OPERATIONS*

Business*Studies*Topic*One*
Sahil&Bhandula&
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BUSINESS*STUDIES*HSC*DESTRUCTION*(OPERATIONS)*
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Role*of*Operations*Management*

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Operations&refer&to&the&business&processes&that&involve&transformation,&or&more&generally&production.&
In&manufacturing,&operations&refers&to&the&processes&involved&in&turning&raw&materials&and&
resources&into&outputs&of&finished&goods&or&products.&
In&services.sector,&operations&refer&to&the&processes&involved&in&actually&carrying&out&the&
service.&
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Example.of.manufacturing.operations:..
Example.of.service.sector.operations:..
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A&vehicle&manufacturer&turning&steel&
The&provision&of&professional&advice&by&a&
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into&cars&or&an&oil&refiner&converting&
solicitor&and&the&washing,&cutting&and&
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crude&oil&into&petrol&or&paraffin&for&
styling&of&hair&by&a&hairdresser.&
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candle&making.&
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Operations&involve:&
The&production&of&goods&and&services&
Production&controls&and&associated&quality&controls&on&processes&
Inventory&control&(monitoring&stock&levels)&
Supply&chain&management&(organising&who&supplies&your&raw&materials)&
Logistics&and&distribution&(delivery&of&products,&or&retail&set&up)&
Management&decision&making&in&terms&of&operational&processes&
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Inputs&and&Outputs:&
Business&inputs&include&tangible&things&such&as&raw&materials,&land,&labour&resources,&capital&in&the&
form&of&machinery&and&technology,&as&well&as&intangible&inputs&such&as&ideas&and&information.&
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Business&outputs&include&the&products&(goods&and&services)&made&for&the&processes&of&transformation&
&that&is,&operations.&
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Strategic*Role*of*Operations*
Strategic&means&the&longIterm&planning&performed&by&senior&managers&&and&the&strategic&goals&are&
to&improve&productivity,&efficiency&and&quality&of&outputs.&The&following&are&the&strategic&roles&of&
operations&which&management&may&implement:&
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Cost&Leadership:&involves&aiming&to&have&the&lowest&costs&or&to&be&the&most&price&competitive&in&the&
market.&A&key&aspect&to&cost&leadership&is&that&although&trading&with&the&lower&cost,&the&overall&
business&should&still&be&profitable.&This&means&that&operations&managers&must&find&ways&to&minimize&
costs.&
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Economies&of&scale:&refers&to&cost&advantages&that&can&be&created&because&of&an&increase&in&scale&of&
business&operations.&Typically&the&cost&savings&from&being&able&to&purchase&lower&cost&per&unit&of&
input&and&efficiencies&created&from&the&improved&use&of&technology&and&machinery.&
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Product&Differentiation:&refers&to&distinguishing&products&in&some&way&from&its&competitors&
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Product&Differentiation:&Goods&&varying&the&actual&product&features;&varying&product&quality&
and&varying&any&augmented&features&
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Product&Differentiation:&Services&&varying&the&amount&of&time&spent&on&a&service;&varying&the&
level&of&expertise&brought&to&a&service;&varying&the&qualifications&and&the&experience&of&a&
service&provider&and&varying&the&quality&of&materials/technology&used&in&service&delivery&

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Cross&Branding:&For&both&goods&and&services,&differentiation&can&be&created&from&crossI&
branding&or&strategic&alliances.&This&approach&adds&value&to&products&by&offering&consumers&
added&benefits&from&a&crossIbranding&arrangement.&
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Goods*and/or*Services*in*Different*Industries*
Operations&decisions&will&vary&for&goods&depending&on&whether&they&are&standardised&goods&or&
customised&goods.&
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Standardised&Goods:&are&those&that&are&massIproduced,&usually&on&an&assembly&line.&Standardised&
goods&are&uniform&in&quality&and&meet&a&predetermined&level&of&quality.&E.g.&Toyota&produce&
standardized&cars&for&the&customers&to&buy&outright&with&no&personal&changes.&
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Customised&Goods:&are&those&that&are&varied&according&to&the&needs&of&customers.&These&goods&are&
produced&with&a&market&focus&rather&than&a&production&focus.&E.g.&customized&furniture&is&possible&
where&you&can&choose&what&colour,&what&cover&material&to&use&and&the&cushion&selection.&
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Interdependence*with*Other*Key*Business*Functions*
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The&operations&department&brings&together&the&materials&and&the&activities&needed&for&the&production&
of&goods&and&services&to&meet&consumer&demand.&It&also&shares&ideas&across&the&business&about&how&to&
improve&processes&or&achieve&cost&savings&to&bring&about&best&practice.&The&operations&manager&will&
liaise&with&the&other&department&in&the&following&ways:&
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Discuss&staffing&and&training&and&development&needs&with&the&Human&Resources&
department/manager.&
Discuss&financing&requirements&with&the&Accounting&and&Finance&department/manager.&
Discuss&product&design&with&the&Marketing&department/manager.&
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Therefore,&it&can&be&seen&that&the&Operations&department&carries&out&a&coordinating&role&in&the&
business&to&ensure&that&the&prime&function&(main&activity)&of&the&business&is&carried&out&efficiently&and&
effectively&so&that&consumer&demand&is&met.&In&this&way&the&business&will&be&profitable.&
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Influences*on*Operations*
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Globalisation&

Corporate&Social&
Responsibility&

Environmentally&
Sustainablity&

Technology&

InVluences&

Quality&
Expectations&

Government&
Policies&

Legal&Regulations&

CostIBased&
Competition&

Globalisation*
Globalisation&refers&to&the&removal&of&barriers&of&trade&between&nations.&Two&key&features&of&
globalisation&include:&
Increasing&integration&between&national&economies&&
High&degree&of&transfer&of&capital,&labour,&intellectual&capital&and&ideas,&financial&resources&and&
technology&
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What.influence.does.globalisation.have.on.operations.management?.
Globalisation&is&a&very&significant&influence&on&operations&management.&Large&businesses&are&
increasingly&orienting&what&they&produce&and&how&they&produce,&towards&the&global&market,&with&a&
view&to&meeting&the&needs&of&global&consumers.&
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The&supply*chain&refers&to&the&range&of&suppliers&a&business&has&and&the&nature&of&its&relationship&
with&those&suppliers.&For&large&global&businesses&the&integration&of&the&range&of&suppliers&creates&a&
network&sometimes&called&the&global*web.&
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Global*web*refers*to*the*network&of&suppliers&a&business&has,&chosen&on&the&basis&of&lowest&overall&
cost,&lowest&risk&and&maximum&certainty&in&quality&and&timing&of&supplies.&
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The&global&web&strategy&is&one&in&which&the&business&aims&to&minimise&cost&across&the&range&of&its&
suppliers.&Thus,&a&business&will&opt&for&a&location&that&places&it&in&appropriate&proximity&to&the&
suppliers.&If&a&high&proportion&of&the&suppliers&are&in&one&particular&region,&this&may&decide&the&
location&of&the&main&operational&processes.&
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Technology*
Technology&is&defined&as&the&design,&construction&and/or&application&of&innovative&devices,&methods&
and&machinery&upon&operations&processes.&
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Technology&developments&strongly&influence&operations&and&production&management&
New&technologies&in&production&and&operations&have&redesigned&and&reduced&the&need&for&
energy&and&raw&materials,&and&result&in&less&waste&and&faster&production&
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NEW&TECHNOLOGIES&REFER&TO:&
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Computer*Aided*Design*(CAD)&is&
software&that&allows&engineers&to&
design&and&change&products.&CAD&is&the&
use&of&computer&systems&to&assist&in&
the&creation,&modification,&analysis,&or&
optimization&of&a&design.&

Computer*Aided*Manufacture*(CAM)&
is&software&that&allows&engineers&to&
design&and&change&products.&CAM&is&
the&use&of&computer&software&to&
control&machine&tools&and&related&
machinery&in&the&manufacturing&of&
work&pieces.&

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Quality*Expectations*
Quality&is&understood&to&be&a&specific&reference&to&how&well&designed,&made&and&functional&goods&are,&
and&the&degree&of&competence&with&which&services&are&organised&and&delivered.&A&business&that&falls&
short&of&the&customer&expectations&will&suffer&a&longIterm&damage&to&its&goodwill&and&reputation&in&
the&market.&&
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Quality*Expectations*with*Goods*
Quality&of&design&
Fitness&for&purpose&
Durability&
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Quality*Expectations*with*Services*
Professionalism&of&the&service&provider&
Reliability&of&the&service&provider&
Level&of&customisation&

Government*Policies&
Since&policies&can&inform&lawImaking,&and&also&lead&to&business&opportunities,&operations&managers&
need&to&be&fully&aware&of&the&contemporary&government&policies&and&what&they&compromise.&Policies&
below&all&impact&on&business&operations&in&terms&of&costs&and&opportunities:&
Taxation&rates&
Required&materials&handling&practices&
EXAMPLES*OF*GOVT.*REGULATION*
OH&S&standards&
Workplace&Health&and&Safety&Act&
Training&and&rules&
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Public&health&Policies&
AntiIDiscrimination&Act&
Environmental&Policies&
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Employment&relations&
Fairwork&Act&
Trade&and&industry&policies&
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CostOBased*Competition*
The&business&can&reduce&its&prices&lower&than&its&rivals.&Sales&and&market&share&should&increase&as&
well&as&profit.&This&influence&may&force&a&business&to&seek&its&own&cost&advantages&through&sourcing&
cheaper&inputs,&updating&technology&or&outsourcing.&
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Legal*Regulation*
Compliance&costs&are&the&expenses&associated&with&
meeting&the&requirements&of&legal&regulations.&The&range&
Achieve&
economies&of&
of&laws&with&which&a&business&must&comply&are&
scale&
collectively&termed&compliance.&The&relevant&laws:&
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Use&automated&
production&
Bulk&buy&inputs&
IWHS&in&the&use&of&machinery&and&in&interacting&with&the&
systems&
business&environment&
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BUSINESSES&
THAT&
ITraining&and&development&in&the&use&of&technology&
REDUCE&
COSTS&
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IFair&work&and&antiIdiscrimination&laws&&
Produce&high&
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Eliminate&waste&
volume&output&
IEnvironmental&protection&in&the&use&of&minimising&
pollution,&etc&
Standardised&
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products&for&large&
markets&
IPublic&health&laws&
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Environmental*Sustainability*
Environmental&sustainability&refers&to&the&development&and&use&of&methods&of&production&that&allow&
resources&to&be&used&by&producers&today&without&limiting&the&ability&of&future&generations&to&satisfy&
their&needs&and&wants.&Managers&have&a&responsibility&to&protect&the&natural&environment&and&ensure&
that&their&methods&of&production&incorporate&sustainable&resource&use.&
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Corporate*Social*Responsibility*(CSR)*
CSR&refers&to&open&and&accountable&business&actions&based&on&respect&for&people,&community/society&
and&the&broader&environment.&It&involves&business&doing&more&than&just&complying&with&the&laws&and&
regulations.&
Crucial&to&the&concept&of&CSR&is&the&idea&of&the&triple*bottom*line.&Business&try&to&achieve&all&three&
aspects&of&the&triple&bottom&line&including:&
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Profit&
Social&Justice&
Environmental&protection&

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What*is*the*difference*between*legal*compliance*and*ethical*responsibility?*
Legal&compliance&is&the&requirements&that&a&business&follows&the&letter&of&the&law&&the&prescribed&
standards&of&behaviour.&
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Ethical&responsibility&sees&businesses&meeting&all&of&their&legal&obligations&and&taking&it&further&by&
following&the&intention&and&spirit&of&the&law.&
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Legal&compliances&include:&
Labour&law&compliance&(minimum&wages,&awards&etc.)&
Environmental&and&public&health&compliance&(minimum&pollution,&stopping&dumping,&etc.)&
Business&licensing&rules&(certain&level&of&training,&etc.)&
Taxation&(any&levies&and&duties,&etc.)&
Trade&practices&and&fair&market&dealings&
Migration&and&rules&around&the&use&of&offshore&skilled&labour&
Intellectual&property&
Financial&and&accounting&regulations&and&corporations&law&
Human&rights&
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Environmental*Sustainability*and*Social*Responsibility*
There&needs&to&be&a&balance&between&economic&concerns&and&environmental&concerns&&
environmental*sustainability.&Businesses&are&being&asked&to&take&increasing&responsibility&for&the&
protection&of&the&environment.&Due&to&this,&businesses&have&adopted&policies&of&conservation,&
recycling&and&restoration.&
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Social*responsibility&is&good&business&&customers&eventually&find&out&which&businesses&are&acting&
responsibly&and&which&are&not.&Customers&can&react&and&stop&buying&a&businesss&product&if&they&learn&
that&the&business&is&exploiting&employees,&accepting&bribes&or&polluting&the&environment.&At&the&same&
time,&customers&will&reward&socially&responsible&businesses&by&purchasing&more&of&their&products.&
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Operations*Processes**Inputs*
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Inputs&are&the&resources&used&in&the&transformation&(production)&process.&Some&inputs&are&already&
owned&by&the&business,&while&others&come&from&suppliers.&
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TRANSFORMING*
RESOURCES**

Inputs&

Human&resources&(labour)&&
Facilities&
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TRANSFORMED*RESOURCES**
Materials&&
Information&&
Customers&
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TRANSFORMED&RESOURCES&

Transformed&resources&are&those&inputs&that&are&changed&or&converted&in&the&operations&process;&they&
are&transformed&by&the&operations&process.&
*
Materials:&Materials&are&the&basic&elements&used&In&the&production&process&and&consists&of&two&types:&
raw.materials&and&intermediate.goods.&
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Information:&Information&is&the&knowledge&gained&from&research,&investigation&and&instruction,&
which&results&in&an&increase&in&understanding.&Information&acts&as&a&transformed&resource&when&it&is&
used&to&inform&how&inputs&are&used,&where&they&are&drawn&from,&which&suppliers&and&supplies&are&
available,&and&so&on.&
External.information&is&information&that&comes&from&market&reports.&Stats&and&industry&bodies,&
etc.&
Internal.information&comes&from&within&the&business&and&is&gathered&from&internal&sources&
such&as&financial&reports,&quality&reports,&and&internal&key&performance&indicators&(KPIs)&such&
as&lead&times,&etc.&
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Customers:&Customers&become&transformed&resources&when&their&choices&shape&inputs.&The&
customer&acts&as&an&input&and&their&desires&and&preferences&act&as&a&transformed&resource.&
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TRANSFORMING&RESOURCES&

The&other&collection&of&inputs&to&any&operations&processes&is&transforming&resources&that&are&those&
inputs&that&carry&out&the&transformation&process.&They&enable&the&change&and&value&adding&to&occur.&
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Human*Resources:&Staff&that&is&well&qualified,&hard&working&and&disciplined&can&bring&great&
productivity&and&efficiency&to&business&operations.&The&effectiveness&with&which&human&resources&
carry&out&their&work&duties&and&responsibilities&can&determine&the&success&with&which&transformation&
and&value&adding&occurs&
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Facilities:&Facilities&refer&to&the&plant&(factory&or&office)&and&machinery&used&in&the&operations&
processes.&Major&decisions&include&the&design&layout&of&the&facilities,&the&number&of&facilities&to&be&
used,&their&location&and&their&capacity.&

Operations*Processes**Transformation*Processes&

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The&main&concept&of&operations&processes&is&transformation,&which&is&the&conversion&of&inputs&
(resources)&into&outputs&(goods&or&services).&The&operations&process&of&a&manufacturer&tends&to&be&
highly&automated&or&mechanised.&
Manufacturers&use&machinery,&robots&and&computers&to&convert&inputs&into&outputs&
Service&providers&rely&heavily&on&interaction&with&the&customer&
ELEMENTS*OF*THE*TRANSFORMATION*PROCESS:*
o The&influence&of&volume,&variety,&variation&in&demand&and&visibility&(customer&contact)&
o Sequencing&and&scheduling&&Gantt&charts,&critical&path&analysis&
o Technology,&Task&design&and&Process&layout&
o Monitoring,&Control&and&Improvement&
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THE&4&VS&INFLUENCES&
InVluences&on&the&
Transformation&
Processes&

Volume&

Variety&

Variation&

Visibility&

Depending&on&which&of&the&4Vsis&considered&the&most&important&to&the&business,&this&will&affect&the&
type&of&production&method&used.&
&

Types&of&Production&

Job:&Producing&a&single&
unique&item;&suits&those&
products&and&services&
that&require&more&than&a&
standard&product&
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Batch:&Producing&a&small&
number&of&the&same&item;&
using&the&same&process&
and&produced&in&batches&
of&50I200&

Flow:&Producing&a&large&
number&of&items&at&the&
same&time;&Products&tend&
to&have&little&variation&

The*Influence*of*Volume&
Volume&refers&to&how&much&of&a&product&is&made.&A&business&using&mass&production&will&produce&a&
high&volume&with&a&high&degree&of&process&repetition.&A&low&volume&business&will&use&a&production&
process&that&allows&lots&of&stoppages&and&adjustments.&
High&volume&=&large&amount&of&capital,&facilities,&technology&and&materials&
Low&volume&=&focus&more&on&multiIskilled&labour&
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Volume*flexibility&refers&to&how&quickly&the&transformation&process&can&adjust&to&increases&or&
decreases&in&demand.&The&responsiveness&to&the&required&changes&in&volume&is&essential&to&effectively&
managing&lead&times.&LeadOtime&is&the&time&it&takes&for&an&order&to&be&fulfilled&from&the&moment&it&is&
made.&If&businesses&cannot&quickly&adjust&to&changes&in&market&demand,&it&can&over&produce,&which&
will&lead&to&wastage&and&an&increase&in&inventory&costs.&Alternatively,&if&back&orders&cannot&be&quickly&
fulfilled,&it&can&lead&to&lost&sales.&
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The*Influence*of*Variety*
Variety&refers&to&the&number&of&different&models&and&variations&offered&in&the&products&or&services.&&If&
the&business&has&customers&with&different&needs,&goods&and&services&will&have&to&be&modified&or&a&
wide&variety&of&models&and&options&will&be&provided.&&
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Mix*flexibility&is&known&by&consumers&as&product&range&or&variety&of&choice.&
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The*Influence*of*Variation*
Where&demand&for&the&product&or&service&fluctuates&during&the&year,&variations&in&labour&inputs&may&
be&needed.&Variation&can&change&according&to&time&of&day,&season,&holidays&and&time&of&year.&
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An.increase.in.demand&will&require&increased&inputs&from&suppliers,&increased&inputs&from&suppliers,&
increased&human&resources,&increased&energy&use&and&increased&use&of&machinery&and&technology.&
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A.decrease.in.demand&will&also&require&operational&flexibility&as&staff&may&need&to&have&their&hours&
reduced,&production&may&need&to&slow&to&avoid&inventory&build&up&and&suppliers&may&put&on&pressure&
due&to&contractual&agreements.&
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The*Influence*of*Visibility*
Operations&will&also&be&influenced&by&the&degree&to&which&customers&can&see&the&operations&in&action.&
Service&based&businesses&(e.g.&school)&will&have&a&high&level&of&visibility,&while&customers&will&rarely&
see&the&operations&process&of&a&manufacturing&based&business.&If&a&business&is&of&high&visibility,&the&
quality&of&labour&must&be&at&an&adequate&level&so&that&the&solid&customer&base&is&maintained.&
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SEQUENCING&AND&SCHEDULING&
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Scheduling&and&sequencing&tools&are&used&to&identify&all&steps&in&the&operations&process&and&organise&
them&into&the&most&efficient&order&to&complete.&
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Sequencing&refers&to&the&order&in&which&activities&in&the&operations&process&occur.&
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Scheduling&refers&to&the&length&of&time&activities&take&within&the&operations&process.&The&two&main&
scheduling&tools&are:&
Gantt&Charts&
Critical&Path&Analysis&(CPA)&
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TASK&ANALYSIS&IS&THE&BREAKDOWN&OF&EXACTLY&HOW&THE&MANUFACTURE&OF&A&GOOD&OR&
ACTIVITIES&TO&PROVIDE&A&SERVICE&IS&TO&BE&ACCOMPLISHED.&
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Gantt*Charts:&The&Gantt&chart&outlines&the&activities&that&need&to&be&performed,&the&order&in&which&
they&should&be&performed&and&how&long&each&activity&is&expected&to&take.&There&are&two&main&
advantages&of&using&Gantt&charts:&
Firstly,&they&force&a&manager&to&plan&the&steps&needed&to&complete&a&task&and&to&specify&the&
time&required&for&each&task.&
Secondly,&they&make&it&easy&to&monitor&actual&progress&against&planned&activities.&
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Critical*Path*Analysis*(CPA):&The&CPA&is&a&scheduling&method&or&technique&that&shows&what&task&
needs&to&be&done,&how&long&they&take&and&what&order&is&necessary&to&complete&those&tasks.&The&critical&
path&is&the&shortest&length&of&time&it&takes&to&complete&all&tasks&necessary&to&complete&the&process&or&
project.&
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TECHNOLOGY,&TASK&DESIGN&AND&PROCESS&LAYOUT&

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Technology*
Every&business&uses&some&form&of&technology&to&transform&its&inputs&into&outputs.&&
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Why*use*technology*in*operations*processes*of*a*business?*
Technology&can&improve&the&competitiveness&of&operations&by&giving&it&more&flexibility&as&it&
allows&the&business&to&respond&to&changes&in&the&market&more&easily.&
The&business&can&change&volumes&to&meet&a&sudden&increase&in&demand&or&produce&different&
variations&of&products&to&satisfy&changing&consumer&demands&and&produce&nonIstandardised&
versions&of&its&standard&product&to&satisfy&individual&clients.&This&is&to&improve&to&productivity,&
less&waste&and&more&efficient&use&of&time.&
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Business&technology&involves&the&use&of&machinery&and&systems&that&enable&business&to&undertake&the&
transformation&process&more&effectively&and&efficiently&Business&technology&items&that&are&
commonplace&today&includes:&
Computer&
Keyboard&
CD&ROM,&USB&
Modem&
Mobile/telephones&etc.&
&
Manufacturing&technology&can&be&used&to&speed&up&(shorten)&processes&and&enable&fuller&utilisation&of&
raw&materials.&This&makes&the&operations&processes&more&cost&effective.&Key&manufacturing&
technologies&include:&
Robotics&
ComputerIaided&design&(CAD)&
ComputerIaided&manufacturing&(CAM)&
&
In&the&services&sector,&office&and&communications&technology&have&enabled&whole&markets&to&open&up&
and&allow&for&a&small&to&medium&business&to&trade&globally.&
&
Task*Design&(Deciding&how&a&task&will&be&completed)&
Task&design&involves&classifying&job&activities&in&ways&that&make&it&easy&for&an&employee&to&
successfully&perform&and&complete&the&task.&Each&individual&task&is&analysed&and&broken&down&into&
separate&steps&and&allocated&to&machines&and&employees&with&the&appropriate&skills,&knowledge&and&
capabilities.&
&
Plant*(Factory/Office)*Layout*
Plant&layout&refers&to&the&plan&of&the&physical&layout&of&the&businesss&factory&or&office&and&is&the&
arrangement&of&equipment,&machinery&and&staff&within&the&facility,&which&obviously,&has&an&impact&on&
the&efficiency&of&the&operations&function.&
&
Types&of&factory&layouts:&
&
*
&
&
&
&
&
&
&
&

PROCESS&LAYOUT&

PRODUCT&LAYOUT&

FIXED&POSITION&LAYOUT&

&
Process&Layout:&
The&process&layout&is&the&arrangement&of&machines&such&that&the&machines&and&equipment&are&
grouped&together&by&the&function&they&perform.&&
&
Product&Layout:&
Product&production&is&characterised&by&the&manufacturing&of&a&high&volume&of&constant&quality&goods.&
An&assembly&line&is&the&most&common&layout&for&this&type&of&production.&This&type&of&layout&is&referred&
to&as&product&layout.&
&
Fixed&Position&Layout:&
Project&production&deals&with&layout&requirements&for&largeIscale,&bulky&activities&such&as&the&
construction&of&bridges,&ships,&aircraft&or&buildings.&A&fixed&position&layout&is&where&a&product&remains&
in&one&location&due&to&its&weight&or&bulk.&
&
Office&Layout:&
The&focus&of&an&office&layout&is&to&enable&the&work&to&be&performed&efficiently&in&a&safe&office&
environment.&
&

MONITORING,&CONTROLLING&AND&IMPROVEMENT&
&
&
&
&
&
&
&
&
&
&
&
BUSINESS&SUCCESS&
&
Monitoring&

Controlling&

Improvement&

&
&

&
&

The&purpose&of&monitoring&and&control&is&to&ensure&the&operations&process&runs&efficiently&and&
effectively,&producing&the&goods&and&services&it&was&designed&to&do.&
Monitoring&is&the&process&of&measuring&actual&performance&against&planned&performance.&
&
Control&occurs&when&KPIs&are&assessed&against&predetermined&targets&and&corrective&action&is&
taken&if&required.&
Improvement&refers&to&the&reduction&of&inefficiencies&and&wastage,&poor&work&processes&and&
the&elimination&of&any&bottlenecks.&
Improvement&through:&
o Quality&
o Speed&
o Dependability&
o Flexibility&
o Cost&improvements&

Operations*Processes**Outputs*

*
Outputs*are&the&final&goods&or&services&that&are&delivered&or&provided&to&the&consumer.&*
&

OUTPUTS&FROM&DIFFERENT&INDUSTRIES&
&
Banking&

&
Financial&services&such&as&home&loans&and&investment&advice,&security&for&
savings.&

Education&

&
Socially&responsible&young&adults&with&knowledge&and&skills&to&learn,&adapt,&
work&and&related&abilities.&

&

&

&
Construction&

Buildings,&homes,&roads&that&meet&the&specifications&of&architects,&designers&
and&engineers&

Customer*Service**
Customer&service&refers&to&how&well&a&business&meets&and&exceeds&the&expectations&of&customers&in&all&
aspects&of&its&operations.&
&
For&manufactured.goods,&customer&service&is&provided&through&replacing&the&good&if&it&is&faulty,&
providing&education&on&its&use,&repairing&the&good&if&it&is&not&working&properly&and&maintaining&
and&servicing&it.&
In&the&service.industries,&where&the&service&is&often&provided&and&consumed&at&the&same&time,&
customer&service&will&reflect&more&how&the&service&is&customised&and&provided.&
&
Warranties*
Warranties&are&businesses&promises&to&correct&any&defects&in&their&products&or&in&the&services&they&
deliver.&
&
Fair.Trading.Act.1987.(NSW)&and&Competition.and.Consumer.Act.2010.(Cth).require&businesses&to&
ensure&that&the&goods&they&sell:&
&
Have&a&level&of&quality&that&is&comparable&to&the&price&and&product&description&
Are&suitable&for&the&purpose&or&job&they&will&be&used&for&
Match&the&product&description&in&any&advertising&or&promotion&
Are&free&from&defects&or&faults&
&
Operations&managers&need&to&trace&the&source&of&the&fault&in&manufacturing&and&solve&it.&In&this&way,&
the&warranty&claims&lead&the&business&to&improve&transformation&processes.&
&
&
&
&
&
&
&
&
&
&

Operations*Strategies&
&

Performance&
objectives&
New&product&
or&service&
design&and&
development&

Global&
factors&

Overcoming&
resistance&to&
change&

Supply&chain&
management&

Operations&
Strategies&

Quality&
management&

Outsourcing&

Inventory&
management&

&
&
&

Technology&

PERFORMANCE&OBJECTIVES&

Performance&objectives&are&goals&that&relate&to&particular&aspects&of&the&transformation&processes.&The&
six&main&performance&objectives&that&can&be&allocated&to&particular&key&performance&indicators&(KPIs)&
are:&

Quality&

Speed&

Dependability&

Customisation&

Cost&

Flexibility&

Quality&
As&a&performance&objective,&consumer&expectations,&which&are&used&to&inform&the&production&
standards&applied&by&the&business&often&determines&quality.&Quality&performance&objectives&include:&
&
Quality*of*design:&arises&from&an&understanding&of&consumers&and&their&preferences&&also&
includes&how&well&a&product&is&made&or&a&service&is&delivered.&
Quality*of*conformance:*focus&on&how&well&the&product&meets&the&standard&of&a&prescribed&
design&with&certain&specifications.&
Quality*of*service:&In&this&sense&quality&refers&to:&how&reliable&the&service&is;&how&well&the&service&
meets&the&specific&needs&of&the&client;&how&timely&or&responsive&the&service&delivery&is.&&
&
Speed*
Speed&refers&to&the&time&it&takes&for&the&production&and&the&operations&processes&to&respond&to&
changes&in&market&demand.&Speed&aims&to&satisfy&customer&demands&as&quickly&as&possible.&Therefore,&
goals&for&speed&include:&
Reduced&wait&times&
Shorter&lead&times&
Faster&processing&times&
&
Dependability*
Dependability&refers&to&how&long&the&products&are&useful&before&they&fail.&One&measure&of&
dependability&is&measured&by&warranty&claims.&In&respect&to&services,&dependability&refers&to&
consistency&of&service&standards&and&reliability&&a&measure&for&service&dependability&is&the&number&of&
complaints&received.&
&
Flexibility*
Flexibility&refers&to&how&quickly&operations&processes&can&adjust&to&changes&in&the&market.&Flexibility&
can&be&best&achieved&by&increasing&the&capacity&of&production.&With&services,&flexibility&can&be&
achieved&through&increasing&the&number&of&service&providers.&
&
Customisation&
Customisation&refers&to&creation&of&individualised&products&to&meet&the&specific&needs&of&the&
customers.&
&
Cost*
Cost&refers&to&the&minimisation&of&expenses&such&that&operations&processes&are&conducted&as&cheaply&
as&possible.&Over&time,&businesses&seek&to&become&more&efficient&and&thus&allocate&costs&better&by&
Acquisition&of&new&technologies;&use&inputs&better&and&minimise&wastage;&reduce&
supplier/inventory/distribution&costs.&

&

NEW&PRODUCT&OR&SERVICE&DESIGN&AND&DEVELOPMENT&

A&business&needs&to&design&and&develop&new&products&and&services&&the&designs,&development,&launch&
and&sale&of&new&products&enables&a&business&to&grow&and&to&attain&a&competitive&advantage.&
&
Product*Design*and*Development*
There&are&two&main&approaches&to&product&design&and&development:&
&
Consumer*approach*&the&preferences&and&desires&of&consumers&determine&which&products&
are&designed&and&developed.&
&
Changes*and*innovations*in*technology&&they&enable&new&and&appealing&products&to&be&
made&because&they&use&advanced&technologies,&which&give&products&greater&functionality.&
&
The&steps&in&the&product&design&and&development&process:&

Concept&
Development&

Cost&BeneVit&
Analysis&

Production&
Design&

Product&
Testing&

&
Important&considerations&when&designing&and&developing&a&product&
Quality&is&a&factor&because&the&customers&will&demand&a&particular&quality,&and&certain&
attributes&and&features.&
&
Supply*chain*management&is&an&important&factor&because&a&new&product&will&draw&suppliers&
and&may&extend&the&range&of&supplies&sought,&the&timing&or&the&volume&of&supplies.&
&
Capacity*management&is&a&factor&as&a&new&product&may&increase&the&use&or&range&of&present&
resources,&or&require&an&investment&in&new&technology&and&machinery.&
&
Cost&must&be&considered&as&it&determined&from&the&amount&of&inputs,&time&and&energy&used&in&
processing.&
&
Service*Design*and*Development*
Service&design,&being&customised&in&nature,&has&always&taken&the&position&of&the&customer&or&client&as&
the&starting&point&in&design.&In&services&design,&both&the&explicit&and&implicit&aspects&need&to&be&
addressed.&&
&
Explicit*service&is&also&known&as&
the&tangible&aspect&of&the&service&
being&provided&such&as:&the&
application&of&time;&expertise;&
skill&and&effort.&
&
Implicit*service&is&based&on&a&
feeling&and&is&therefore&
intangible.&The&implicit&aspects&
of&a&service&are&the&psychological&
wellbeing&&the&feeling&of&being&
looked&after&&that&comes&with&
the&provision&of&the&service.&
&

SUPPLY&CHAIN&MANAGEMENT&

Supplies&are&an&essential&input&into&operations&processes.&Supply*Chain*Management*involves:&
Integrating&and&managing&the&flow&of&supplies&through&the&inputs&
Transformation&processes&(Throughput&and&value&adding)&
Outputs&to&best&meet&the&needs&of&customers&
&
Throughput:&the&amount&of&material&or&items&passing&through&a&system&or&process&
&
&
&
The&supply&chain&includes&all&businesses&directly&linked&to&the&supply&of&goods&or&services&to&the&
consumer.&Businesses&need&to&acquire&various&resources&necessary&to&produce&a&good&or&supply&a&
service.&Suppliers&need&to&be&found&that&can&provide&the&most&appropriate&inputs&at&the&best&price&and&
reliably&supply&the&required&
quantity&with&the&appropriate&
Transformation&
Inputs&
Outputs&
quality.&
Process&
&
The&key&aspects&to&supply&chain& Sourcing&&
Throughput&
Finished&or&
management&are:&
semiIVinished&
EIcommerce&
Value&adding&
Sourcing&
goods&or&
Raw&Materials&
EIcommerce&
services&
Other&inputs&
Logistics&and&
Logistics&
Distribution&
(energy)&
Distribution&
&
&
Sourcing*
Also&called&procurement&or&purchasing,&sourcing&refers&to&the&purchasing&of&inputs&for&the&
transformation&process.&&
*
In&recent&years,&there&have&been&four&
particular&trends&in&SCM:&
&
Supplier.Rationalisation:&involves&a&business&
assessing&the&number&and&diversity&of&its&
Consumer&
suppliers&&helps&determine&which&suppliers&
Demand&
are&least&effective&and&which&can&be&better&
utilised.&
&
BackwardsNVertical.Integration:&purchasing&
through&mergers&or&acquisitions&of&suppliers.&
Factors&
As&a&strategy,&this&guarantees&supply&for&the&
InVluencing&
Quality&of&
Cost&of&
Inputs&
Choice&of&
transformation&processes,&as&the&supplier&is&
Supplier&
Sources/
Required&
then&owned&by&the&business.&
Suppliers&
&
Cost.Minimisation:&this&strategy&is&focused&on&
cost&minimisation.&As&new&offshore&markets&
develop,&there&is&increasing&access&to&lowIcost&
resources/inputs&
Flexibility&and&
Timeliness&of&
&
Supply&
Flexible.or.Responsive.Supply.Chain.Processes:&
lean&processes&is&relevant&for&
manufacturing&businesses.&A&lean&
organisation&is&one&that&minimises&waste,&
*
seeks&to&continually&lower&costs&or&improve&
*
processes&and&processing&speed.&
*
&

Global*Sourcing*
Global&sourcing&is&a&broad&term&that&refers&to&businesses&purchasing&supplies&or&services&without&
being&constrained&by&location.&In&the&supply&chain&management&activity,&global&sourcing&means&buying&
or&sourcing&from&wherever&the&suppliers&are&that&best&meet&the&sourcing&requirements.&
&
Benefits&of&Global&Sourcing:&
Cost&and&expertise&advantage&
Access&to&new&technologies&and&resources&
&
Challenges&Arising&from&Global&Sourcing:&
Possible&relocation&of&operations&
Increased&cost&of&logistics,&storage&and&distribution&
Managing&different&regulatory&conditions&between&nations&
Increasing&complexity&of&overall&operations&when&sourcing&from&diverse&locations&
&
EOCommerce*
EIcommerce&involves&the&buying&and&selling&of&goods&and&services&via&the&Internet.&&
&
Business&Sourcing&and&EICommerce&
EIprocurement,&or&the&use&of&onIline&systems&to&manage&supply,&allows&suppliers&to&direct&access&to&
the&businesss&level&of&supplies.&When&stock&falls&to&a&preIdetermined&point,&the&supplier&will&supply&
even&without&a&formal&request&from&the&buyer.&This&process&is&called&businessNtoNbusiness.arrangement.
(B2B).&
&
B2B.=.allowing.the.supplier.to.assess.the.needs.of.the.buyer.and.meet.them.in.a.timely.manner.
&
EICommerce&and&the&Consumer&
The&increasing&use&of&eIcommerce&by&consumers&also&has&an&effect&on&the&supply&chain.&A&business&
that&sells&direct&to&consumers&(B2C)&via&the&internet&or&that&allows&other&internetIbased&businesses&to&
do&so&clearly&must&be&able&to&manage&supplies&that&are&affected&by&this&diversity&of&ordering&options.&
&
Benefits(of(E+Commerce(
24I&hour&advertisement&for&their&products&
Inventory&management&can&be&improved&also&with&eIcommerce&&it&can&set&up&so&that&an&
email&to&a&supplier&is&automatically&generated&when&inventory&levels&are&getting&close&to&
buffer&stock&levels&(minimum&stock&business&likes&to&keep&at&a&time)&
Improves&efficiency&in&the&supply&chain&because&the&supplier&receives&the&message&and&
can&deliver&more&stock&just&as&the&business&needs&it&for&JIT&inventory&management.&
&
Logistics*
It&is&part&of&the&supply&chain&that&focuses&on&moving&inputs,&resources&and&outputs&through&the&supply&
chain&as&quickly&as&possible.&Logistics&is&a&term&broadly&referring&to&distribution&but&also&includes:&
Transportation&
The&use&of&storage,&warehousing&and&distribution&centres&
Materials&handling&and&packaging&
.
Distribution&refers&to&the&ways&of&getting&the&goods&or&services&to&the&customer.&
&
Distribution.Centres&are&not&intended&for&long&term&storage&but&they&are&strategically&located&so&as&to&
minimise&the&time&it&take&to&supply&stock&to&retail&outlets.&
&
Transportation&refers&to&the&modes&of&moving&the&goods&either&by&van,&truck,&train,&airplane&or&ship.&
&
Storage&involves&finding&a&secure&place&to&hold&stock&until&it&is&required.&

OUTSOURCING&

Outsourcing&involves&the&use&of&external&providers&to&perform&noncore&business&activities.&When&an&
external&provider&that&specialises&in&a&particular&business&function&performs&a&service,&it&will&do&so&at&a&
lower&cost&and&with&a&greater&effectiveness.&These&activities&include:&
&
&
Transport& &
&
&
&
&&Security&
Supply&Chain&Management&
Logistics&
Maintenance&
Servicing&of&equipment&
Producing&components&
Supplying&materials&
&
Advantages*of*Outsourcing*
Disadvantages*of*Outsourcing*
Simplification&
Breakdown&in&the&business&operations&
Efficiency&and&cost&savings&
Loss&of&control&over&quality,&reliability,&costs&
Increased&process&capability&
Slower&lead&time&and&response&to&changes&&
Increased&accountability&
Loss&of&corporate&memory&and&vulnerability&
Access&to&skills/resources&lacking&within&business& Issues&with&communication&and&language&
Capacity&to&focus&on&core&business&activities&
&
&

TECHNOLOGY&

Technology&may&be&defined&as&the&
design,&construction&and/or&application&
of&innovative&devices,&methods&and&
machinery&upon&operations&processes.&
The&thoughtful&application&of&
technology&allows&businesses&to&gain&a&
competitive&advantage.&
&
Leading*Edge*Technology*
Leading&edge&technology&is&the&
technology&that&is&the&most&advanced&or&
innovative&at&any&point&in&time.&Using&
leading&edge&technologies&can&help&
businesses&to:&
Create&products&more&quickly&
and&to&higher&standards&and&with&less&waste&
Operate&operations&process&more&effectively&
&
Established*Technology*
Established&technology&is&the&technology&that&has&been&developed&and&widely&used.&Established&
technologies&are&functionally&sound&and&help&to&establish&basic&standards&for&productivity&and&speed.&
Examples&of&established&technologies:&
Barcoding&
Robotics&
CAD&
CAM&
ComputerIintegrated&manufacturing&(CIM)&
Flexible&manufacturing&systems&(FMS)&
&
BOTH&FORMS&OF&TECHNOLOGY&LEAD&TO&AN&EFFICIENT&AND&EFFECTIVE&OPERATIONS&PROCESS&&
&
&
&
&

INVENTORY&MANAGEMENT&

Inventory&or&stock&refers&to&the&amount&of&raw&materials,&workIinIprogress&and&finished&goods&that&a&
business&has&on&hand&at&any&particular&point&in&time.&
&
Inventory&management&involves&making&decisions&regarding&how&much&stock&to&have&on&hand&at&any&
one&time&and&the&most&appropriate&systems&of&storage&and&methods&of&handling.&
&
Holding&stock&is&also&known&as&justOinOcase*(JIC)&or&buffer*stock&&where&a&business&holds&a&certain&
level&of&stock&as&a&reserve&to&cover&interruptions&to&supply&or&an&unexpected&increase&in&demand.&
&
Advantages*of*Holding*Stock*
Consumer&demand&can&be&met&when&there&is&stock&available&
Reduces&lead&times&between&order&and&delivery&
Stocks&=&immediate&revenue&
Rapid&distribution&and&transportation&of&products&as&indicated&by&demand&
Making&products&in&bulk&=&reduction&in&costs&
No&need&to&rely&on&suppliers&for&prompt&deliveries&
&
Disadvantages*of*Holding*Stock*
The&costs&involved&including&storage&charges,&spoilage,&insurance,&theft&and&handling&expenses&
Products&may&come&obsolete&&occurs&if&stock&remains&unsold&
&
Inventory*Valuation*Methods&
Last&in,&first&out&(LIFO)&means&that&stock&purchased&most&recently&is&sold&first.&This&method&can&be&
used&for&goods&that&have&no&useIby&date&such&as&machinery&parts&or&canned&food.&
&
First&in,&first&out&(FIFO)&assumes&that&the&first&stock&that&has&been&purchased&is&the&oldest&and&will&be&
sold&first.&FIFO&is&more&appropriate&for&perishable&
times&such&as&food&and&drink.&
&
JustIinItime&(JIT)&inventory&management&is&to&hold&as&
minimal&stock&as&possible&and&only&bring&in&stock&from&
suppliers&as&required.&Advantages&of&JIT&are:&
Reduced&costs&of&storage&and&securing&stock&
Increases&the&liquidity&of&working&capital&as&
less&cash&is&tied&up&as&stock&
Reduces&the&chance&of&stock&becoming&obsolete&
Reduces&the&chance&of&perishable&food&spoiling&
Less&warehouse&space&allows&room&for&more&
activities&
Less&time&is&spent&on&checking&products&&
&
The&disadvantage&is&that&if&a&supplier&experiences&a&
problem&and&stock&is&not&delivered&on&time,&the&entire&
production&schedule&is&disrupted.&
&
THE&METHOD&OF&VALUATION&AFFECTS&THE&CALCULATION&OF&THE&VALUE&OF&THE&GOODS&SOLD,&
THE&VALUE&OF&THE&UNSOLD&STOCK&AND&THE&GROSS&PROFIT&IIII&SO&STUDY&AND&KNOW&HOW&TO&
CALCULATE!&
&
&
&
&
&

QUALITY&MANAGEMENT&

Quality&management&refers&to&those&processes&that&a&business&undertakes&to&ensure:&
Consistency&
Reliability&
Safety&
Fitness&of&purpose&of&product&
&
Quality*Control*&(inspection,.measurement.and.intervention).
Quality&
Quality&control&reduces&problems&and&defects&in&the&product&
Assurance&
by&using&inspections&at&various&points&in&the&production&
process.&&
Quality&
Quality&
PreIdetermined&quality&targets&would&be&set&and&any&
Control&
Improvement&
failure&to&meet&the&targets&would&need&to&be&assessed&
and&appropriate&action&taken&to&correct&any&issue&that&
Approaches&
has&caused&quality&standards&to&fall&below&expectation.&
to&Achieving&
Quality&
Quality&control&management&may&require&that&labour&
be&appropriately&trained&to&apply&quality&standards&
throughout&working&processes.&
&
Quality*Assurance**International*Quality*Standards*
Quality&assurance&involves&the&use&of&a&system&to&ensure&that&set&standards&are&achieved&in&
production.&This&is&done&through&taking&a&series&of&measurements&and&assessing&them&against&preI
determined&quality&standards.&
&
Aspects&of&quality&that&are&important&to&QA&include:&
The&notion&of&fitness&for&purpose&or&how&well&a&product&does&what&it&is&designed&to&do&
The&desire&to&achieve&right&first&time&so&that&products&do&not&need&to&be&reworked,&which&
wastes&time,&energy&and&other&resources&
&
A&widely&used&international&standard&is&the&International&Organisation&for&Standardisation&9000&(ISO&
9000).&
&
Given&that&the&production&of&components&for&a&manufactured&good&such&as&a&TV&may&come&from&
different&suppliers&from&different&countries,&such&standards&are&an&important&quality&control&
mechanism&for&global&companies.&This&ensures&that&the&quality&of&the&components&from&one&nation&is&
also&equal&to&the&components&of&another&supplier&in&another&nation.&
&
Quality*Improvement*
Quality&improvement&focuses&on&two&aspects:&continuous&improvement&and&total&quality&management.&
&
Continuous.Improvement:&is&an&ongoing&commitment&to&improving&a&businesss&goods&or&services.&That&
is,&all&staff&is&encouraged&to&demonstrate&initiative&and&to&suggest&areas&where&improvements&can&be&
made&in&improving&the&quality&of&the&products&being&produced.&
&
Total.Quality.Management:&this&concept&focuses&on&managing&the&total&business&to&deliver&quality&to&
customers.&It&is&an&ongoing,&businessIwide&commitment&to&excellence&that&is&applied&to&every&aspect&of&
the&businesss&operation.&To&achieve&TQM&objectives&requires&four&elements:&benchmarking,&employee&
empowerment,&a&focus&on&the&customer&and&continuous&improvement.&
&
&
Benchmarking:&evaluate&(something)&by&comparison&with&a&standard&
&
&
&
&
&

OVERCOMING&RESISTANCE&TO&CHANGE&

All&businesses&are&subject&to&change&from&the&external&environment&such&as:&
Legislative&and&regulatory&changes&
Changes&in&economic&conditions&
Social&changes&over&time&
Technological&breakthroughs&
&
Changes&can&often&be&resisted&as&occasionally&change&causes&uncertainty&and&uncertainty&can&be&
stressful.&Resistance&to&change&arises&from&two&principal&sources&with&a&business:&
Financial&
Psychological/emotional&
&
Financial*Costs*
&
Cost&of&
purchasing&
Purchasing.New.Equipment:&The&purchase&of&
new&
equipment&
equipment&such&as&machinery&and&technology&
is&considered&a&capital&cost.&Despite&the&high&
costs,&there&can&be&advantages&from&making&the&
capital&investment:&
Improved&processing&flexibility&
Improved&processing&speeds&
Costs&of&
Financial&
Cost&of&
More&consistency&
structural&
redundancies&
reorganisation&
Higher&overall&quality&
Costs&&
Reduced&wastage&and&losses&
&
Redundancy.Payout:&Redundancy&is&defined&as&
a&loss&of&work&arising&from&job&skills&that&are&no&
longer&required&or&relevant&to&the&workplace.&
Costs&of&
Redundancy&payouts&is&the&money&that&is&given&
retraining&
employees&
to&employees&when&they&are&forced&out&of&work&
because&their&job&skills&are&no&longer&relevant.&
&
Retraining:&This&cost&arises&from&change&that&causes&a&reorganisation&of&the&businesss&internal&
hierarchy&or&from&the&acquisition&of&technology.&
&
Reorganising.Plant.Layout:&There&can&be&high&costs&involved&when&reorganising&plant&layout,&such&as:&
Downtime&when&transferring&from&the&old&machinery&to&the&new&machinery&
Testing&new&equipment,&machinery&and&technology&
Transporting,&placing&and&bringing&power&to&new&plant&
Loss&of&productivity,&arising&from&reIorientation&of&staff&with&new&work&processes&etc.&
&
Psychological*Costs*
INERTIA&OF&OWNERS,&MANAGERS&AND&EMPLOYEES&
Inertia&is&a&tem&that&describes&a&psychological&resistance&to&change.&A&feeling&of&uncertainty&or&fear&of&
the&unknown,&when&change&is&about&to&happen&or&pressing,&can&lead&people&to&resist.&
&
&
&
*
&
Forces&driving&change&
&
&
&
&
&
Forces&resisting&change&

Overcoming*Resistance*to*Change*
Step&1:&Identifying&the&need&for&change&
It&is&important&to&identify&the&need&for&change&&once&it&has&been&identified,&it&is&necessary&to&develop&a&
plan&for&how&to&change&the&change&will&be&achieved.&To&do&so&the.need.for.change.needs.to.be.
communicated.to.all.relevant.stakeholders.&
&
Step&2:&Setting&achievable&goals&
A&key&aspect&of&the&plan&will&be&the&setting&of&achievable&objectives.&The&goals&need&to&be&realistic,.
measurable.and.achievable.&A&number&of&things&need&to&be&done&in&setting&the&objectives:&
&
Preparing&people&for&the&change&and&trying&to&get&acceptance&for&the&need&to&change&from&as&
many&staff&as&possible.&This&is&called&unfreezing.&
Including&the&changes&that&will&have&to&take&place&in&peoples&behaviour&and&the&values&they&
share&
Include&in&the&objectives,&the&resources&and&support&systems&that&will&be&needed.&
E.g.&implementing&a&new&computer&system&will&require&not&just&the&computers&but&continuing&
technical&support&while&staff&adjust&to&and&learn&the&new&skills&required&to&operate&the&new&system.&
Step&3:&Creating&culture&of&change&(encouraging&teamwork&approach&using&change&agents)&
Change&agents&are&the&key&group&of&influential&people&in&a&business&who&much&be&convinced&to&support&
the&change&and&who&then&manage&the&change&process&&change&agents&facilitate&the&change&process&as&
they&effectively&lead&and&influence&other&workers&along&the&desired&path&for&change.&
&
Some&things&to&effectively&target&these&people:&
Convince&them&of&the&need&for&change&
Get&these&people&to&agree&on&the&nature&of&the&changes&that&have&to&happen&
Give&these&people&the&power&to&implement&the&change&effectively&
&
Step&4:&The&use&of&change&models&
(i)
ForceIfield&analysis&
Refers&to&an&environment&in&which&there&is&continuous&and&unexpected&change.&This&system&has&two&
sets&of&forces:&
Driving&forces&&forces&pushing&for&the&change&
Resisting&forces&&forces&against&the&change&
&
FOR&CHANGES&TO&OCCUR,&THE&DRIVING&FORCES&NEED&TO&BE&STRONGER&THAN&THE&RESISTING&
FORCES.&THIS&CAN&BE&ACHIEVED&BY&EITHER&ACCEPTING&THE&NEED&FOR&CHANGE&OR&REMOVING&
RESISTING&FORCES.&
&
(ii)
Unfreeze/change/refreeze&model&
Unfreezing&is&establishing&readiness&for&change.&The&change&has&to&be&made&attractive&that&people&
accept&it.&
&
Change&is&implementing&the&change.&For&the&change&to&be&affective,&employees&will&have&to&adopt&new&
values&and&behavioural&patterns.&
&
Refreezing&is&locking&the&new&behaviour&into&place&by&means&of&supporting&mechanisms&such&as&
training&and&incentives&to&ensure&that&employees&do&not&return&to&their&old&ways.&
&
ADAPTING(TO(CHANGE(THROUGH(OVERCOMING(THE(FINANCIAL(AND(PSYCHOLOGICAL(
RESISTANCE(CAN(HELP(BUSINESSES(TO(CREATE(SUSTAINABLE(COMPETITIVE(ADVANTAGE(EVEN(
WHEN(FACEDD(WITH(WHAT(APPEAR(TO(BE(THREATS.(
(

GLOBAL&FACTORS&

There&are&several&global&factors&that&present&opportunities&when&assessing&the&operations&strategies&
available&for&operations&managers.&
&
Global*Sourcing*
Global&sourcing&is&a&broad&term&that&refers&to&
businesses&purchasing&supplies&or&services&without&
being&constrained&by&location.&Global&sourcing&as&an&
Global&
Sourcing&
operations&strategy&involves&the&sourcing&of&any&
business&operations&that&gives&the&business&cost&
advantages.&
&
Benefits:&
Cost&advantages&
Research&and&
Economies&of&
Access&to&new&technologies&
Development&
Scale&
Advantages&of&expertise&and&labour&
Specialisation&
Access&to&other&resources&
Ability&to&operate&extended&hours&
&
Scanning&and&
Disadvantages:&
Learning&
Storage&and&distribution&
Different&regulatory&conditions&between&nations&
Increasing&complexity&of&overall&operations&
&
&
Economies*of*Scale*
Economies&of&scale&refer&to&cost&advantages&that&can&be&gained&by&producing&products&on&a&larger&
scale.&This&means&that&business&can&lower&their&per&unit&input&costs&and&therefore&increase&their&
profits.&
&
There&are&clear&production&advantages&of&producing&high&volumes.&Typically&the&cost&savings&come&
from&being&able&to&purchase&lower&cost&per&unit&input&costs&due&to&bulk&purchases&of&stock,&and&the&
efficiencies&created&from&the&improved&use&of&technology.&
&
Scanning*and*Learning*
All&businesses&can&benefit&from&scanning&(searching&or&looking)&the&global&environment&and&learning&
from&the&best&practice&of&businesses&around&the&world.&People&and&places&to&learn&include:&
Management&journals&
Industry&and&business&associations&
Conferences&
Other&forums&
Staff&members&
Managers&
&
Research*and*Development*
R&D&helps&businesses&to&create&leading&edge&technologies,&and&to&create&innovative&products&and&
solutions.&&A&central&aspect&of&R&D&is&ascertaining&what&consumers&want&and&assisting&to&create&
products&that&meet&their&needs.&
&
&
&
&
&

Global&
Factors&

OPERATIONS*TOPIC*GLOSSARY*
&
&

TERM!
Inputs!
Capital=Labour!Substitution!
Transformed!Resources!
Materials!
Raw!Materials!
Intermediate!Goods!
Information!
KPIs!
Govt.!Relations!Management!

Transformation!Process!
Transforming!Resources!
Human!Resources!
Facilities!
Volume!
Mix!Flexibility!
Lead!Time!
Predicting!Demand!
Sequencing!
Scheduling!

DEFINITION!
Are!the!resources!used!in!the!transformation!process!
Means!that!machinery!and!technology!displace!(put!out!of!place)!people!
by!doing!the!work!they!do!
Are!those!inputs!that!are!changed!or!converted!in!the!operations!
processes!such!as!materials,!information!and!customers!
Are!the!basic!elements!used!in!the!production!process!and!consist!of!two!
types:!raw!material!and!intermediate!goods!
Are!the!essential!substances!in!their!unprocessed!state!
Are!finished!or!semi=finished!products!that!are!used!in!further!
manufacturing!or!processing!
Is!the!knowledge!gained!from!research,!investigation!and!instruction,!
which!results!in!an!increase!in!understanding!
Are!specific!measures!used!to!assess!the!efficiency!and!effectiveness!of!
the!businesss!performance!
Refers!to!the!systems!that!businesses!use!to!maintain!customer!contact!
to!improve!customer!service,!increase!competitiveness!and!identify!
changes!in!customer!tastes!
Is!the!conversion!of!inputs!(resources)!into!outputs!(goods!&!services)!
Are!those!inputs!that!carry!out!the!transformation!process!such!as!
human!resources!and!facilities!
The!employees!of!a!business!
Refer!to!the!plant!(factory!or!office)!and!machinery!used!in!the!
operations!processes!
Refers!to!how!much!of!a!product!is!made!
Is!the!mix!of!products!made,!or!services!delivered!through!the!
information!process!
Is!the!time!it!takes!for!an!order!to!be!fulfilled!from!the!moment!it!is!
made!
Is!forecasting!demand!so!that!adjustments!can!be!anticipated!and!a!
business!can!act!accordingly!
Refers!to!the!order!in!which!activities!in!the!operations!process!occur!
Refers!to!the!length!of!time!activities!take!within!the!operations!process!

Gantt!Charts!

Is!a!type!of!bar!chart!that!shows!both!the!scheduled!and!completed!work!
over!a!period!of!time.!It!is!often!used!in!planning!and!tracking!a!project!

Critical!Path!Analysis!

A!scheduling!method!or!technique!that!shows!what!tasks!need!to!be!
done,!how!long!they!take!and!what!order!is!necessary!to!complete!those!
tasks!
Is!to!commute!or!travel!to!work!electronically.!This!means!that!home!or!
another!location!becomes!the!worksite!and!work!is!delivered!via!email!
or!the!internet.!
Are!highly!specialised!forms!of!technology!that!can!shape!transformation!
processes!so!that!they!are!very!high!quality,!efficient!and!minimise!
waste.!
Is!a!computerised!design!tool!that!allows!businesses!to!create!product!
possibilities!from!a!series!of!input!parameter!(limitation)!

Telecommute!

Robotics!

CAD!

CAM!

Task!Design!
Skills!Audit!

Plant!Layout!
Process!Layout!
Product!Layout!
Product!Production!
Product!Production!
Fixed!Position!Layout!
Workstation!
Monitoring!
KPIs!
Controlling!
Improvement!
Bottleneck!

&

Is!a!software!that!controls!manufacturing!processes,!and!can!be!used!
more!broadly!to!calculate!how!much!of!each!input!recourse!would!be!
required!
Is!breaking!down!the!work!into!a!series!of!jobs!that!make!it!easy!for!an!
employee!to!successfully!perform!and!complete!the!task.!
Is!a!formal!process!used!to!determine!the!present!level!of!skills!and!any!
skill!shortfalls!that!need!to!be!made!up!either!through!recruitment!or!
through!training!
Is!the!arrangement!of!equipment,!machinery!and!staff!within!the!facility!
Is!the!arrangement!in!which!machines!and!equipment!are!grouped!
together!by!the!function!they!perform!
Is!when!the!equipment!is!arranged!into!sequence!of!tasks!performed!in!
manufacturing!a!product!
Is!the!manufacturing!of!a!high!volume!of!constant!quality!goods!
Deals!with!layout!requirements!for!large!scale!bulky!activities!such!as!the!
construction!of!bridges!or!aircrafts!and!ships!
Is!where!a!product!remains!in!one!location!due!to!its!weight!or!size,!
employees!and!equipment!are!brought!to!the!site!
Are!the!desk!areas!required!by!office!workers!usually!fitted!with!all!the!
office!work!equipment!such!as!a!computer,!telephone!and!printer!etc.!
Is!the!process!of!measuring!actual!performance!against!planned!
performance!
Are!predetermined!variables!that!are!measured!so!appropriate!controls!
to!operations!processes!can!be!made!
Occurs!when!KPIs!are!assessed!against!predetermined!targets!and!
corrective!action!is!taken!if!required!
Refers!to!systematic!reduction!of!inefficiencies!and!wastage,!poor!work!
processes!and!the!elimination!of!any!bottleneck!
Is!an!aspect!of!the!transformation!process!that!slows!down!the!overall!
processing!speed!or!creates!an!impediment!(obstruction)!leading!to!a!
back!of!incompletely!processed!products.!