role of operations management:

 Transforming input to output

 Maximizing profits and minimizing costs
 Inventory controls
 Supply chain management.

• strategic role of operations management – cost leadership, good/service differentiation

STRATEGIC ROLE
 Operations overlaps with other business functions
 strategic meaning affecting all business activities
 strategic role of operations management is to allocate resources and make strategic decisions ( decisions for
long term benefit)
 Revenue or income maximized which means cost must be maintained
 Cost or expenses- in order to generate profit and make the business successful cost and expenses must be
managed strategically
COST LEADERSHIP
 cost and expenses which need to be managed as they decrease profits
 is to minimize costs and aiming to have the lowest costs or to be the most price competitive business
offering good quality.
 The Several sources of operational costs must be managed by managers and reduced. Lean production is
an operations approach to minimize wastage thus making production efficient
 Cost leadership is the cause of economies of scale which are cost advantages that can be created as a result
in lower overall cots operations. Which is created through acquiring cheap units and efficiency in the
productions process
 Strategies for cost leadership included:
1. Economies of scale in production and distribution
2. Access to cheaper raw materials
3. Controlling productions and research costs.
GOOD/SERVICE DIFFERENTATION
 product distinguishes from competitors . Features that distinguish: quality, price and product image
 Key strategy applied to produce distinctive products is personal customized goods updated features,
personal design, unique and innovative feature that are exclusive
 Services: differentiated by time spent delivering the service
 Service provided by expertise and qualified individuals are strategies for service differentiation.
 Service that use a varying materials/technology used in providing the service.

• goods and/or services in different industries

 operation management decisions will vary depending on the type of goods produced
 standardized goods are those that are mass produced on a production line and the quality of the good is
predetermined this is common in the manufacturing industry
 customized goods are those that vary according to the needs of consumers, produced with a market focus
rather than production focus
 thus the operational structure of a business depends on whether the goods produced are differentiated
  operational structures depend on whether the good is perishable or non-perishable if perishable items are
produced quality management will have more rigid structure with constant auditory inspections.
Nonperishable goods require little to no quality management.

• interdependence with other key business functions

 Hr management contributes to operations through hiring employees to perform tasks which assist
operations. Likewise operations also contributes to Hr as it allows employees to attain an income after
supplying labour in operations.
 Marketing a good is dependent on the production of the good itself, if the operations functions implements
unique and innovative features in the product, marketing will shows connect those features with consumers.
strong link between operations and marketing is when operations managers are making decisions about
how much a product will sell for.
 in order for operations to be successful in making goods finance is required to gain inputs and machinery is
required. Financial analysts can provide information to operation managers in relation to product sales, thus
OM can gain an insight into what part of their product needs improvement to get sales back up as the fiance
sector is concerned with profitability.

influences

• globalization, technology, quality expectations, cost-based competition, government policies, legal

regulation, environmental sustainability
Globalization
 the removal of barriers of trade between nations which means there is increasing integration between national
economies and high degree of transfer of capital.
 Provides business a sources of market opportunities internationally
 Creates opportunities for Australian businesses to expand into overseas markets, For example importing
materials or using foreign direct investment to establish operations from the ground up in a country where it
is cheaper to produce
 The product must meet the needs of global consumers
 Business are able to outsources its operation to foreign nations to minimize cost margins
 The supply chain of the business is increased as expanding overseas opens new suppliers …..
Technology
 impacts the way business carry out their operations
 avenue to increase productivity and reduce costs of hiring people to perform certain tasks
 Technology applied in the administration of a business assist with the organization, planning and decision
making processes
 Technology used at processing level in manufacturing, logistics and distribution assist in the process of
satisfying consumer tastes
 When technology is being applied in operations it will affect the business in several ways 1. Transactions- the
exchange of money for goods and services is further simplified by card transactions this creates a demand for the
business to accept this form of payment as consumers no longer carry cash
2. Sales- generating sales is dependent on the technological advantages a business product has ,
therefore in order to gear into sustainable growth technology must accepted and acknowledging te
implication of it on sales
 3. Effective management- technology influences management as it makes it simple to keep track and
records of stock, sales, profit, suppliers , creditors and etc
GOVERNMENT POLICIES
 policies affect the business operations such that new rules and regulations imposed DIRECTLY impact
businesses
 For example the federal government imposing carbon tax which means that business would have to pay levy
in the ratio in which it produces carbon as a byproduct of operations, This shapes business operations as
they would now seek to minimize the cost which shapes business practices.
 Policies such as taxation rates, WH&S standards, food safety measurement and environmental practices all
IMPACT business operations such that now have to adhere to the rules and regulations imposed by the
government
 The government trade protection policies (tariffs) protects Australian business form overseas influences.
 This effects business operations as they now are forced to become more productive and lower costs to be
more price competitive.
LEGAL REGULATION
 Laws and regulation force businesses to comply to federal government standards
 Regulations promote safety and fair business conduct
 Operations deals with the transformation of input to output performed by labour. Law that effect operation
include WHS, providing a safe and secure environment from employees, and giving staff appropriate safety
training
 Consumer protection - Apple has been repairing phones outside the warranty period for free since the
Australian Consumer Laws (ACL) changed in 2011. Consumers are given a guarantee for products,
including electronic goods.
s that impact on operations strategies used e.g

 Operations cannot release more than a legal maximum amount of pollution

 Products must meet minimum standards for quality and safety for consumers
 Products created by operations must perform as they are promoted to
 Employees must have a safe working environment (no dangerous machinery, or unsafe procedures)

ENVIROMENTAL SUSTAINABILITY
 Consumer awareness of the negative effects of business operations on the environment has impacted
business to be eco friendly
 Regulatory bodies such the EPA have an objective to protect, restore and enhance the quality of the
environment in NSW. Auditory checks on business are performed and reports are derived from the amount
of pollution caused by business operations.
 Business managers are forced to adhere to standards of consumers and regulatory bodies such that they
engage using minimal natural resources and reduce wastage and use alternative resources, organic growing,
recycling and packaging and catering for future generations
 business operations should be shaped around practices that consume resources today without compromising
access to those resources for future generations
 government influence on eco sustainability led Apples operations to minimize its carbon footprint. n 2016,
Apple have focused on generating clean energy for 100% of its Operations in China. Apple announced two
new programs aimed at reducing the carbon footprint of its manufacturing partners in China.

Quality expectations
 Making sure operations meets the expectations of consumer in relation to a good or service. Customer
expectation are durability, overall quality, reliability and is the product fit for its purpose
 The expectations of quality from consumers, stakeholders and regulatory bodies influences the operations
of a business such that operations is expected to provide quality. That fact that operations have the role
produce products that translate consumer demands which are often associated with products with quality
features.
 The International Standards Organisation(ISO) defines quality as the loyalty of features and
characteristics of products that bears its ability to satisfy stated needs or implied needs
 This definition impacts business owners as they are forced to adhere to the expectations ISO
 The degree of satisfaction varies between consumers so the definition of quality is also subjected to change
thus operations must adapt to the quality expectations of consumers

Cost based competition

 The influence of prices of competitors
 Cost is big influence as it determines prices i.e if costs are lower business are financially in the position to
offer goods at lower prices. E.g Kmart
 Is derived from determining a breakeven point such that if a business breaks even earlier than competitors it
is able to sell its goods on competitive pricing
 Applying a cost leadership reduced fixed and variable expenses.
 Businesses can gain price advantages by using operational strategies that lower costs, hence, Businesses can
reduce its prices lower than their rivals. However prices must sufficiently be lowered as shareholders require
profit.
• corporate social responsibility
 CSR Refers to the accountability of business actions based on respect for people, community/society and the
broader environment
 CSR involves going beyond legal and governmental compliance to achieve ethical business actions and
mutual respect with the wider community. ADVANTAGE: it will create a positive business image thus
attracting consumers. DISADVANTGES might add to costs which eventuates competitve disadvantages.
 CSR places values on sustainability and ethical business operations
 CSR places values on financial returns and social responsibility and environmentally friendly practices.
 CSR means to obey the laws of the country it is operating in, considering the interests of employees,
consumers and the community
– the difference between legal compliance and ethical responsibility
 it is expected of business to comply with the law and regulations imposed by the government
 laws are MANDOTRY such that are obliged business follow them in order to avoid penalty.
  Businesses go beyond PRESCRIBED STANDARDS E.G Rebooks human rights standards, in relation to
slave labour. The companies boycott has enhanced their business image as they now are ETHICALLY
RESPONSIBLE.
 businesses that go further than adhering to the minimum requirements set out under laws, they
demonstrate a commitment to ethical responsibility.
– environmental sustainability and social responsibility

 main goal of operation= TRANSFORMING RESOURCES to an output worth more

 raw materials are transformed as well intermediate materials I.EThey need further processing before they are
ready for sale to the final demand user.
 Inputs are converted value is added to the product.
 Information is also seen to be transformed For example teachers imparting knowledge to students who don’t
know what was being taught to them
 A resource is transformed to fit the SPECFIC needs of the customer (customer oriented). E.g Barber cut hair to
the demand of the customer.

operations processes
 inputs
 Labour
 Energy
 Raw materials
 Machinery and technology
– transformed resources (materials, information, customers)
 TRANSFOMRED RESOURCES= resources that are changes or converted in the operation process
 Considered as the resources that defines a business
 Things that are going to be transformed or manipulated e.g wood
MATERIALS
 BASIC ELEMENTS used in the production process including raw materials UNPROCESSED or
INTERMEDIATE goods which have already been transformed.
 Raw materials are the essential substances in their unprocessed state I.E natural and RAW state
 of the 748 suppliers listed in Apple’s Supplier list in 2016, more than 600 were in Asia which manufactured
intermediate goods
INFORMATION
 The essential knowledge, ideas, and/or opportunities a business uses to transform the good.
 Gained from research and investigation provided through internal and external business influences
 Assists in the operation process as It informs about consumer trends which assists in the production of
resources that are more suited the customer
CUSTOMERS
 A transformed resource in a customer oriented approach as their preference and desires are considered as a
starting inputs in the production process
 Customers choices shape inputs that are used to make an output which translates the choice of customers
 feedback is key to gaining information about customers and their thoughts about products and services
(customer relationship management). Customers can provide Apple with feedback via their website, retail stores
and product research groups. (60)
  transforming resources (human resources, facilities)
 with the increasing number of tertiary, quaternary and
quinary business information is being moved and of
MATERIALS
transformed resources
 business must transform information as they CARY out
TRANSFO key information vital to the transformation process. They
RMED INFORMATION enable change and value adding to occur.
HUMAN RESOURCES
MATERIL  important input in to the business as they are performing
tasks in making products and selling them and generating
CUSTOMERS profit for the business
 skilled employees assist in the carrying out of the
transformation process as their skills bring about productivity
 employees enable the business to benefit from various
skills and enable change and value adding to occur
 employees that are qualified are effective in carrying out tasks and duties associated with the
transformation process
 employees coordinate and combine other inputs to produce an output
FACILITES
 The uses of plant and equipment assist in transforming input in the opereation process
 Production facilities allow business to produce its products in a cost efficient manner and productive . For
example, Caltex Australia uses automatic fuel circulation pumps. This allows for fuel levels to be maintained
across all pump present on the site. This ultimately allows, owners to note how much fuel is needed and
prevents doubling up fuel stock.
 The plant and machinery are able to make a very significant to a business and its capacity to transform
 transformation processes
 Conversion of inputs to outputs
 Adding value
 Using machinery and human resources to transform input to output
 For example Sony takes plastic, metal, glass and electronic parts and transforms them through design,
manufacturing and assembly into numerous products
 the influence of volume
 Volume is how much a product is going to be made. Key operations decisions are made in regards to this
 Volume flexibility refers to how quickly the transformation process can adjust to increase and decrease in
demand
 Adapting to the required changed in volume is essential to effectively managing lead times
 Failure to adjust to changes in market demand they can over produce which may lead wastage and inventory
costs.
 Kingsgrove sport purchase a large volume of initial stock to meet the spike in demand immediately before the
begging of sports seasons. They must be able to anticipate demand and lead times, and assess the season/.
variety
 Variety is the range of products offered by a business
 The grater the mix flexibility, the more the operation process needs to allow for adaptions to entire range.
 The influence of variety on transformation processes is: the greater variety made, the more operations process
 Electrolux. Despite the apparent diversity in these products they have similar electronic components, allowing
for mix flexibility when vastly similar operation process occurs. In this way the brand is able to sell a variety of
products made with largely similar production process
variation in demand
 Business will attempt to forecast demand so inventory adjustments can be made in preparation so that they cant
act accordingly.
 Responding to demands influences business operations as an INCREASE in demand will require increase in
amounts of inputs and lead times need to be adjusted in accordance. It becomes hard to meet if suppliers cannot
supply quickly and if labour is not flexible enough.
 A DECREASE in demand will also require operation to flexible, staff may be required to reduce their hours,
production may need to slow to avoid inventory buildup and suppliers may put on pressure due to contractual
agreements.
 Officeworks experience variation in demand throughout the year. Towards the end of school and Uni semesters
demand increases, as students will haul as much supplies for the next semester therefor operations must produce
more goods to be sold. Officeworks as capitalized on this by using promotion such as “back to school” deals
that have allowed it to become a leader in the industry.
 the influence of visibility (customer contact)
 Customers and their feedback can shape the transformation process of a business, with higher visibility
allowing for more customer contact. This influences the business as they now have to meet the customers
requirements
 Preferences have the power to alter products produced by a business as the role of business is make products
suited to customer preferences
 May be direct (e.g. surveys, interviews, market share data analysis and sales data)
 Kogan uses indirect customer contact through sales data to identify the popularity of certain goods which
determines is Kogan will continue to sell that good.

sequencing and scheduling

 SEQUENCING refers to the order in which activities are a carried out
 SCHEDULING refers to the length of time activities take within the operation process
– Gantt charts
 Gantt charts outlines the activities that need to performed, the order in which they should be performed and how
long each activity takes
 Uses in any process that have several procedures, they are vital for managers to effectively get tasks done as
they outline when tasks are performed and show workers the time frame they will work under
 Used for SCHEDULING tasks so they don't pile up
critical path analysis
 CPA is a scheduling method or technique that shows what tasks need to be done and the time taken
 Establishes order in operations
 critical path is the shortest in length of time it takes
to complete all tasks
 Tasks can be performed simultaneously such as
painting and testing components
 NOTE (1)+(2)+(5)+(2)+(1)+(1)=12 days is NOT
the shortest path it SKIPS MAKING COMPONENT
thus not all tasks are completed
glo technology, task design and process layout
TECHNOLOGY
 The applications of technology assists in transformation process making it more effective and efficient
 New tech increases efficiency in ADMINSTARATIVE and PRODUCTIVE processes
 However can be very expensive and may lead to existing products to be outdated
 Tech is used to shorten time spent on process.
 Qantas uses online check in and online booking to reduce the time spent at the airport
 Toyota manufactures heavily rely on using up to date machinery in order to MASS produce cars in a short time
frame, enabling fuller utilization of raw materials which makes operation more cost effective.
TASK DESING
 Breaking the job into series of smaller jobs. Assign specific people who have the right skill to perform the job
 Makes it easier for employees to perform tasks
 Employees is Apple factory in assembly line. The process of making the iphone has been broken down into a series
of tasks. These tasks are performed by employees with the right skills to perform them correctly
PROCESS LAYOUT
 Arraigning the order of tasks and resources tin the SPECFIC layout they are going to be used
 Grouping machines and equipment on the basis of their functions
 monitoring, control and improvement
MOINTORING
 Refers to measuring the performance and quality against set expectations
 Measuring all operations activities such as SUPPLY CHAIN MANAGEMENT and the uses of inputs
 Monitoring is based around (KPI’S) which are predetermined variables that MEASURED
 (KPI’S) include: lead times/wait times, inventory turnover rates, defect rates and IT and maintenance costs.
 MEASURES HOW THE BUSINESS IS GOING.
CONTROL
 When (KPI’S) are assessed against predetermined targets and corrective actions are taken to MANAGE the flaw
 Compares what is intended to happen and what has happened
 Requires a capacity to make adjustments so that they improve operations process that need improving
 IMPROVING AND MAINTAING
IMPROVEMENT
 The systematic reductions on ineffectiveness: wastage, poor work process and etc.
 Eliminating any problems that require constant monitoring or things the fail to meet expectations
 Improving: Time, process flows, quality, cost and efficiency
 outputs
– customer service
 An intangible output of a business. Can’t touch it
 Refers to how well customer expectations are met and exceeded in all aspects of operations
 Must allow for direct feedback to shape the transformation process so that meet the needs of consumers
 Customer satisfaction
 Apple is reputable for their customer service as they provide after sales support at the genius bar and provide
training for the elderly on how to use I phone’s.
– warranties
 Promise made by a business that states they will liable for any defects in the good produced or service delivered
 It is a business’s claim as to quality of a good/service
 Agreement to fix defects in product.
 Apples after sales support called the genius bar is warranty claim department that fix defects in products
operations strategies
  performance objectives – quality, speed, dependability, flexibility, customization, cost
QUALITY
 As a (KPI) QUALITY focuses on the product standard and is determined by customers’ expectations in quality of
DESGIN, CONFORMANCE and GENERAL QUALITY
 Quality of design : arises from an understanding of consumer and their preferences. It means how well a product
looks and how customized it is compared competitors. High quality of design is achieved by using premium
materials, the care and presentation of the good and how aesthetically pleasing it is. Mercedes-Benz provides high
quality SUV’S that have pure carbon-fiber interior trims and titanium exhaust tips . The use of high class material
sets the business apart from competitors.
 Quality of conformance:
 Quality of service
SPEED
 The time it takes for the operation process to respond to changes in demand also time between ordering and
delivering
 Time it takes for production and processing the good
 Speed requires change in input levels and processing time can be made to respond to demand
 Reduce wait times, shorter lead times, faster processing time and etc.
 In 2007 Apple identified that a glass screen on the I phone would better suit customers however the handset was
weeks from launch Apple manufacturing factories in china forced employees to work 12 hour shift meet the new
expectations
DEPENDABILITY
 Refers to how reliable and consistent a product is
 In respect to goods, refers to how long the products are useful before they fail.
 Dependability is measured by warranty claims less warranty claims often means the more dependable a product is
 In respect of services, refers to the consistency of the service of standards and reliability.
 Dependability of services is measure by how many complaints were filed by customers
FLEXIBILTY
 Refers to how quickly operations process can adjust to changes in the market
 Example: changes is the market demand cause a pressure on capacity. The business must quickly create a new
product or extend a product line
 FLEXIBILTY= LESS TIME SPENT
 Faster the processing time the greater likelihood that process can be adjusted quickly
 Increasing capacity of production
Customisation
 Refers to creation of individualized products to meet the specific needs of the customers
 Services can be customized although aspects of it may be standardized as seen in the fast food industry
 A customer oriented approach is taken to insure products are meeting needs of specific people
 Giving greater choice and innovation
 Variations in product features and functionality offer some level of differentiation between products
COST
 As a KPI refers to minimization of expenses, meaning that operation process are conducted as cheaply as possible.
 This allows the business to lower its price across the goods/services they offer
 Acquisition if new technologies and plants enable businesses to lower costs.
 Business need to manage: supplier costs, inventory costs, wages and etc.
 outsourcing – advantages and disadvantages
 outsourcing is using an EXTERNAL PROVIDER to preform actives
 WHY? = cheaper and done with greater efficiency
 Qantas outsources nearly all of their i.t operations and some call center operations as well as maintenance offshore.
ADVANTAGES DISADCANTGES
Efficiency and cost-saving: access to cheaper and
possibly specialized labor. Attaining cheaper inputs for
less quicker transformation process
Increased process capability:
 Access to improved technologies
 Specialized focus and highly skilled labor-
products delivered with improved service
Increased accountability:
 Occurs through the use of service level
agreements which CONTRACTUALLY bind
the vendor to pre-determined KPI’S
Able to focus on core benefits
 Outsourcing allows he business to focus on it’s
in house performance
Strategic benefits
 Using a provider that also provides its services
to competitors allows the business to benefit
from high expertises
 Different time zones allows extension of
working hours in operating hours 24/7 call
centers
 global factors
global sourcing
 sourcing all inputs and operations from global sources/business which has cost advantage( cheap inputs)
 global sourcing ensures that the outsourcing decision is exposed to the global market.
Xerox is a global corporation which produces office tech in over 160 countries drawing inputs from
international suppliers is Japan, Korea and china. The business now has relocated to Asia which close to
their suppliers. This increased costs temporarily how in the long term the business benefits from low
costs.
Opportunities Challenges
Cost advantage Possible relocation of operations
Access to new technology and resources Differing regulatory conditions( ethical concerns)
legal issues-e.g minimum wage
Labor specialization and expertise Variable quality across suppliers
Extended operating hours Increased overall complexity in operations
Efficiency in production Can increases costs as supply chain management is
more complex

 economies of scale
 Costs advantages that can be gained by producing on a larger scale
 this means the business can lower costs per unit to produce.
 Increases profitability
 Promotions can be negotiated with suppliers which further makes it cost effective
 Apple Having over 300 suppliers in China, Apple outsources large overseas production to gain lower unit costs,
economies of scale and quick lead times. Giving Apple a competitive advantages
Advantages Disadvantages
Costs advantages ( production per unit becomes less if As the firm continues to grow more layers of
the business increases scale in operations) management are required this increases costs
Rise in profits potential loss of control of key processes
Greater added value on production there will be fluctuations in demand.
Production advantages Communication problems

 scanning and learning

 Allows business to take into account what their global competitors are doing
 Conferences, management journals, industry associations and other forums act as opportunities for businesses to
lean from the success of other business
 Increases business competitiveness
 Provides proven strategies
 Pure Gelato: the business has subscribed to international cuisine magazines to learn about trending and successful
flavors.
research and development
 R&D provide the business new innovative ideas and approaches
 Helps business to find new and improved opportunities.
 R&D help the business to create leading edge technology and to have an innovative solutions
 Government grants assists business in investing into R&D
 R&D allows the business to better meet the needs of consumers
 Apple’s industrial design team are used to moving to supplier sites to support suppliers in their effort to meet Apple
design requirements which are key to the product’s success
 overcoming resistance to change
– financial costs
 Major cause of resistance to change:
1. Cost of purchasing new equipment
2. Cost of redundancies
3. Cost of retraining
4. cost of structural reorganization of the business, including changes to plants
purchasing new equipment
 purchasing or leasing of new materials is expensive
 capital costs associated with the purchase new plant and equipment can be recouped(value added in
transforming process)market advantages.
 Qantas: faces high financial costs of purchasing new equipment as changes occur, New equipment include over
$1 billion in surveillance since 2001.
Advantages Disadvantages
Improved processing flexibility High costs of purchase
Improved processing speed Employees have to be restrained
More consistency in production High service costs
 redundancy payments,
 Money given to employees as they are made redundant
 The amount of they pay depends on the length of time employee has been with the business, the amount of pay
prior
 the high accumulative costs of redundancy payments usually is a result of capital labor-substitution
 Qantas 2013: the business gave a gross total of $122 million worth of redundancy payments. This served as a
resistance to change as employees of major departments were absent this decreased productivity.
Retraining
 When new technology comes out employees are unsure how to use it
 Therefore they are forced to learn how to use technology.
 Management have to go out of their way to teach employees
 Creates: confusion, uncertainty, decrease in productivity, financial expensive etc.
reorganizing plant layout
 Change plant layout can be expensive as shifting machinery to different places may need ports and access to a large
enough area
 time consuming
 reorganizing the plant layout which is specific to the transformation process can alter the way the product is
produced
 cost of transporting and moving machines
 loss of productivity.
inertia
 psychological effects of job loss
 feeling of fear and uncertainty as job prospectus are lost
 loss of career makes it harder for individuals to cater for family
 CAUSES: Automation and technology
 supply chain management
 managing the flow of supplies throughout the inputs, transformation processes and outputs
 sourcing inputs
 adding value
 production processes
 logistics
 refers to distribution of goods/services through various modes
ADVANTGES DISADVANTGES
Transportation  achieves speed in delivery  expensive
 efficient  items can go missing in
 increases revenue (sur-charges) movement
 cause damages
Warehousing  stock is secure and available  expensive to get premises
 increases shelf life  insurance and security of stock
 stock subject to damage
Materials handling and packaging  increases aesthetics of products  expensive
 adds value  must adhere to safety
regulations

 e-commerce
 Refers to buying and selling online
 No cost advertisements
 Flexible as everyone shops online
 Electronic ordering. E-procurement online systems that mange supplies
global sourcing
 the purchase of inputs from external providers without being constrained by location
 buying and sourcing supplies form wherever the suppliers better meet needs of consumers
 Advantages Disadvantages
 adds value and experience in the processing  Possible relocation of operations
process  Increased logistics costs
 simplifies the production process  Increases layers of managers
 cost effective  Different regulatory laws between countries
 Access to new technology and resources  Increases Complexity of operation
 quality management
– control
 Reduces problems and defects in product
 Inspections at various points of the operations process
 Assessing product performance
 Asses product against KPI’s
 Take corrective measures
– assurance
 Ensure that standards are archived in production
 Series of measurements assessing against KPI’s and expectations
 Provocative approach to quality.
 The product must be fit for its purpose
 Meeting international quality expectations
– improvement
 making all processes over time efficient and effective
 ongoing commitment to improvement
 inventory management
 goal of inventory management is to ensure there are always sufficient raw materails and components
 maintain operations
 refers to the amount of raw materials a business has on hand at any particular time
– advantages and disadvantages of holding stock,
Advantages Disadvantages
 demand can be meet when stock is available,  COST OF: stock maintenance, acquiring a
prevent the loss of consumers premises, handling expenses, insurance, theft
 holding stock in distribution centers allow for and spoilage
rapid transportation to an area of demand  Invested capital labor and energy cannot be
 reduces lead time between order and delivery used elsewhere
 older stock can sold on discounts encourages  The cost of obsolescence, which can occur
cash flow when stock hasn’t been sold
 assets on balance sheet.
LIFO (last-in-first-out)
 if stock is bough over time $A, $B and $C $C>$B>A and total sales=$Y then: $Y-(# of stock sold *$C)= gross
profit
 LIFO may understate gross profits especially when costs rise over time

FIFO (first-in-first-out)

JIT (just-in-time)