Intermediate ORM 1 INTERMEDIATE LEVEL OPERATIONAL RISK MANAGEMENT Civil Air Patrol.
Introduction Operations Management Intermediate Business Management.
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Transcript of Introduction Operations Management Intermediate Business Management.
IntroductionOperations Management
Intermediate Business Management
2
The Role and Importance of Operations
Role of Operations
Purchasing of Raw Materials to meet Production requirements
Managing Stock
Using quality techniques to ensure
maximum quality output is achieved
from minimum inputs
Warehousing and distribution of
finished products
Ensuring appropriate methods of
production are used
3
The Role and Importance of
OperationsOperations is important because:
• it is one of the CORE activities of any business
• It produces the products and services which enable the business to make a profit
April 19, 2023 R Alexander March 2009 4
Role & Importance of OPERATIONS
Operations is the name given to the process of transforming INPUTS into FINISHED GOODS.
An organisation’s product is the goods or services it supplies to customers.
One of the main aims of an organisation is to ensure that they satisfy their customers by providing them with a high quality good or service.
April 19, 2023 R Alexander March 2009 5
Production Systems
An organisation will use a mix of labour and machinery to produce their good or service – the Production System
The nature of the good/service will determine what type of production system is used:
Capital intensive: mostly machines are used in production
Labour intensive: mainly people are involved in
production
Automation: production is controlled by a computer
April 19, 2023 R Alexander March 2009 6
Questions1. Describe the role and importance of operations in an
organisation. (2 marks)
2. Distinguish between a capital intensive production system and a labour intensive production system.
(1 mark)
3. For each of the following businesses, identify whether they are capital intensive, labour intensive or automated and outline why.
(8 marks)
• Coca Cola bottling factory• Wedding dress maker• Car manufacturing plant• Olive picking in Tuscany
4. Describe an automated production system. (1 mark)
April 19, 2023 R Alexander March 2009 7
Solutions
2. Mostly machines are used in capital production whereas mainly people are involved in labour intensive production.
April 19, 2023 R Alexander March 2009 8
SolutionsFor each of the following businesses, identify whether they are capital intensive, labour intensive or automated and outline why.
(8 marks)
• Coca Cola bottling factory - AUTOMATED• Wedding dress maker – LABOUR INTENSIVE• Car manufacturing plant – CAPITAL
INTENSIVE• Olive picking in Tuscany – LABOUR
INTENSIVE
April 19, 2023 R Alexander March 2009 9
Operating System
In order to ensure that a product is produced efficiently, the organisation must organise its raw materials, labour and machinery.
The method of organising these resources to get a desired outcome is known as an Operating system.
COPY THE DIAGRAM ON THE NEXT SLIDE INTO YOUR JOTTER
Input Process Output
Raw Materials
+Labour
Using differentamounts of
different resources to produce a
different endproduct
The actualgoods
orservice
April 19, 2023 R Alexander March 2009 11
The Operations Department’s Interaction with other Departments
In order to work efficiently it is important that the Operations department communicates with other key functional areas in the organisation.
April 19, 2023 R Alexander March 2009 12
OPERATIONS LINKING WITH ……
MARKETING DEPARTMENT Inform where to distribute products What type of packaging to use Carry out research and development of products
FINANCE DEPARTMENT Departmental budgeting Determine methods of payment to be used for
employees Suggest which supplier to use
HUMAN RESOURCE DEPARTMENT Responsible for recruiting the right people Provide training for staff
Don’t copy this yet!
April 19, 2023 R Alexander March 2009 13
Task
Create a mind map in your jotter showing how the Operations Department links with each of the following departments:
Marketing Department Finance Department Human Resources Department
Use page 69 of your notes to help
April 19, 2023 R Alexander March 2009 14
Elements of the operations function
The work of the Operations Department in a business consists of a number of different elements.
Purchasing System design System operations
April 19, 2023 R Alexander March 2009 15
Purchasing
Responsible for buying materials and resources used in production Important to buy the right quantity and quality of materials and resources at the right
time. A very important role of Purchasing is to choose a suitable supplier. They must ensure
that the supplier:
Is reliable Can deliver the correct quantity Can deliver on time
April 19, 2023 R Alexander March 2009 16
Purchasing
The Finance department will work with Purchasing to make sure that they are buying at the best price and getting the best terms e.g. discounts, credit
Often a firm will buy in bulk to get better discounts.
Important to get good value for money.
April 19, 2023 R Alexander March 2009 17
THE PURCHASING MIX –THE FACTORS THAT SHOULD BE CONSIDERED WHEN PURCHASING STOCK OR NEW EQUIPMENT
Alternative suppliers Are suppliers dependable? Local or national suppliers? Extra
costs?Delivery time Lead times long or short? Reliability and keeping promises.Price Cash discounts, trade discounts, bulk buying, credit termsQuality Supplier guarantee of consistent quality materialsQuantity Can supplier guarantee required quantities. Cost of extra
storage for bulk buying. Storage Facilities How much storage space is available? Safety and security.
COPY THIS SLIDE TO YOUR NOTES
April 19, 2023 R Alexander March 2009 18
System design
The Operations department must decide on the best operating system:
Most suitable factory layout? Flow of work? How to distribute finished goods? Labour requirements? Best combination of machinery and people? Best to invest in machines or humans in the long term?
April 19, 2023 R Alexander March 2009 19
Elements of Operations
System Operation The Operations department must control the flow of stocks to ensure that the
correct quantity is available at all times to keep production going.
Developing New Products The Operations department must develop and design new products to allow
production to take place. In order to achieve this is, it is important for them to communicate with the
marketing department.
April 19, 2023 R Alexander March 2009 20
QuestionsExplain the importance of the purchasing mix.
(6 marks)
Describe 4 things a business must consider when deciding on an operating system
(4 marks)
Outline why the Operations Department must control the flow of stocks.
(1 mark)
April 19, 2023 J Whiteley March 2009 21
Solutions - Explain the importance of the purchasing mix. (6 marks)
Price – this is important because the firm must get value for money. They will want to receive discounts for bulk buying.
Quality – if the quality of the supplier is not good they the finished product will also be poor.
Quantity – the supplier must be able to supply the necessary quantities to allow the business to continue trading.
Location of supplier – a local supplier is less likely to have delivery problems due to weather etc
Reliability of supplier – will they deliver on time/ correct amount
Storage facilities available – does the firm have enough storage space to buy in bulk.
April 19, 2023 J Whiteley March 2009 22
Describe 4 things a business must consider when deciding on an operating system. (4 marks)
4 things a business must consider when deciding on an operating system are: The most suitable factory layout so that the stages of
the production process are in a logical order. Distribution of finished goods – will the firm be able to
distribute itself or will it outsource distribution? Labour requirements – how many workers are needed
where and when? The organisation will need to consider the combination
of machinery and people that best meets its needs. Is it best to invest in machines or humans in the long
term?
April 19, 2023 J Whiteley March 2009 23
Outline why the Operations Department must control the flow of stocks. (1 mark)
The Operations department must control the flow of stocks to ensure that the correct quantity is available at all times to keep production going. Running out of stock means that production will come to a halt.