Business Operations Notes

Topics: Management, Supply chain management, Inventory Pages: 18 (4229 words) Published: April 30, 2013
Big Blue Heading = syllabus italics
Underlined blue = syllabus points
Underlines Light blues = syllabus sub h
Light blues = headings
Bold Purple = definitions
Normal = general info

Big Blue Heading = syllabus italics
Underlined blue = syllabus points
Underlines Light blues = syllabus sub h
Light blues = headings
Bold Purple = definitions
Normal = general info

Operations Notes
Role of Operations Management
Operations refers to the business processes that involve transformation or, more generally – ‘production’

Combining aspects of the following:
* The production of goods and services
* The production controls and associated quality controls. Included in this are input management and capacity (volume of output) decisions. * Inventory controls
* Supply chain management
* Logistics and distribution
* Management decision making in terms of operational processes Strategic Role of Operations Management
The ‘strategic role of operations refers to the role that operations plays within the strategic direction of a business. Or how does the operations center contribute to meeting the goals of the business?

Strategic means ‘affecting all key business areas’; that is, the strategic role of the operations management involves operations managers contributing to the strategic direction or strategic plan of the business.

* Operations are a cost centre as it incurs costs rather than creates revenue. Cost Centre: those aspects of the business that do not directly derive income Profit Centre: those aspects of the business that directly derive income

Costs that are features of the operations function
Input capital, land resources, leases on machinery, testing Labour employees, sub-contractors, overtime, training, rostering Processing machinery maintenance, electricity, product design, prototyping Inventory back order, logistics and distribution, storage, theft, damaged goods Quality management prevention of loss planning and training, sampling and inspection, warranty Cost leadership

Cost leadership is having the lowest costs to be the most price-competitive in the market. A key aspect to cost leadership is that although trading with the lowest cost, the overall business should still be profitable. * Numerous costs (above features) incurred in this process/ function * Intrinsic aspect of strategies operations management involves COST LEADERSHIP * Although trading with lowest costs still be able to profit Good/Service differentiation

Characteristics | Features of goods | Features of service | Tangibility andperishability| Tangible can be seen, moved, touched and stored. Some goods are perishable may spoil if not used (e.g. fresh fruit)| Intangible only exist while performed, effects may endure for long after the completion of serviceNot perishable | Customisation| Tend to be standardisedCan sometimes be customised| Generally customised, though May be standardised to a high degree| Ownership| Can be owned & transferred between people through the sale of ownership.| Cannot be owned | Time betweenproduction &consumption| Can be considerable| Are simultaneous| Determination ofvalue| Can be independently ascertained throughCosting all inputs and adding a margin. Inputs can easily be determined: cost of labour, materials and transformation plus a margin for profit.| Highly subjective and depends what the market is prepared to bear. Value increase with service provider giving high levels of skill, longer time, high levels of education and experience, and high levels of ability and expertise|

Product Differentiation: Goods
1. Varying Product Features – increase complexity or options 2. Varying Product Quality – low = more affordable, High = more pricy 3. Varying Augmented Features – add-ons or additional benefits Services Differentiation

1. Varying Time Spent
2. Varying level of...
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