality / value for money)
- Concept screening (vetted to see if it meets criteria ie. profitable)
- Design process (prototype / value engineering - all components add value)
- Time to market (the shorter the better)
- Product testing (to see if it works properly and customers like it)
13
Q
Areas of interface between operations and finance:
A
- Operations management will be an important contributor to effective and efficient purchasing, production and delivery of g/s
- it should work in partnership with FF to ensure this efficiency and effectiveness is optimised
- operational level tasks that interact with FF include:
- purchasing
- production
- service provision
14
Q
Purchasing (procurement) is
A
- responsible for placing and following up orders
15
Q
Purchasing coordinates with FF as follows:
A
- Establishing credit terms - work with to liase with suppliers to set up a credit account and negotiate acceptable credit terms
- Prices - FF can advise on what is max price that should be paid to maintain margins
- Payment - approved by purchasing and made by FF
- Data capture - order details will be captured by purchasing and given to FF
- Inventory - FF can help ensure less cash is tied up in inventory
- Budgeting - FF will consult with purchasing about likely costs for budgets
