MNB1601_ Latest Exam Summary 2021.

MNB1601_ Latest Exam Summary 2021. Business Management-MNB1601. Defining terms used in operations management Operations management is concerned with the management of the transformation process (the operations process) whereby products are manufactured or services rendered Concepts defined operations management: o The operations function is that function in the business aimed at the utilisation of resources to manufacture products or render services o Operations managers are the personnel in the business who is directly responsible for managing the operations function o Operations management involves operations managers’ activities, decisions and responsibilities that tie in with the execution of the operations function 11.2 Operations-management model The most notable elements of the operations-management model are the operations-management strategies and objectives, and the management activities that influence the transformation process that produces outputs 11.2.1 Operations-management strategies and performance objectives Consumer who are satisfied with the business’s products or services should be a top-priority objective Six main elements to customer/client needs: o Higher quality o Lower costs o Shorter lead time (quicker manufacturing or provision of services) o Greater adaptability (flexibility) o Lower variability with regard to specifications (reliability) o High level of service (better overall service) Six operations-management performance objectives to achieve customer/client needs: o Do things right the first time – the operations function should not make mistakes o Do things cost effectively – ensuring an acceptable profit for the business o Do things quickly – time between demand and delivery be as short as possible o Make changes quickly – adapt or change activities if necessary o Do things right every time – error free products and services o Do things better – providing a better product or service than the competitors Fig11.2: Positive results obtained by the application of operations-management guidelines Operations-management guideline Positive result Doing things right the first time → Higher quality Doing things cost effective → Lower cost Doing things fast → Shorter lead time Changing things quickly → Greater adaptability Doing things right every time → Lower variability Doing things better → Better service 11.2.2 The transformation model The operation function is primarily concerned with using resources (inputs) to provide outputs by means of a transformation process Three main components: o Inputs  Material  Customers/clients  Information  Human resources  Equipment and facilities  Technology o The transformation process  Convers inputs into outputs o Outputs  Assume the form of products or services Different operations have different characteristics: o The volume of output may differ o The variety of output may differ o The variation of output may differ o The visibility of output may differ 11.3 The classification of process types for manufacturers and service providers In manufacturing, the most common classification system classifies different operations processes according to the volume of output (scope) and the variety of products 11.3.1 The classification of process types for manufacturers Five main categories: o Project processes Projects represent operational processes that are highly individual and unique, normally tackled on a large scale, e.g. construction projects, development projects or upgrading projects o Jobbing processes Jobbing represents operational processes conducted on a small scale with a low volume of output, with the same nature of work throughout but the specific requirements differ, e.g. jewellery manufacturing or express printing works o Batch processes (job lots) In batch production (lot production), a limited range of products is manufactured and production appears to be nearly the same as jobbing, but it does not have the same degree of variety, e.g. furniture, domestic or electronic manufacturers o Mass processes Mass production is the production of products in high volumes, but with relatively little variety, e.g. poultry farm or motor car manufacturer o Continuous processes Continuous production is a step beyond mass production because the volume are even greater, but there is very little variety in the type of product, e.g. wheat mill, electricity generation utility, cement manufacturer, petrochemical refinery and paper manufacturer 11.3.2 The classification of process types for service providers Three main categories: o Professional services Professional services represent operational processes provided on a high clientcontact basis, e.g. dentist, doctors, attorneys, auditors and management consultants o Service shops Service shops represent operational processes where the characteristics of service provision fall between those of professional service and those of mass services, e.g. banks, hotels and retails shops o Mass services Mass services represent operational processes where many client transactions take place with limited client contact with a low variety; these services are usually equipment orientated and are provided on a large scale, e.g. post and telecommunication services, air and rail transport and television broadcast services 11.4 Operations design 11.4.1 The nature of operations design Operations design entails two interdependent aspects: o The design of products and services (aka product design) o The design of operations product or service processes to manufacture or provide these products or services (aka process design) 11.4.2 The design of products and services  The competitive advantage of good design The design of a product or service begins and ends with the customer/client, designed to satisfy the needs of the customer/client  The components of products and services All products and services consist of three interdependent components: o A concept (or idea) the set of expected benefits that the customer/client purchases when purchasing a product or service in response to his/her needs o A package product concept – tangible physical object, e.g. car, clothing service concept – intangible object, e.g. the car’s guarantee o A process necessary to create the package of products and services, the design of the products or services takes place in conjunction with the design of the processes required to manufacture or provide them  The stages in the design of products and services o Concept generation different ideas for new product or service concepts are generated o The screening process concepts are evaluated by means of a screening process based on certain design criteria, such as feasibility, acceptability and vulnerability o Preliminary design the first attempt to specify the composition of the components of the product or service to be included in the package and to identify the processes that will be necessary to produce or provide the product or service package o Evaluation and improvement evaluating the preliminary design with a view to improving it, and making the process of manufacture and provision less expensive and easier o Prototype and final design the prototype is the last step, in order to test it in the market, and if it is favourably received in the market, the final design and specifications of the product or service can be compiled 11.4.3 The design of operations processes  The design of supply networks o Suppliers of materials or services o Intermediaries and final customers/clients  The layout and flow of manufacturing and service-provision facilities o The layout the physical arrangement of the resources, e.g. machines, equipment and personnel o The flow the way in which resources such as materials, information and customers/clients flow through the transformation process The three steps of the layout: Step 1: Selecting the process type Step 2: Selecting the basic layout o The fixed-position layout o The process layout (flexible-flow layout) o The product layout (line-flow layout) o The cellular layout (hybrid layout) Step 3: Making a detailed design of the layout  The application of process technology o Refers to the machines, equipment and apparatus used un the transformation process  Job design and work organisation o Job design it determines how workers perform their various daily tasks o Work organisation factors influencing the people in the work environment in order to improve the execution of tasks in terms of efficiency and effectiveness  Method study the recording and investigation of work methods  Work measurement techniques designed to determine how long it takes a worker to do a specific job 11.5 Operations planning and control Operations planning and control focusses on all the activities required to put the operations process into action efficiently on a continuous basis so that products can be manufactured or services can be provided 11.5.1 The nature of operations planning and control o Supply side the products manufactured or services provided in the operational process o Demand side the specific needs of actual and potential customers/clients for products or services Three dimensions: o Volume (the quantity of products or services)  The loading of tasks the volume of work allocated to a work centre  The sequencing of tasks the sequence in which the tasks are performed  The scheduling of tasks the use of a detailed roster indicating when tasks should start and when it should be completed o Timing (when the products or services have to be manufactured or provided) o Quality (whether products or services conform to customers’/clients’ expectations) 11.5.2 Capacity planning and control The focus of capacity planning and control is on the provision of the manufacturing or service capacity of a particular operations process o Capacity the fixed volume of a product, or a time dimension o The nature of capacity planning  The total demand and required capacity must be determined  Alternative capacity plans must be identified  The most suitable approach to capacity planning and control must be choses o Techniques and methods used during capacity planning and control  Moving-average demand-forecasting technique  Cumulative representations of demand and capacity 11.5.3 Inventory and supply-chain planning and control A separate functional management area called purchasing management Inventory defined as all stored resources (material, information and clients) 11.5.4 Quality planning and control o Quality ‘the absolute best’ ,’something flawless’, ‘suitable for the purpose it was designed’ o The nature of quality planning and control  Customer/client-marketing-design-operations cycle o The steps in quality planning and control  Defining the quality characteristics of the product or service  Measuring the quality characteristics of the product or service  Setting standards for each quality characteristic of the product or service  Controlling quality against the set standards  Identifying and rectifying the causes of poor quality  Continuously improving quality 11.6 Operations improvement 11.6.1 The nature of operations  Different types of performance standards o Historical performance standards o Target performance standards o Competitors’ performance standards o Absolute performance standards  Priorities for improvement o The needs and preferences of customers/clients o The performance and activities of competitors  Approaches to improvement o Breakthrough improvement dramatic and large scale changes, not very regularly o Continuous improvement aka Kaizen improvement, more regular, but smaller changes 11.6.2 Failure prevention and recovery  Types of failures o Facility failures o Staff failures o Supplier failures o Customer/client failures  Failure detection and analysis o Process-monitoring o Complaints o Feedback from customers/clients  Systems-reliability improvement o Redesigning the products and services o Redesigning the processes of manufacturing or providing  Recovery of failures o Recovery procedures and contingency plans should be in place to minimise the effect on customers/clients 11.6.3 Total quality management A quality system includes the organisational structure, responsibilities, procedures, processes and resources for implementing quality  Defining total quality management (TQM)  A management philosophy that primarily aims to satisfy the needs and expectations of customers/clients by means of high-quality products or services  The ISO 9000 quality management system standard The ISO 9001:2000 guidelines: o The section on documentation requirements  Deals with which documents are required for establishing, implementing and maintaining the quality management system (QMS) o The section on management responsibility  Deals with management commitment to the QMS o The section on resource management  Deals with using resources to implement the QMS o The section on product realisation  Deals with planning the operation and supporting processes for the realisation of the required outputs o The section on measurement, analysis and improvement  Deals with monitoring and measuring through customer satisfaction, internal audits and process achievement CHAPTER 12 HUMAN RESOURCE MANAGEMENT 12.1 Introduction The process of finding, developing and keeping the right people through human resource planning remains important for all management tasks 12.2 The relationship between line management and the human resource department 12.2.1 The role of human resource management in the organisation  One of the crucial roles of the human resource (HR) manager is to improve the skills base of employees and to contribute to the profitability of the organisation 12.2.2 Human resource management and organisational effectiveness  An effective organisation must have a vision, mission and strategy Human resource management attributes: o Primary benefits monetary benefits, e.g. salary, pension, share options o Secondary benefits and working conditions Non-monetary benefits like leave, working hours, working conditions o Training and development development initiatives and programmes o Career development long-term career-path development, succession planning and performance management o Company culture and diversity the combined efforts of the employer to establish a strong company culture 12.2.3 Who performs the human resource function?  Human resource department, - human resource manger  Line managers  Supervisors 12.3 Human resource planning The process of using an organisation’s goals and strategy to forecast the organisation’s human resource needs in terms of finding, developing and keeping qualified human resources  Phase 1 – Identify the work being done in the organisation o Job analysis the process by which management investigates the tasks, duties and responsibilities of a job within an organisation – the nature of the work to be done o Job description the data collection used for job analysis is put in writing in a certain format: a job title, purpose of the job, what the position holder will have to do, how the job must be done and under which conditions o Job specification job specification detail the knowledge, skills and abilities relevant to a job, including the education, experience, specialised training, personal traits and manual dexterity of the person doing the job  Phase 2 – Human resource forecasting The purpose of human resource forecasting is to balance human resource supply and human resource demand Demand – affected by business objectives; determining the number of people needed Supply – affected by the hr programmes providing the human resources Factors to consider when forecasting o Economic growth o New development in the business o The labour market  Phase 3 – The human resource plan The purpose of this plan is to provide guidelines and steps that indicate how the business’s short-, medium- and long-term human resource requirements can be provided for, e.g. make provision for an active recruiting campaign, the need for intensive training programmes or making recommendations to automate because of a shortage of human resources 12.4 Finding qualified talent 14.4.1 Recruiting The purpose is to ensure that a sufficient number of, and competent, applicants apply for the various jobs  Internal recruiting  External recruiting The recruiting procedure  Recruiting from inside must ensure an efficient human resource record system – a human resource information system (HRIS)  Recruiting from outside requires a thorough analysis of the labour market – the social or geographical area from which a business draws its employees Recruiting methods:  Recruitment through advertisement  Recruitment through private employment/recruitment agencies  Recruitment through existing employees (employee referrals)  Recruitment through personal approach (aka head-hunting)  Recruitment through radio, TV and the Internet (e-recruiting)  Sundry recruiting strategies, e.g. visiting schools or universities 12.4.2 Talent selection The process of determining which individuals are best suited to fill positions in the organisation  Application and shortlisting  Intensive assessment o Psychological testing o Diagnostic interviewing  Final selection  Short list of approximately 3 persons, and consulting their references to confirm the information provided  On-boarding  New employees go through a process of on-boarding (induction, orientation and socialisation), introducing the employee to the organisation 12.5 Developing talent 12.5.1 Human resource development (HRD)  Training and development  Training involves providing employees with the knowledge and skills needed  Development have a long-term focus on preparing for future work responsibilities  Technical training and management training  Technical refers not only to tasks performed in a workshop, but any physical task  Management work – tasks such as planning, organising, controlling and managing people 12.5.2 Development methods  On-the-job training and development o Job rotation o Job shadowing o Job enlargement o Job enrichment o Job instruction training o Coaching o Mentoring o Apprenticeships (learnership) o Internships  Away-from-the-job training and development o Lectures o Conferences or discussions o Seminars o Vestibules or simulations o E-learning o Case studies o Role playing o In-basket exercise and assessment centre 12.5.3 The danger of the ‘shotgun’ approach to development Various organisations use a ‘shotgun’ approach to development, reasoning that, if a training programme is good for one employee, then it must be good for everyone 12.5.4 Performance appraisal The purpose of performance appraisal is to determine in which aspects the employee has: o Performed exceptionally well o Complied with the requirements for the job o Not complied with the requirements for the job Three basic purposes of a performance appraisal results: o To provide a basis for financial rewards o To determine employee promotion o To provide the employee with feedback on how well he/she is doing 12.6 Retaining talent 12.6.1 Compensation of employees  Firstly, a decision must be made about how the company’s compensation in general should compare with that of the labour market