UNIT # AOS 3 - BIS MAN
OPERATIONS STRATEGIES (TECHNOLOGICAL DEVELOPMENTS)
Four strategies used to improve the efficiency and effectiveness of operations include: Technological Developments Materials Quality Waste Minimisation
GLOBAL SOURCING OF INPUTS (advantages and disadvantages) -GLOBAL CONSIDERATIONS
Advantages Access to cheaper materials. • Access to materials not occurring in the domestic country. • Can specialise in production not sourcing Disadvantages Can lengthen delivery / supply times. • Exposed to changes in exchange rates. • Language barriers in dealing with suppliers. • Suppliers country ethical, environmental and legal standards may be different. • Risk of damage in shipping increases with distance.
CAD/CAM- advantages and disadvantages (TECHNOLOGICAL DEVELOPMENTS)
Advantages Productivity rates increase so cost per unit can fall • 24/7 production • Accuracy / precision increase • Remove dangerous or repetitive tasks • Reduced wastage Disadvantages Initially very expensive • If system breaks down major suspension to production • Requires technical training • Can lead to large scale redundancy
WASTE MINIMISATION
Businesses are being forced to change the way they manage waste. Waste prevention techniques are increasingly utilised in business: Reduce the use of resources Reuse produced waste, effort is made to reuse it where practical. Recycle waste material into useable products. Recover materials or energy from waste which cannot be reduced, reused or recycled.
MANUFACTURING - CORPORATE SOCIAL RESPONSIBILITY (CSR)
Cleaning waste goes into a holding tank in the on-site water treatment facility. Recycling of packaging materials occurs where it is economically and environmentally viable as well as paper products such as skim milk powder bags are recycled. Bottles can be collected for recycling as they are able to be crushed and mixed with other resin to be made into products such as chairs and tables. Using off peak rates for utilities where possible including a natural gas boiler for short periods which does not pollute the air. Extensive product testing includes more than 120 assessments of samples collected, including microbiological quality, composition and taste testing before being released to stores.
CONSIDERATIONS... -GLOBAL CONSIDERATIONS
Considerations when sourcing raw materials (inputs) from various locations across the globe include: Growing conditions - Drought / flood Sustainable production / environmental damage Political / economic stability of region Labour market conditions / child labour Duration of delivery - shipping time Market conditions can change Prices change - e.g. global exchange rates change
QUALITY MANAGEMENT
Consumers generally base purchasing decisions on quality and price, looking for the best possible quality at the lowest price. Organisations with a reputation for quality products and service have a distinct competitive advantage. A quality product should be: Reliable Fit for the purpose for which it were intended Easy to use Durable Well designed Delivered on time
PRESSURE FOR CSR - CORPORATE SOCIAL RESPONSIBILITY (CSR)
Employees often choose to work with employers who are known to have CSR policies and practices in place. Customers are more likely to buy from a business that demonstrates social responsibility. Shareholders often make investment choices based on the level of social responsibility demonstrated by a business (aka 'green investment'). The communities increasingly concerned about and aware of social responsibility issues and expects greater corporate responsibility from its corporate citizens. The media-highlights CSR issues and companies that 'infringe' risk, incurring damage to reputation. Suppliers often choose to give preferential treatment to CSR businesses.
GLOBAL SOURCING OF INPUTS -GLOBAL CONSIDERATIONS
Just as you might purchase products from overseas, businesses can also buy inputs from markets in other countries. This is referred to as global sourcing. Global Souring of Inputs is when raw materials are sourced from overseas due to a favourable prices compared to Australia. Cadbury source cocoa from a range of counties in Asia & West Africa. Many businesses today do this to exploit efficiencies that can be gained from the global delivery of products, including: Low-cost Skilled Labour Low-cost Raw Materials Economic factors such as lower taxes and low trade tariffs due to free trade agreements.
WASTE MINIMISATION Cost savings from waste minimisation include:
Lower waste disposal costs Lower waste treatment costs Lower energy costs Savings on materials and supplies A reduction in regulatory compliance costs Lower storage costs Cost recovery through the sale of recyclable materials Cost recovery through sales of 4Rs technologies developed through research and development
EMPLOYEE PARTICIPATION/EMPOWERMENT -qualities management
Many businesses use quality circles as a means of achieving employee empowerment. Under this approach, teams of up to 10 workers meet regularly to solve problems related to process, design or quality. The groups often make presentations to management with their ideas, in order to improve the performance of the business. Such programs have resulted in substantial cost savings for businesses.
GLOBAL OUTSOURCING -GLOBAL CONSIDERATIONS
Outsourcing is when a business decides to contract a component/s or area of responsibility to an external organisation. The involvement of overseas businesses relates to reducing costs. Outsourcing can relate to core tasks such as manufacturing or support services including communications, accounting, marketing or information technology. When outsourced, positive outcomes include cost savings, improvements to quality and access to operational expertise. Conversely three is often negative media exposure and public feedback when a business opts to outsource, particularly overseas.
OVERSEAS MANUFACTURE -GLOBAL CONSIDERATIONS
Overseas manufacture is when a business opts to transfer manufacturing overseas to take advantage of reduced costs compared to Australia. Also referred to as offshoring, meaning a good is produced in a country that is different to the location of the business's headquarters. Many businesses successfully manufacture their goods locally, but manufacturing in countries outside Australia can enable a business to get its product to the market more quickly, reduce the cost of production and reduce delivery costs. A businesses may choose to manufacture overseas to: Reduce labour Overhead and component costs Businesses will often keep research and development & design in Australia.
MANAGING OPERATIONS & BUSINESS OBJECTIVES (OPERATIONS MANAGEMENT)
Senior management set business objectives and operations managers interpret these and decide how they are going to be achieved via the operations process. An operations manager must be the implementer and driver of business strategy and ensure processes and procedures are in place to meet overall business objectives. The operations management are of responsibility has a considerable influence on the quality, cost and availability of an organisation's goods or services.
QUALITY STRATEGIES -qualities management
Strategies to improve the efficiency and effectiveness of operations related to quality, including: Quality Control Quality Assurance Total Quality Management (TQM) Failure to meet these expectations can result in: Customer Dissatisfaction = Poor sales = Poor sales revenue = Poor profits Poor reputation = Lost sales = Lower profits Product recalls = Additional costs and lost sales = Lower profits
SUPPLY CHAIN MANAGEMENT -GLOBAL CONSIDERATIONS
Supply Chain Management (SCM) is the coordination of the movement and storage of raw materials, of work-in-progress inventory, and of finished goods from point of origin to point of consumption. A typical supply chain starts with the sourcing of natural resources, followed by manufacturing activities such as component construction and assembly. The supply chain moves on to storage facilities before reaching the consumer. It is from this range of suppliers that the business purchases materials and resources. The supply chain needs to be well managed because an operations system depends on the inputs.
WASTE MINIMISATION
Waste minimisation options include: Redesigning products and packaging Procurement of materials made from recycled materials Reusing scrap material Improving quality control Exchanging waste with other businesses Introducing all systems approaches, such as Lean Management.
TOTAL QUALITY MANAGEMENT (TQM) (advantages and disadvantages) -qualities management
Advantages - Zero defects. • Greatly reduced wastage - "prevention better than cure". • Higher customer satisfaction Disadvantages Requires a whole business cultural shift which can be time consuming and expensive to implement.
EMPLOYEE PARTICIPATION/EMPOWERMENT (definition) -qualities management
Employee participation encompasses the concept that problems are be best solved with an emphasis on employee involvement.
CSR & ELEMENTS OF THE OPERATIONS SYSTEM - CORPORATE SOCIAL RESPONSIBILITY (CSR)
Environmental Sustainability of Inputs Use of inputs that have minimal negative impact on the environment. The ethical and moral position of the supplier must be considered, as this can reflect negatively on the business. Amount of Waste Generated from Processes Ensuring the production process runs in an efficient manner to minimise the waste produced. Implementation of lean management. Ability to recycle wastage created as art of the production process. Amount of Waste Generated from Outputs Ensuring the final product will not create excess waste through its packaging, use or disposal. Possibility of recycling packaging or the output itself.
OPERATIONS MANAGEMENT
Operations refers to the production of goods and/or services and is responsible for transforming inputs into finished outputs. Businesses must manage their operations as efficiently as possible if they want to remain competitive in the market. The operating system of a business will determine the cost of production and the quality of the finished goods. It is crucial that the operations system is aligned with the business's goals and objectives. Ideally, the operations system will produce the best quality goods for the lowest price.
QUALITY MANAGEMENT
Quality is the degree of excellence in a product and its ability to satisfy client/customer requirements.
QUALITY ASSURANCE -qualities management
The ISO 9000 series of quality certifications is a widely used international standard. Specific processes to be adopted in regards to customer satisfaction, continuous improvement and the production process Training of staff Documentation of processes Controls Corrective action Auditing of processes
TOTAL QUALITY MANAGEMENT (TQM) (defnition) -qualities management
Total Quality Management is an ongoing, business-wide commitment to excellence that is applied to every aspect of the business's operation.
LEAN PRODUCTION - STRATEGY (advantages and disadvantages) - WASTE MINIMISATION
strengths- > reduced energy and recourse consumption > increased worker productivity > increased customer satisfaction weakness- > employees may resent the change to lean or may prefer not to provide any input > the constant focus on improvement and elimination of easte can result in workplace stress > can involve high implementation costs
CUSTOMER FOCUS (definition) -qualities management
Customer Focus - quality should be the responsibility of every employee therefore customers must be the focus of their efforts.
LEAN PRODUCTION - STRATEGY - WASTE MINIMISATION
Lean Production is based on: Just In Time: materials are delivered just as they are required in the production process so inventory costs are kept to a minimum. (See earlier in this chapter for more detail.) Continuous Improvement (Kaizen): a strategy where employees at all levels of the company work together proactively to achieve regular incremental improvements in the production process. Use of Automation (Jidoka): improving efficiency and effectiveness whilst reducing waste and defects.
WEBSITE DEVELOPMENT (TECHNOLOGICAL DEVELOPMENTS)
In the twenty-first century the development and maintenance of an accessible and easily locatable business website is vital to competitiveness. Customers invariably research businesses, their products, menus, location, special offers and product benefits via business websites. Websites are a vital point of sale medium with online shopping evolving rapidly. They also allow for bookings to occur within the customer having to call or visit the business. Customers expect that business website function across a range of platforms including smartphones.
INPUTS, PROCESS, OUTPUTS (OPERATIONS MANAGEMENT)
Inputs include raw materials, component parts, human resources, information and knowledge, equipment, technology and time. The Process/Transformation stage is planned, implemented and controlled by the operations manager. At this stage the inputs are converted to the outputs. Finally, the Outputs are produced. These can be either goods or services.
CHARACTERISTICS OF OPERATIONS MANAGEMENT (OPERATIONS MANAGEMENT)
There are two types of outputs: Goods, which are tangible objects and can generally be produced, stored and consumed separately and are usually mass produced (e.g. shoes, a car). Services, which are intangible and often produced and consumed simultaneously as well as being tailored to individual requirements (e.g. education, professional advice).
TOTAL QUALITY MANAGEMENT (TQM) -qualities management
Total Quality Management contains three core comments: Customer Focus Continuous Improvement Employee Participation/Empowerment
AUTOMATED PRODUCTION LINES - advantages and disadvantages (TECHNOLOGICAL DEVELOPMENTS)
Advantages • 24/7 production • Accuracy / precision increase • Reduced wastage Disadvantages • Initially very expensive • If system breaks down major suspension to production • Requires technical training
CAM (TECHNOLOGICAL DEVELOPMENTS)
Computer Aided Manufacturing Software used to allow the manufacturing process to become computer directed by designing and controlling the process. The CAD software can be linked to CAM software to manufacture designs that are accepted by clients. CAM can also be used more broadly to calculate how much of each input would be required.
TOTAL QUALITY MANAGEMENT (TQM) -qualities management
Quality becomes both a commitment and the responsibility of every employee in the business. The aim of TQM is to create a defect-free production process and maintain a customer focus in operations. The adoption of TQM can improve the price competitiveness of a business and can also improve product quality, allowing the business to attain a competitive advantage.
CUSTOMER FOCUS -qualities management
The TQM approach considers one of the most important questions a business should ask: 'What does the customer require?' All teams need to realize that they are serving a customer. This is as true for the employees that deal directly with external customers as for those that simply pass work on to other employees within the business.
TECHNOLOGICAL DEVELOPMENTS (TECHNOLOGICAL DEVELOPMENTS)
The specific Technological Development strategies required to improve the efficiency and effectiveness of operations are: Automated Production Lines Computer-aided Design (CAD) Computer-aided Manufacturing (CAM) Techniques Website development
ALTERNATIVE STRATEGIES - WASTE MINIMISATION
There are a range of Lean Management strategies utilised by businesses. Other options you may read about include. Seven Types of Waste (Transportation, Inventory, Motion, Waiting Time, Overprocessing, Overproduction, Defects) known as TIMWOOD. Pull Focussed, Takt, Once Piece Flow, Zero Defects. 5S - Sort, Straighten, Shine, Standardise, Sustain.
MASTER PRODUCTION SCHEDULE (MPS) (MATERIALS MANAGEMENT)
A Master Production Schedule (MPS) is a statement of what a business intends to produce, in what quantities over a set time frame taking into account forecast customer demand and production costs. When production is to take place. Where production is to take place. Who - staff needed to do the work. Advantages Helps determine very accurate ordering quantities and timings - avoid wastage, time and costs. • Very clear to all staff of processes and their sequence. • Easy for new staff to learn routine. • Reduced general wastage. Disadvantages• Initially time consuming and expensive to track, record and write up the "manual". • Hard to account for every situation. • Not very flexible.
ROBOTICS (TECHNOLOGICAL DEVELOPMENTS)
A typical key feature of an automated production line is the use of robotics — a form of technology that is capable of complex tasks. Robots are used in engineering and specialised areas of research, as well as on automated production lines, where a programmable machine capable of doing several different tasks is required. Robotics allows for a degree of precision and accuracy generally unmatched by human labour. In addition, robots work without complaint or demands for wage rises, in conditions that would be soul destroying and often dangerous for employees. Robotics is a high cost form of technology that can be unaffordable for many small and medium-scale manufacturers.
WEBSITE DEVELOPMENT - advantages and disadvantages (TECHNOLOGICAL DEVELOPMENTS)
Advantages 24/7 availability • Labour costs reduced • Ensures consistent message • Easy access to customer feedback survey • Saves cost of a bricks and mortar business Disadvantages Initially very expensive • If system breaks down major suspension to production • Requires technical training • Can lead to large scale redundancy
GLOBAL OUTSOURCING (advantages and disadvantages) -GLOBAL CONSIDERATIONS
Advantages Access to cheaper labour rates • Business not directly responsible for non-core services and their employees and entitlements • Works well with IT based services where internet and phone developments mean they could be based anywhere in the world Disadvantages Language barriers in dealing with overseas businesses sometimes translates into customer frustration • Reliance on internet connections • Suppliers country corporate social responsibility and legal standards may be different
AUTOMATED PRODUCTION LINES (TECHNOLOGICAL DEVELOPMENTS)
Automated production Lines Automation involves replacing human effort with: Machinery Technology due to advances in engineering Mechanics Robotics Computer advancements Automated production lines work generally in manufacturing industries where mass production of a standardised product is possible. Each station performs a specific operation in sequence, preferably with automatic transfer between each station. However automated production lines can also be used in service related industries e.g. Australia Post
INPUTS (OPERATIONS MANAGEMENT)
Inputs are the resources used in the process of production. Some resources are owned by the business, while others are from suppliers. Materials includes raw materials, components and parts consumed or converted by the transformation process. Capital equipment includes the plant, machinery, equipment and property necessary to conduct operations. Labour refers to people involved in the operations function. Information from a variety of sources contributes to the transformation process. Businesses do not always account for the value of this resource, because it cannot be easily quantified as an asset. Time and its efficient use are critical to all businesses. Coordinating resources within appropriate time frames limits costs and wastage. Operational planning may involve achieving production tasks ranging in duration from one year to merely hours. Money is generally considered to be the most flexible of all resources, because it can easily be converted into any quantity or combination of materials, capital or labour.
INTRODUCTION TO INVENTORY CONTROL (JUST IN TIME) (MATERIALS MANAGEMENT)
Inventory control is a system used to ensure that costs associated with maintaining an inventory of materials are kept to a minimum. Costs can be minimised by not allowing materials to remain idle and by making sure that inputs are available for the operations system when needed. An operations system that runs out of materials will not perform at optimal level. Modern businesses use bar coding and computerised stock records to control inventory. Computerisation can help to minimise loss or theft of stock and it provides precise, up-to-date information about stock levels. Signals can alert management when it is time to order new materials, and how much to order. Businesses also conduct stocktakes, physically counting stock and then comparing the count against what was expected to be available. Just In Time (JIT) is an inventory management system which aims to avoid holding any stock (either as inputs or finished goods). Supplies arrive just as needed for production, and finished products are immediately despatched or sold to customers. This approach makes sure that the right amount of materials arrive just as they are needed for production. It can reduce storage costs and reduce the risk of any waste occurring in storage, thus increasing competitiveness. However, supplier deliveries must be reliable, and materials must be received at the appropriate time. While JIT offers great potential for productivity improvement and cost savings, it does have potential drawbacks. Key elements of the Just In Time system: JIT aims to reduce costs through minimisation of inventory. Small quantities of inputs, such as raw materials and component parts, are delivered more frequently. Large stockpiles are therefore avoided. Inventory is replaced as it is used. Employee participation is required to identify wasteful work practices and eliminate these on a continuous basis. Advantages No raw material wastage. • The bare minimum of cash "trapped" in raw materials. • No storage space required. • No idle machines. Disadvantages Significantly reliant on suppliers to deliver on time, all of the time - failure to do this very quickly shuts down the entire production line.
SUPPLY CHAIN MANAGEMENT (advantages and disadvantages)
Advantages Access to cheaper materials • Access to cheaper labour rates • Business not directly responsible for factory production • Works well with large volumes of simple assembly manufacture where delivery times are not too important • Can take advantage of global variations in tax rates Disadvantages Can be very complicated to manage • Can lengthen delivery / supply times • Exposed to changes in exchange rates • Language barriers in dealing with suppliers • Suppliers country corporate social responsibility, environmental and legal standards may be different • Risk of damage in shipping increases
OVERSEAS MANUFACTURE (advantages and disadvantages) -GLOBAL CONSIDERATIONS
Advantages • Access to cheaper labour rates, cheaper costs of protection • Access to large pool of employees • Business not directly responsible for factory operation • Works well with large volumes of simple assembly manufacture where delivery times are not too important • Access to new export markets Disadvantages Lost jobs in domestic manufacturing • Can lengthen delivery / supply times • Language barriers in dealing with manufacturing suppliers • Suppliers country corporate social responsibility, environmental and legal standards may be different • Concern for Sweatshop labour • Risk of damage in shipping increases
QUALITY CONTROL (advantages + disadvantages) -qualities management
Advantages • Prevents poor quality goods or services reaching the consumer. Disadvantages • Is very wasteful as the rejected products involve raw materials, time and processes which are not sold to the customer Doesn't always isolate the cause of the problem. • Unless Quality control is performed on every product some inferior goods may slip through.
CONTINUOUS IMPROVEMENT (definition) -qualities management
Higher and higher standards are set in the continual pursuit of improvement. Kaizen (Japanese for 'improvement') emphasises continuous improvement in all facets of a business, from the way the CEO manages to the way assembly line workers perform their jobs. Although perfection is practically impossible to achieve, it is the 'striving' which is important to a business's corporate culture.
CAD (TECHNOLOGICAL DEVELOPMENTS)
Computer Aided Design Software which improves the creation and editing of products in the design phase - allows for the creation of 3D designs. CAD software can customise a series of options that meets the client's or customer's needs. Normal drafting processes would cost much more, take longer and be less accurate. CAD software can also design the sequence of steps that would need to be taken to create the desired product in the shortest possible lead time using the least material.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate Social Responsibility is the obligations a business has over and above its legal responsibilities to the wellbeing of employees and customers, Ethics = People Social Responsibility = Planet
FORECASTING (MATERIALS MANAGEMENT)
Forecasting is a materials planning tool that relies on data from the past/present and analysis of trends to attempt to determine future requirements. A business needs to forecast the quantity and timing of demand for its good or service and then match supply with demand. . In order to forecast successfully an operations manager must locate sources of supply, negotiate the best price, place purchase orders, follow up, maintain good relations with vendors, approve, evaluate and rate suppliers. The following factors must be considered when forecasting materials: Supplier lead-in time: Suppliers require prior warning of orders. Component manufacture, for example, may take some time so orders must be made in advance to allow for this. Future price changes:This possibility must also be considered. Prices may change due to seasonal variations, world market conditions, changes in the value of the Australian dollar or potential industrial action at a supplier's production facility. Advantages • Can anticipate seasonal changes and adjust orders to save on costs and wastage. • Can help to prevent overordering taking up storage space. Disadvantages • The "running backwards looking over your shoulder" principle - unexpected events can still catch you out. • Requires a lot of time to anticipate, track and analyse all potential impacts on supply chain.
GLOBAL CONSIDERATIONS
Globalisation has provided an array of options for businesses and challenged traditional methods of sourcing inputs, production methods and use of suppliers. Globalisation is the movement across nations of trade, investment, technology, finance and labour brought about by the removal of trade barriers. Global Considerations to consider include: Global Sourcing of Inputs Overseas Manufacture Global Outsourcing Overview of Supply Chain Management
APPLICATION OF CSR TO OPERATIONS - CORPORATE SOCIAL RESPONSIBILITY (CSR)
In a question relating to CSR and its application to Operations you may need to complete one or more of the following tasks: Application of one CSR strategy to each element of the operations system (input, process output). Such an application may relate to a good or a service. Avoid using similar strategies for each element. E.g. Use environmental sustainability for one and refer to an ethical issue for another. Use your breadth of knowledge and ensure you highlight how the outcome will impact the business. Discussion of a selected CSR strategy including advantages and disadvantages. Advantages are generally fairly obvious however there always lie disadvantages. Cost is often a considerable con along with the cost of capital purchases and redundancies. Application of a true CSR strategy as opposed to enforcement of the law. Avoid continually referring to CSR applications that are "above and beyond legal requirements". Use it once e.g. "providing workers with allocated rest breaks above and beyond what is required by law". Show your breadth of knowledge. Compliance with the law is not considered ethical or socially responsible by VCAA
LEAN MANAGEMENT - STRATEGY - WASTE MINIMISATION
Lean management involves a systematic process for eliminating waste so the end customer gets the most value from their perspective with fewer resources. Lean Management is based around Just-in-Time (JIT), Continuous Improvement & Automation. Lean management also improves the employee experience as they concentrate only on the things that matter to the end customer. Lean aims to: Increase efficiency, effectiveness and quality of processes Lower costs of production Improve customer satisfaction Improve employee satisfaction The term "lean" was coined to describe Toyota's business model and their Toyota Production System, and can be applied to both goods and services.
CSR & OPERATIONS - Managing inputs appropriately, Managing suppliers appropriately - CORPORATE SOCIAL RESPONSIBILITY (CSR)
Managing inputs appropriately -Operations managers should attempt to use inputs that do not have a serious impact on the environment. The inputs used in a production process also create waste. In the desire to keep down the costs of production, businesses should not be tempted to use cheaper, illegal waste disposal methods. Managing suppliers appropriately - Many businesses work with their suppliers to ensure that they follow guidelines on socially responsible behaviour. Suppliers can be expected to provide materials that come from socially responsible sources, such as environmentally sustainable supplies and workplaces that are free of exploitation. It is also not appropriate for businesses to provide preferential treatment to suppliers that offer gifts such as free meals, trips or entertainment, or to select suppliers based on personal friendships.
CSR & OPERATIONS - Managing staff appropriately, Managing the customer relationship appropriately - CORPORATE SOCIAL RESPONSIBILITY (CSR)
Managing staff appropriately -Operations managers must make sure that the business's facilities and technology contribute to the health and welfare of staff, above and beyond what is required by legislation. Irregular or incomplete maintenance of production facilities can result in detrimental consequences. For example, toxic production processes can threaten the health of employees, as has been the case with asbestos mining and manufacturing. Managing the customer relationship appropriately - An operations manager needs to make sure that the goods produced are of the required quality, that they are safe and reliable. Dangerously defective or harmful products can result in the injury or death of consumers. The delivery of a product can raise issues around the socially responsible behaviour of managers, such as fair and equitable treatment of customers.
MATERIALS MANAGEMENT
Materials Management is the strategy that coordinates the use, storage and delivery of supplies to ensure the correct amounts of inputs are available when required in the operations system. Managing materials as efficiently and effectively as possible is vital to a successful operation and a business reaching its objectives. The materials themselves are any raw products / components that are needed in the production process and when stored and are held in "stock". Materials may also be referred to as inventory. The four strategies related to Materials Management include: Forecasting Master Production Schedule Materials Requirement Planning Just-in-Time
MATERIALS REQUIREMENT PLANNING (MRP) (MATERIALS MANAGEMENT)
Materials Requirement Planning (MRP) is completed after the business has a clear understanding of the quantities to be produced and the time frame involved. It is an itemised list of all materials involved in production to meet the specified orders. Such planning must consider: Lead times required by suppliers; that is, whether items need to be ordered weeks or months in advance The amount of stock (inventory) on hand A schedule containing an itemised list of the types and amounts of input materials required to meet the MPS requirements is drawn up using anticipated and real customer orders. Materials Requirement Planning is usually completed using sophisticated software. Advantages • Reduction in wastage. • Reduction in storage space. • Reduction in idle machines. Disadvantages • Initially expensive to set up a dedicated system which can accurately track materials through the site.
PROCESS/TRANSFORMATION & OUTPUTS (OPERATIONS MANAGEMENT)
Process/Transformation is the conversion of inputs (resources) into outputs (goods or services). Sony, for example, takes plastic, metal, glass and electronic parts, and transforms them through design, manufacturing and assembly into numerous electronic products. Outputs are the result of a business's efforts — the final good or service that is delivered or provided to the consumer. Goods tend to be homogenous, which means that they are basically all the same or similar. Services tend to be differentiated, that is, they are provided to individual customers and are modified to suit each customer.
QUALITY ASSURANCE -qualities management
Quality Assurance involves an external certification from the International Organisation for Standardisation (ISO) via one of their 161 national standards bodies.
QUALITY ASSURANCE (definition) -qualities management
Quality Assurance is a proactive process and aims to build quality into work processes and thereby avoid errors in the first place.
QUALITY ASSURANCE (advantages + disadvantages) -qualities management
Quality Assurance is growing at a rapid rate among Australian organisations as globalisation increases international competition and the quality expectations of Australian consumers. Advantages - Great for marketing. • Gives competitive advantage in domestic and global markets. • Reduces wastage as the proactive focus aims to stop errors occurring before the good or service is produced. Disadvantages - Can be expensive to have the certification. • Can take additional time preparing documents and processes prior to the inspection.
QUALITY CONTROL (definition) -qualities management
Quality Control involves the use of a series of physical checks at different stages of production to ensure that products and services meet designated standards and errors are eliminated post-production.
QUALITY CONTROL -qualities management
Quality control is reactive and aims to detect and eliminate defects after they occur. Once detected, operations management decides whether production needs to be halted to fix the problem's cause or not. At times, a product recall becomes necessary to rectify problems with units already sold.
SUPPLY CHAIN MANAGEMENT -GLOBAL CONSIDERATIONS
Supply chain management is critical for the following reasons: If materials are not on hand, nothing can be produced. If materials are of inferior quality, it is difficult or costly to produce quality products. If the right quantity of materials is not available, the business cannot meet demand. Supply chain management involves not only assessing the location in terms of distance to suppliers, but also considering the efficiency of delivery, the stock use rate, the uniformity of quality, and pricing and comparisons with other suppliers of similar product, to identify whether they can better meet the business's needs
OPERATIONS MANAGEMENT - KEY TERMS (TECHNOLOGICAL DEVELOPMENTS)
The following are key terms required for Operations Management: Effectiveness - the degree to which a business has achieved its stated objectives. Efficiency- how well a business uses resources to achieve objectives. Productivity- a measure of performance that indicates how many inputs (resources) it takes to produce an output (goods or services). Ensure you are equipped with each definition, its meaning and the ability to apply them to a specific case study.
TRIPLE BOTTOM LINE - CORPORATE SOCIAL RESPONSIBILITY (CSR)
Triple Bottom Line - reporting where a business organisation reports on social outcomes and environmental impact as well as financial performance. Economic performance is measured using financial key performance indicators (KPIs), measuring profits, financial turnover, market share and monetary value of assets held. Social performance is measured through examination of impacts the business has on people both within (employees) and outside the business (community). A business applying triple bottom line reporting will act in a way that benefits the community and ensures people are not exploited or endangered by the operations of the business. Social factors considered include wages and conditions, and contribution to the community. Environmental performance is measured through impact on the natural environment. Limiting or reducing negative environmental impacts is assessed.
WASTE MINIMISATION
Waste Minimisation is a process that involves reducing the amount of unwanted or unusable resources created by the business's production process in an attempt to improve the efficiency and effectiveness of operations. Minimising waste reduces the costs of production of the business, such as the costs of waste removal, and also improves productivity across the operations area. Furthermore, minimising waste demonstrates concern for the natural environment; this can contribute to improving the reputation of the business.
