MNB1601 NOTES OPERATIONS MANAGEMENT The operations function is that function of the business aimed at executing the transformation process. The importance of operations management: It can reduce the cost of making products or offering services It can increase the revenue the business receiv...
Business Management IB (University of South
Africa)
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,MNB1601 NOTES
OPERATIONS MANAGEMENT
The operations function is that function of the business aimed at executing the
transformation process.
The importance of operations management:
• It can reduce the cost of making products or offering services
• It can increase the revenue the business receives for offering its products and
services to its customers/clients
• It can reduce the amount of investment (capital) needed to manufacture the type
and quantity of products or to offer the service required/
• It can provide the impetus for new innovation by using its solid base of operational
skills and knowledge to develop new products and services
Other reasons Op's Management are important to a business:
• Operations management can improve productivity
• Operations management can help a business to satisfy the needs of
its customers/clients more effectively
• Operations management can be decisive for the general reputation of the business
Defininq terms used in operations manaqement:
• The operations function is that function in the business primarily aimed at the
utilisation of resources to manufacture products or render services.
• Operations management involves operations managers' activities, decisions
and responsibilities that tie in with the execution of the operations function.
Operation-manaqement strateqies and performance objectives:
All businesses formulate business objectives, and if a business intends surviving in the long
term, consumers who are satisfied with the business's products or services should be a top-
priority objective. Although there are numerous customer needs that can be reduced to 6
main elements:
• Higher quality
• Lower costs
• Shorter lead time (quicker manufacturing or provision of services)
• Greater adaptability (flexibility)
• Lower variability with regard to specifications (reliability)
• High level of service (better overall service).
With these 6 customer/client requirements as a basis, operations management
performance objectives can be formulated to give the business an “operations-cased
advantage” over other businesses. Operations management performance objectives must
indicate the specific areas with the domain of the operations function that will be
emphasised when products and/or services are produced or provided. The operations-
management
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,performance objectives are formulated in such a way that they are applicable to both
manufacturers and service providers. To acquire operations based advantages, the
following 6 general operations-management performance objectives can be
followed:
• Do things right the first time
• Do things cost effectively
• Do things fast
• Make changes quickly
• Do things right every time
• Do things better
Operations manaqement quideline Positive result
Do things right the first time Higher quality
Do things cost effectively Lower cost
Do things fast Shorter lead
time
Changing things quickly
Greater Adaptability
Do things right every time
Lower variability
Do things better
Better service
The transformation model:
The operations function is primarily concerned with using resources (inputs) to provide
outputs by means of a transformation process. Therefore the transformation model
comprises 3 main components: Inputs, the transformation process itself and outputs.
Inputs:
Inputs used in the transformation process comprise both the resources that are to be
transformed (processed, changed or converted) and the resources required to make the
transformation possible. The resources to be transformed include the following:
• Material
• Customers/clients
• Information
The resources required to make transformation possible include:
• Human Resources
• Equipment and facilities
• Technology
The Transformation Process:
The transformation process converts inputs to outputs. The nature of the process is
determined by what input is predominantly being processed.
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