Business; Operations; Role of operations management

The role of operations management
Strategic role of operations-cost leadership,good/service differentiation
Good and or services in different industries
Interdependence with other key business functions
Operations Management
Operations is the key business function concerned with the transformation of inputs into outputs
The operations manager oversees this process by planning,production,organising inputs,motivating employees, and monitoring and controlling outputs
Strategic role of operations management
The operations manager will make strategic decisions about the overall design of the operations system.
A strategic decision is one that affects the business on the long term
Examples of strategic operations decision management
Where the business chooses to make its products will affect the location of operations. Or where will the business get its inputs
Will the business buy inputs and raw materials from a local supplier or look off shore and buy from another company
What are the strategic goals in operations management ?
Improve productivity, efficiency and quality of inputs.
The strategic operational decisions will also need to fit the overall strategic goals and vision in the business plan and fit the changing business environment
What are the three broad long terms decisions in strategic operations management
Planning production and delivery
Controls to manage quality
Improving operations
Strategic role of operation management
Cost leadership
A cost leadership strategy is where a business aims to be the lowest cost manufacturer within its industry and gain a competitive advantage.The products are the basic,no frills type with fewer features perhaps lower quality and using low cost packaging.The business will expect a small profit margin on each item it sells, balanced by a high volume of sales to generate satisfactory revenue.
Ways cost leadership can be achieved
Strategic role of operations management
Using less expensive inputs
Using technology
Producing faster
Having lower quality outputs
Outsourcing product servicing
Distributing the product using dealers who work with lower profit margins
Issues that operations managers need to be aware
Cost leadership- strategic role of operations management
Competitors can use the same strategy and may achieve even lower costs.Small businesses are able to implement strategies to reduce costs much faster than larger firms
The business’s product is not perceived by customers to be equal to it’s competitors because competitors products offer better technology,features and services
Developments in technology change consumer preference
Good/Service differentiation
Strategic role of operations management
A business may decide that a better strategy to achieve a sustainable advantage in a competitive market is to differentiate its products rather than aiming to be the lowest cost supplier.Customers have ever increasing expectations about quality,service and technology.A product may achieve a greater market share because it is unique different to its competitors
Risks associated with good service differentiation strategy
Competitors can imitate the market leader’s innovations and consumer preference can still change
Ways to achieve differentiation in operations
Good/service differentiation-strategic role of operations management
Better quality outputs
Faster delivery
Custom-designed products
More features and applications
Incorporation of new technology
Clever design
Examples of a differentiation strategy
Good/services differentiation strategic role of operations
thumb wheel,
click wheel
touch screen technology used in apple products from ipods iphones and ipads
Airlines will try to differentiate their product so as to attract consumers
Good and or services in different industries
Significant differences between manufacturing and service based businesses.A business can provide both a physical and a service. There are similarities between service based and manufacturing operations they both; use technology make predictions about consumer demand deal with customers and suppliers , make decisions about capacity location and physical layout of the business
Manufacturing goods
Goods in different industries
Manufacturing outputs are tangible once they are made they can not be customised.The productivity of the business making the goods is easy to measure as physical goods can be counted. Use a lot of equipment they are capital intensive.Great variety in the output of operations of different business. New types of industry are developing technological change
Services in different industries
Are not tangible services like financial advice a doctors consultation or being represented in court by a barrister are real but do not exist in a physical sense. Are labour intesneive. Require a loot of interaction with customers who consume the service where it is provided eg a hair salon. Most development in operational management occurs
Advantages and disadvantages of producing goods and services
Services in different industries
Advantage of services over manufacturing is that it is easy to modify and customise the service to suit the desires of the customer
Disadvantage it is much harder to measure productivity due to each service being different for different customers
Examples of Australia’s different industry sectors
Goods and services in different industries
Set out as
Sector example nature of the goods and service
Education,Bond Uni, Aus first private,not for profit uni
Small business,7-Eleven,convenience store
Agriculture,Cubbie Station ltd, largest cotton producer in Australia
Banking& finance Macquarie bank provides banking finances advisory & investment services for business
Australia’s industry sectors
Goods and services in different sectors
Just the sectors
Agriculture , Education , Health care , Media , Legal
Banking and finance , Leisure and gaming , Tourism
Construction and engineering , Small business
Food and beverage manufacturing , Insurance
Infrastructure and utilities , Property , Retail
Manufacturing , Telecommunication ,Transport
Information technology , Mining and energy
Interdependence with other key business functions
Role of Operations
There will be constant flow of information between operations and the other key business functions, marketing, human resources and finance. Each relies on the other so that the business can achieve its gals. With specialisation of the business function there must be interdependence
Interdependence with other key business functions
Operations with marketing
Role of operations
Marketing research identifies the nature of goods and consumers desire and marketing strategies to encourage purchases. Operations must supply a product that has the features and quality consumers demand as well as reliably distributing this product to the market
Interdependence with other key business functions
Operations with finance
Role of operations
The finance manager will create budgets and make funds available to purchase inputs, equipment’s, repairs and maintenance. Production costs will be minimized in order to maximize profit margins
Interdependence with other key business functions
Operations with Human resources
Role of operations
Human resources will ensure that enough employees with the appropriate skills are available for the operation function. The human resources manager will use their leadership style and rewards to ensure quality work is done by employees in the operation function
Define interdependence
Different parts of an organization must rely on each other to perform their task or role.
Define Tangible
A physical good that can be seen and felt
Define Customised
Changing the features of a product to suit the precise preferences of a customer
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