chapter 2 chapter notes with summary of the chapter study notes of full chapter from textbook global and south african perspectives operations management from boston city campus
Key questions:
Why is operations performance vital in any organisation?
Why is quality important?
Why is speed important?
Why is dependability important?
Why is flexibility important?
Why is cost important?
How do operations performance objectives trade off against each other?
Operations performance is vital for any organisation.
• The view of operations management as being able to either make or break any business is not just because the operations function
is large and, in most businesses, represents the bulk of its assets.
• The majority of its people but because the operations function gives the ability to complete by providing the ability to respond to
customers and by developing the capabilities that will keep it ahead of its competitors in the future.
• Operations management principles and the performance of its operations function is hugely important.
• Operations managers wil always face new challenges, not only when they have major new projects to manage but also more generally
as their economic, social, political, and technological environment changes.
• Many of these decisions and challenges seem largely economic in nature.
• What wil the impact on our costs of adding a new product or service feature?
• Other decisions have more of a ‘social’ aspect. How do we make sure all our suppliers treat their staff fairly?
• Yet others have an environmental impact. Are we doing enough to reduce our carbon footprint?
• What’s more the ‘economic’ decisions also have an environmental aspect to them. Wil a new product feature make end-of-life
recycling more difficult? Will the new technology increase pollution?
• The ‘social’ decision must be made in the context of their economic consequences. We want suppliers to treat staff well, a but we
also want to make a profit.
The triple bottom line.
• The triple bottom line is an approach used to measure the organisations performance. (TBL or 3BL) also known as people, planet and
profit.
• The organisation should measure themselves not on the traditional economic profit that they generate for their owners but als o the
impact their operations have on society (sense of communities and individually for example in terms of their employees) and the
environment.
• The influential initiative that has come out of this triple bottom line approach is that of ‘sustainability’.
• A sustainable business is one that creates an acceptable profit for its owners but minimises the damage to the environment and
enhances the existence of the people with whom it has contact.
• It balances economic, environmental, and societal interest. This gives the organisation its ‘licence to operate’ in society.
• Sustainable business is more likely to remain successful in the long term than one which focuses on economic goals alone. Only a
company that produces a balanced TBL is really accounting for the total cost of running its operations.
, Chapter 2 : Operation Performance
The social bottom line.
• The idea behind the social bottom line is that the business acknowledges they have a responsibility for the impact they have on
society and balance the external ‘societal’ consequences of their actions with the more direct internal consequences such as profit.
• At the level of the individual, social bottom line performance means devising jobs and work patterns which allow individuals to contribute
their talents without undue stress.
• At a group level it means recognising and dealing honestly with employee representatives
• The business should recognise their responsibility to local communities by helping to promote their economic and social well -being.
The environmental bottom line.
• Environmental sustainability means ‘ensuring that the overall productivity of accumulated human and physical capital resulting from
development actions more than compensates for the direct or indirect loss or degradation of the environment’.
• Operations managers can’t avoid responsibility for environmental performance.
• It is often operational failures which are at the root of pollution disasters and operations decisions which impact on long-term
environmental issues.
The economic bottom line
• The top management of an organisation represents the interest of the owners and therefore are the direct custodians of the
organisations economic performance.
• Operations managers must use the operation’s resources effectively and there are many ways of measuring this ‘economic bottom
line’.
• From an operations perspective, 5 aspects of performance have a significant impact on economic performance.
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