VCE Business Management powerpoint from Beechworth

Operations
management is about
producing goods
and/or services based
on business objectives.

Definitions
Operations management- consists
of all the activities in which
managers engage to produce a
good or service.

Tangibles- are goods which can be
touched.

Intangibles- include services, which
cannot be touched.

Business objectives
• Improve business efficiency
• “by lowering our costs of
doing business, we have
built a world class model of
efficiency and logistical
expertise”. Said James
Strong.

Operation strategies

• Improve supply chain
management.

• Utilizing technology to
increase efficiency.

• Relationship Between Strategy and
Operations objectives

• Even though strategic and operational objectives are to a large
extent different, it is important to be aware of the fact that they are
closely related.

• An organization is unlikely to achieve a strategic objective if it fails
to effectively translate it into practicable operational objectives.

• At the same time, operational objectives will lack structure with
each other and with the over all organizational mission if they are
not designed to affect the achievement of strategic objectives.

• objectives only become useful when translated into operational
objectives and operational objectives are only effective when
designed to serve a strategic objective.

Questions
• Tangible costs
• A- are goods which can be touched.

Characteristics of Operations
Management within Large-Scale
Manufacturing and Service
Organizations

Glossary
Tangible – goods which can be touched
Intangible – include services which cannot be
touched
Service – cannot be physically touched and taken
home
Good – a physical product which can be handled
and stored before being sold
Operations Management – consists of all the
activities that a manager participates in to
produce a good or service

Depending on what type of large-scale organization is
running (service or manufacturing) depends on how
they run their operations system. Customers don’t
need to be present for the production in a
manufacturing business whereas in a service they are
part of the production. The output of a service large-
scale organization is intangible (haircut), where the
product of a manufacturing large-scale organization
is tangible (car).
This is a virtual tour of Sydney Children Hospital’s
operations management system:
http://www.sch.edu.au/vt/ service

Example 1 – Service
Hospital
Inputs
Transformation Processes
Raw Materials – electricity, Operation
medication, beds, cleaning
products, medical Nursing
equipment X-rays
Labor – doctors, nurses, Cooking
suppliers Cleaning
Information – research and Comforting
development, medical
procedures Outputs
Time Patients are fixed
Money

Example 2 – Manufacturing
Bakery
Inputs Transformation Process
Raw Materials – water, Designs
electricity, food products
Baking food
(ingredients)
Quality Control
Labor – Bakers, waitress/waiter,
suppliers
Information – recipe Output
Time Bread, cake, slice, biscuit
Money

Questions
Give an example of two different services and goods.

What's the difference between a tangible and a
intangible?

How does a service differ from a good? Use examples
to support your answer.

Using Bakers Delight as an example- Australia’s
most successful Bakery Franchise

Resources used in the process of production

money
time

Raw ingredients
labour

Conversion of inputs (resources) into outputs (goods or services). For
example, the blending of raw ingredients into a mixture and then
cooking it.

Refer to the end result of an organizations efforts- the service or
product that is delivered or provided to the consumer. What makes the
money.

Goods that can be touched (e.g. taken home- a TV or a cake

Include services- which cannot be touched (e.g. a haircut, cannot be stored)

•To produce a good the customer doesn’t have to be present (doesn’t have
to be there whilst the TV is made)

•To produce a service, customer has to present (whilst having a haircut)

Key elements Interactive quiz
Bakers delight virtual bakery tour

Name one input that would be required by an orange juice producer?

Oranges, labour, sugar.

Materials Management

By Camden Colee

What It Involves…
Materials management
is the strategy which
Identifying
Ongoing managers use, storage and
Materials delivery of materials to
requirements
ensure the right amount of
inputs is available when
required in the operations
Reducing
Safely Storing system.
holdings of
Materials
surplus stock
Materials
Management

Controlling the
release of
Receiving
materials into
Materials
the production
process

In the beginning the manager
Materials planning
must come up a production
plan. This then will give rise to a
more detailed Master
Production Schedule (MPS) and
Materials Requirements
Planning (MRP).

WHY?
These lists and schedules allow
the organisation to produce
good or services on time, to the
right specifications and in the
correct numbers.

Inventory Control
Why?
This allows cost associated with inventory to
be minimised.
Organisations may use Just In Time. Ie Ford

Supply Chain Management
Why?
If materials are not on hand, nothing can be
produced.
We do not want inferior materials.
Needed to meet demand.
I’m lovin’ suppliers

McDonald's uses socially responsible suppliers.

Definitions
Materials management
The strategy which managers use, storage and delivery of materials to ensure the right amount of inputs is
available when required in the operations system
Inventory
The goods and materials held as stock by an organisation.
Materials Handling
The physical handling of good in warehouses and distribution points.
Production Plan
An outline of activities undertaken to combine resources (inputs) to create goods or services (outputs).
Master production schedule
what is to be produced and when.
Materials Requirements Planning
Involves developing an itemised list of all materials involved in production to meet specific orders.
Inventory Control
A system used to ensure that inventory costs are minimised and that the right amount of inputs is available when
needed.
Just In Time
An inventory control approach which ensure that the right amount of inputs is delivered only as needed in the
system.
Supply Chain
The range of suppliers from which the organisation purchases materials and resources.

Office Technology
• Computers
• Video conferencing
• Databases
• Mobile telephones
• The Web
• Printers
• EFTPOS
• Photocopiers
• Personal organizers
• Printers
• Answering and facsimile
machines

Customer relationship management
• CRM software technology can be used to
improve customer service and increase
competiveness as it stores information about
existing and potential customers.

Manufacturing Technology
• Robotics are highly specialised
forms of technology capable of
complex tasks
• Computer aided design is the
computerized design tool that
allows business to create product
possibilities from a series of input
parameters
• Computer aided manufacture is
the software that designs and
controls manufacturing processes
• Computer integrated
manufacturing is the method of
manufacturing in which the entire
production process is controlled
by computer

Example
• 3 is part of Hutchison Whampoa’s global
group of companies. It needed to quickly
deploy a flexible customer management
solution. The CRM software which 3 now uses
provides for wireless access and integrates
with its database and web site. This enabled 3
to reduce response times- it means that 3 can
have a salesperson in contact with a potential
customer only minutes after the customer has
entered a query on the web sit.

technology quiz
• How can technology improve operations?
• Google the answer
• What types of tasks are robots useful for?
• State two benefits and two costs of
manufacturing technology?

Is the measure of efficiency – the amount of output produced
compared to the input required in production

How organizations can improve productivity

•Improve communication

•Management style (participative)

•Human resource strategies

(recognition and reward programs)

•Automating work processes (robots)

•Improving design and layout facilities

OR
MORE produced for the same input

The range over which the organization intends to compete.

It may be narrow or wide in relation to
•Countries
•Markets
•Industries
•Customers

Organizations compete in two ways:
•Cost
•Differentiation (flexibility, speed, quality)

Bulk
Achieve economies of buy
scale input Eliminate waste

Strategies
when
Competing Produce high volume
on cost output

Produce standardize
products or large markets
Use automated
production systems

Prioritise decisions based on reducing costs and improving productivity by:

•Stable production with limited interruptions

•All resources used to their optimum advantage (minimise waste)

•Constantly looking to streamline the production process

•Updating facilities and equipment (new technology, more efficient)

•Provide training and development to improve employees skills and knowledge

View quality Use technology to
as a Market produce large
competitive themselves as a numbers of
weapon quality business customized products
to varying
specifications
Publicly
communicate an
organization wide Competing on
Taylor products
commitment to Quality
to customers
quality

Reduce defect Strictly comply
Immediately rates in
respond to with design
production specifications
customer needs process

Prioritise their decisions based on strict application of total quality management by:

•Evaluate process to ensure minimal defect rates

•Reduce human variables (inconsistency)

•Rely on extensive use of integrated technology and computerization

•Develop strong links with the customer

Respond
Often have quickly to
flatter changes in
management demand Quickly
structures identify an act
on trends

Competing
on speed of
Maintain a delivery
corporate culture Reduce the
expecting problems
ongoing and associated with
radical change bureaucracy
Promote a
sense of
urgency

Prioritise their decisions based on ensuring a faster transformation process by:

•Creating autonomous work teams

•Establish a efficient supply chain

•Develop faster feedback mechanism

•Adapting the transformation process to reflect the necessity for constant change

Organizations that can improve their productivity ( the amount of
inputs required to produce outputs) will become more
competitive because they are
•reducing production cost by minimizing defects

•adopting new strategies to purchase their inputs at a
cheaper price (such as bulk buying)

•continuously improving the speed of their transformation
process by upgrading their technology when the changes are
available.

Therefore they can be more competitive in not only the price of
their product but its quality and the speed of its delivery as well.

If an organisation can be more competitive with its competition
it can increase its sales and possibly market share resulting in
more overall success.

Ethical and social responsible
management

Ethics involve the study of moral issues and choices. They are
concerned not with legal obligations but with what is morally
right or wrong.

It is sometimes difficult to definitively say what is ‘right’ and what
is ‘wrong’, as it often depends on the circumstances
surrounding the situation.

Management ethics refers to moral standards as applied to
management behaviour.

Management ethics are the application of moral
standards to management behaviour.

• The modern concept of ethical organisations encompasses many
related issues including:
• corporate social responsibility (CSR) - or simply social responsibility
• the 'triple bottom line'
• ethical management and leadership
• 'Fairtrade'
• globalization (addressing its negative effects)
• sustainability
• social enterprise
• mutuals, cooperatives, employee ownership
• micro-finance, and
• well-being at work and life balance

Ethical Issues

Fairness and honesty

Respect for people

Conflict of interest

Financial management

WWF Code of Ethics
How they behave towards their Mission, Our
World, and theirselves
WWF has a clearly stated mission and
purpose. All of their programmes support that
mission, and its goals will be more easily
reached if the following principles are
embraced.

http://wwf.panda.org/who_we_are/organizati
on/ethics/

Management ethics are the applicaion of moral standards to
management behaviour.

Social responsibility is the awareness of an organisation’s
management of the social, environmental, political and
human consequences of its action.

A social audit is a report of what an organisation has
done, and is doing, with regard to social issues.

An audit is an independent check of the accuracy of financial
records and accounting procedures.

A corporate code of conduct is a set of ethical
standards for managers and employees to uphold

ethical
Pleasant work environment, community
support, improved business performance

unethical

Discrimination, harassment,
unfair dismissal, bullying,
enethical work

http://www.businessballs.com/ethical_manage
ment_leadership.htm

http://www.corporatecomplianceinsights.com/
why-ethics-matter-a-business-without-values-
is-a-business-at-risk/

VCE Business Management powerpoint from Beechworth

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VCE Business Management powerpoint from Beechworth