MNO2601 Exam
Summary 2022. This is an all-inclusive and a complete guide to MNO2601 - Production And Operations Management
What is operations management
o The activity of managing the resources which are devoted to the production and delivery of products and services.
It is a core function of a...
What is operations management
o The activity of managing the resources which are devoted to the production and delivery of products and services.
It is a core function of any business although it may not be called operations management
o It is concerned with managing processes. Because all management functions manage processes it is relevant to all
managers
What do operations managers do and why is it so important
o Translation of strategy into operational action
o Design, planning, controlling and improvement of operation/processes
o Can aid in reducing of costs, increasing revenue and reducing the investment cost for future innovation
o Because of the a turbulent and dynamic business environment operations managers need to think on their feet
o Improving operations can be the most effective way to improve financial performance
Input and Outputs
o The process of operations to produce products and services by changing inputs to outputs.
o The Transformation process model.
Transformed resources
Materials
Information THE TRANSFORMATION Output products and Customers
Input resources
Customers PROCESS services
Transforming resources
Facilities
Staff
Transformed resources –
Materials – process which materials transform their physical properties, shape or composition such as manufacturing
operations. Other change location(logistic companies), position (retail), storage(warehousing)
Information – Operations that transform their informational properties such as accountants and marketing companies
Customers – Process where customers may change their physical properties (hairdressing), storage (hotels) and
locations (transportation)
Transforming resources –.
Facilities – The buildings, equipment, plant and process technology of the operation
Staff -The people at any level who operate, maintain, plan and manage the operation
Tangible products, you can physically touch such as television or newspaper. Intangible products or services cannot be touched
such as consultancy services or a haircut, although you can see the results.
1.4 Operation processes have different characteristics (Different characteristics of production/operation processes)
All operations are similar but they do differ slightly in different ways, four of the following are important:
1. Volume – The level or rate of output from a process, a key characteristics that determines process behaviour.
2. Variety – The range of different products and services produced by a process, a key characteristic that determines process
behaviour.
3. Variation – The degree to which the rate of level of output varies from a process of time.
4. Visibility – The amount of value added activity that takes place in the presence, in reality or virtually, of the customer also
called customer contact.
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, The implication of the ‘four v’s’ of operations. A Typology of Operations
Low repetition. High repeatability
Each staff member performs more Specialisation
of a job. LowVOLUMEHigh Systemisation
Less systemisation Capital intensive
High unit costs Low unit costs
Flexible Well defined
Complex Routine
Much customer needs LowVARIETYHigh Standardised
High unit costs Regular
Low unit costs
Changing capacity Stable
Anticipation Routine
In touch with demand LowVARIATIONHigh Predictable
High unit costs High utilisation
Low unit costs
Short waiting tolerance Tim lag between production and
Satisfaction governed by customer consumption
perception Standardised
Customer contact skills needed LowVISIBILITYHigh Low contact skills
Received variety is high High staff utilisation
High unit costs. Centralisation
Low unit costs.
1.5 The activities of operation management (Activities of production/operation management)
While the exact nature of operations management may vary within different organizations, the following general activities
apply to all types of operation
o Understanding the operations strategic objectives – First responsibility of any management team is to understand
what it is trying to achieve i.e. developing a clear vision.
o Developing an operations strategy for the organization – Managers need to have a set of general principles to
guide decision making.
o Designing the operation’s products, services and processes – The activity of determining the physical form, shape
and composition of products and services.
o Planning and controlling the operation – What the operations resources should be doing and making sure that
they are doing it.
o Improving the performance of the operation
o The broad responsibilities of operations management – Five responsibilities that are particular relevant:
1. The effects of globalization
2. The pressures of environmental protection
3. The increasing relevance of social responsibility
4. The need for technology awareness
5. How knowledge management is becoming an important part of operations
An effective and efficient operation will give a business the following types of advantages among others:
a) Reduced costs of production through less waste, reworking, etc.
b) increased revenue from increased customer satisfaction with better quality
c) reduced investment in facilities and equipment through better utilization
d) set the platform for future innovation by acquiring new knowledge and developing new skills
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