Area of Study 3: The Operations

Management Function
Chapter 6: Operations Management function
Operations Management
Task of managing the process that transforms
resources into finished goods and services
Managing resources to achieve efficient output of
goods and services
Operations and business objectives
Level of Planning Description of tasks undertaken
Strategic Planning -what products to make or services to
provide
-process and layout
-facilities
-location
Tactical planning -material resourcing
-labour resourcing
-layout and process design
-sourcing technology
-quality management
Operational planning -scheduling – what to process and when
-sequencing – order of process
-loading – amount of work placed onto
resources
-rostering – who does what and when
Role of Operations Manager
Ensuring that the operations systems meet objectives
of the organisation as a whole
Making strategic decisions relating to planning and
designing an operating system
Inventory management
Manufacturing
Quality
Maintenance/engineering
Operations system
Series of procedures and processes an organisation
take in order to create its outputs of finished goods and
services through the transformation of inputs.
Key Elements of Operations System -
INPUTS
Inputs – resources necessary to produce the product
Raw materials and components
Human Resources
Technology
Capital, plant and equipment
Information and knowledge
Times
Key Elements of Operations System -
PROCESSING
Transformation of inputs into outputs
Plans the process then organises its implementation
Process will vary according to:
types of goods and services produced
Size of the organisation
Number, quality and availability of resources
Key Elements of Operations System -
OUTPUTS
Final product, the results of the operations process
Outputs are goods or services
Good involves an object changing hands, service
involves purchase of labour
Management should ensure output type is responsive
to needs of the market
 How operations management relates to
business objectives and strategy
An organisation in its desire to increase its level of
business competitiveness will require the operations
management functional area to establish objectives such as:
Increasing productivity
Improving quality of processes and output
Adopting a sustainable approach to its operations
These features can help enhance the competitiveness of the
business:
Optimal levels of operational efficiency
High standards of quality
Ethical and socially responsible considerations
Being able to measure level of achievement with objectives
 The productivity objective
Productivity: level of output obtained from a level of input
Output (O) (units of production)
Productivity (P) = Inputs (I) (units of raw materials, capital,
labour)
Examples of productivity measures:
Units of production produced per employee
Crop tonnage per hectare planted
Number of client attended to per hour or per unit of wage cost
Number of units produced per unit of money
Productivity and quality improvements are key to achieving
international competitiveness
Business will attempt to gain competitive advantage based on
Factors determining organisational
productivity
Technology levels
Research and development
Equipment and facilities
Tasks and processes
Layout of facilities
Communications processes
Workplace safety
Evaluation of operations management
Key Performance Indicators appropriate to
determining if operations management system is
working well:
Efficiency
Level of waste
Productivity
Customer satisfaction (measured by repeat orders or
number of returned products.
Profit
Activities
Activity 6.3 Case Study p142-143

Chapter Summary Questions

Examination Preparation Chapter 6 p146