OPERATIONS DEPARTMENT

OPERATIONS DEPARTMENT
OPERATIONS PLANNING
preparing input resources to supply products to
meet expected demand
PRODUCTION PROCESS/TRANSFORMATION PROCESS

the inputs of resources, land, capital, labour are produced into

finished goods, services and components for other firms.

Production is the total amount made by a business in a given

time period.

CREATING VALUE – increasing the difference between

the cost of purchasing bought-in materials and the price
the finished goods are sold for
ADDING VALUE
the difference between the cost of purchasing raw materials and the
prices the finished goods are sold for. The degree of values
added will depend on:

 Design of the product

 Impact of the promotional strategy
 Efficiency with which the input resources are combined and
managed
KEY TERMS TO REMEMBER
Intellectual Capital – intangible capital of a business that
includes human capital, structural capital and relational capital

Human Capital – well trained and knowledgeable employees

Structural Capital – databases and information systems

Relational Capital – good links with suppliers and customers

Level of Production – the number of units produced during a

time period
 EFFICIENCY
Efficiency is about making the best possible use of
resources. Efficient firms maximise outputs from
given inputs, and so minimise their costs. By
improving efficiency a business can reduce its
costs and improve its competitiveness.
PRODUCTIVITY
the ratio of outputs to inputs during production.
It can be raised through:
THERE IS A DIFFERENCE BETWEEN PRODUCTION AND PRODUCTIVITY

Production is the total amount made by a

business in a given time period.

Productivity – the ratio of outputs to inputs

during production.
 PRODUCTIVITY IMPROVEMENT
Productivity can be improved through:

 Training and Development

 investment in equipment
 better management of staff
 Improve worker motivation
 Purchase more technologically advanced equipment
 LABOUR PRODUCTIVITY
measures how much each employee makes over a
period of time. It is calculated by dividing total
output by the number of workers.
LABOUR / STAFF PRODUCTIVITY
Staff productivity depends on:

 skills
 quality of machines available
 effective management
WAYS TO INCREASE PRODUCTIVITY:
BENEFITS OF INCREASED PRODUCTIVITY AND
EFFICIENCY
OTHER WAYS TO REDUCE COST
OTHER WAYS TO REDUCE COST
• Reducing overheads such as administration, eg
making some support staff redundant. Customer
service may suffer as a result of this.
• Relocation to countries where staff with
appropriate skills can be hired at lower wages.
• Improving management so staff are motivated to
work harder, or are better used.
• Redesigning the product so an item is easier and
cheaper to make.
LEAN PRODUCTION

A term, technique or process for those

techniques used by business to cut
down on waste and therefore increase
efficiency.

For Example, by reducing the time it takes

for a product to be developed and
become available for sale.
 7 TYPES OF WASTE CREATION
1- Over production: producing more than ordered by the customers.

2- waiting — when goods are not moving or being processed in any way then
waste is occurring
3- transportation — moving goods around unnecessarily causPs waste and is
not adding value to the product. Goods may also be damaged when they are
being moved around
4- unnecessary inventory — if there is too much inventory then this takes
up space, may get in the way of production and costs money
5- motion — any actions, including bending or stretching movements of the
body of the employee wastes time. It may also be a health and safety risk for
the employees. This also applies to the movement of machines which may not
be necessary
6- over-processing — if complex machinery is being used to perform simple
tasks then this is wasteful. Some activities in producing the goods may not be
necessary if the design of the product is poor
7- defects — any faults require the goods being fixed and time can be wasted
inspecting the products.
HOW LEAN PRODUCTION WORKS?
Reduced costs can lead to lower prices for
customers, businesses being more competitive
and possibly also increased profits.
Lean production might include using the following
methods:
• Kaizen
• just-in-time inventory control
• cell production.
 1- KAIZEN
Japanese word which means continuous improvements
through the elimination of waste.

Improvement does not come from investing in new

technology or equipment but through the ideas of the
workers themselves.

Small groups of workers meet regularly to discuss

problems and possible solutions.
This has proved effective because no one knows the
problems that exist better than the workers who work
with them all the time, so they are often the best ones
to think of ways to overcome them.
KAIZEN
 2- JUST IN TIME INVENTORY
Just-in-time (JIT) is a production method that involves reducing or
virtually eliminating the need to hold inventories of raw
materials or unsold inventories of the finished product.

Supplies arrive just at the time they are needed.

ADVANTAGES:
 BENEFITS OF LEAN PRODUCTION
Benefits of lean production Costs are saved through:
• less storage of raw materials or components
• quicker production of goods or services
• no need to repair defects or provide a replacement
service for a dissatisfied customer
• better use of equipment
• cutting out some processes which speeds up
production
• less money tied up in inventories
• improved health and safety leading to less time off
work due to injury.
3- CELL PRODUCTION

Separate Assembly lines

Boost the morale of employees