Fundamental rationale of business and management
Without efficient operations, leading to products and services customers are satisfied with, success in the other business functions is unsustainable.
With revenue growth under threat, the shift towards operations is to ensure costs reductions to boost profits and satisfy the growing demands of shareholders for increasing returns. Operations management in an era of globalisation, change and innovation is critical for an organisation’s economic sustainability.
Outsourcing (pros and cons)
+ cheaper and faster to set up than in-house production
+ sometimes allows for better up-to-date technology than at origin
+ allows focus on the core business and not on things like support center or office cleaning
– control reduction
– potential lack of quality control and disadvantages arising from the interdependence of relying on a stakeholder to provide resources for a production process
– stealing of intellectual property
Tipple bottom line
Organisations have a responsibility to people, planet and profit. There operations management connection is that given the scarcity of resources and the need for environmental sustainability, organisations need to ensure that in addition to profit, they consider the “wider” picture of their economic activity.
different methods of production
one-off projects (ships; niche markets) with customer specifications
items are produced in consignments and undergo part of the process together; good mix between flexibilty and customer specifications but still allowing some economies of scale, making the product price cheaper (bread making)
continuous prodction process, where the where consigment moves from one stage to the next without stopping (car industry)
large-scale flow production; significant economies of scale (supermarket beans)
cell production / cell manufacturing
cell production is splitting of a flow production line into self-contained units, each completing one unit of the product
employees can be rotated within the group of cells, which may enhance motivation and covering staff absence.
global location trends
more multinational activity
increasing impact of ICT
growing market for offshoring and outsourcing
successful global branding and glocalisation
crowdfunding like Kickstarter and microcredits
location can be influenced by the following factors:
- accessibility to the market - easy access limits transportation costs, especially with heavy goods and white goods (fridges…)
- goverment grants and allowances and tax considerations (Ireland)
- availability of land - especially concerning large-scale production or warehouses
- existence of reliable infrastructure such as energy generation, transportation links, traffic congestion, etc.
- relationships with suppliers
- availability and suitability of local labour