Operations - Role of operations management Flashcards
What is the strategic role of operations management?
- strategic: refers to long-term, broad aims affecting all key business areas
- involves coordinating with the other business functions to contribute to the achievement of the business’s strategic goals
- this involves making production decisions and allocating resources to reduce costs, produce high quality goods and services to increase sales and profits
What are the two key aspects of the strategic role of operations management?
- cost leadership
- good/ service differentiation
Outline cost leadership in operations management
- aiming to have the lowest costs or to be the most competitive in the market
- direct relationship with cost and quality, must balance costs with the desired quality of products
Identify and provide examples of wastes in businesses that can add to costs of operations
- overproduction: excess stocks
- motion: a worker who seems busy but is not actually doing anything
- defects: products that do not reach quality standards
Describe strategies to achieve cost leadership in operations
- economies of scale: increasing the scale of operations (e.g. mass
production, bulk buying) - vertical integration: expanding by acquiring another company in the supply chain
- outsourcing
- reduce product quality/ features
Identify the two approaches of good/ service differentiation
- standardisation: making products that are identical
- differentiation: distinguishing goods or services from competitors
Outline strategies to achieve differentiation of goods
- actual features: e.g. ingredients
- product quality e.g. type of ingredients
- augmented features: add-ons, additional features
Outline strategies to achieve differentiation of services
- amount of time spent on a service
- level of expertise offered: e.g. qualifications and expertise
- self-service options e.g. supermarkets, fast food stores
- flexibility
- no fuss: e.g. no questions asked return policies
- quality of materials or technology used in service delivery
Define cross branding as a product differentiation strategy
- strategic alliances which create a form of differentiation due to the external factor created by the alliance
- e.g. McDonald’s and monopoly
Identify the different types of goods produced in different industries
- standardised vs customised goods
- perishable vs nonperishable goods
- intermediate vs final goods
Compare standardised and customised goods
- standardised: identical, mass-produced on assembly lines, cost leadership approach, same quality and design
- customised: varied according to customer preferences, differentiation approach, market focused
Compare perishable and non-perishable goods
- perishable: can spoil or decay, high standards of quality, short production time, robust packaging and storage
- non-perishable: doesn’t spoil, more durable
Define intermediate goods
Goods that are produced to be sold and used as inputs in the production processes of other business, processed more than once
Outline the interdependence of operations with the other key business functions
- marketing: operations produces prototypes and final products designed by marketing
- finance: operations can improve efficiency of production and identify changes to suppliers to help reduce costs
- human resources: operations informs HR of what skills, qualities and experiences are needed for operations jobs
