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operations notes
Business Studies- Unit 4
High School - Australia
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Business Studies HSC Topic: Operations
Students learn about Summary Notes
1. Role of operations management ● Strategic role of operations management
Operations refers to the business processes through which resources are transformed into goods and services. It is where inputs go through the transformation process ( value adding ) to become outputs. ● In manufacturing , it refers to the processes involved in turning raw materials and resources into outputs. ● In the services sector, it refers to the processes involved in actually carrying out the service.
Operations management involves planning, organising, coordinating and controlling ( POCC ) the transformation of inputs to outputs so they meet consumer needs while making efficient use of resources.
Customers want firms that both innovative products at low cost that improve quality of life and: ● Waste minimal resources in their production ( lean production ) ○ Integrate environment al awareness and a need for ecologically sustainable practices ● Reflect fair value for labour used in processes (i. avoid sweatshops)
The strategic role of the operations management involves operations managers contributing to the strategic direction of the business. The overarching goal of a business is to maximise profit , and can be done by either: ● Maximising revenue or income ● Minimising costs or expenses
All functions of the business incur cost, even though all aspects are not generating revenue directly. ● Profit centres – aspects of the business that directly derive income ● Cost centres – those that do not directly derive income but do incur costs
○ Cost leadership Cost leadership involves having the lowest costs or being the most price-competitive in the market. 1. Successful Cost Leadership: A cost strategy where a business sets out to provide customers with the best value for a relatively low price has been found to provide a SCA. Cost leadership can also be gained by achieving low operating costs from offering high volumes of standardised products using fewer standard components with limited varieties of models. 2. Risky Cost Leadership Strategies: Low-cost strategies have been found to lead to price wars that fail to provide a SCA for any business.
Market share is gained by appealing to price-sensitive customers by providing them either with the lowest price in the target market or the lowest price compared to the value customers received, but leads to lower customer loyalty. Economies of scale refers to cost advantages that can be created because of an increase in scale of business operations. The savings come from being able to purchase lower cost per unit of input or improved use of technology and machinery.
● Less products (700) mainly Aldi’s own brands – competitors usually stock 20, ● Few employees: 4-5 employees per store vs 15 in other standard supermarket. However, the wages are higher ($19/hour + bonuses vs $15/hour) ● Restricted opening hours (usually 9am-6pm): less than 19 hours than other supermarkets ● Store design: Simple and practical, they products are directly displayed on the pallets ● No free shopping bags: customers bring their own bags or boxes ● Credits cards attracts a 1% surcharge ● Shopping trolleys require a $2 coin deposit: avoid the cost of an employee to collect & return the trolleys ● Marketing & Communication are minimal: no marketing department, usually Aldi does not employ an advertising or public relations agency. Aldi does not spend money on market research. ● Waste is not tolerated, i lights are switched off in offices when there is enough daylight from outside.
Qantas’ main costs are staff (24%), aircraft operating such as maintenance (20%), fuel (26%), depreciation (9%), marketing (4%), property (3%), IT (3%) and other (11%). They have cut costs by over $5 billion in the last 10 years through economies of scale. ● The Joint Business Agreement with American Airlines expanded Qantas’ network into US destinations. (2011) ● Qantas signed an agreement with Emirates allowing them to use Emirates’ aircrafts to accommodate passengers flying to Europe instead of paying for their Qantas aircraft. This involves the airline only having to fly its own aircraft to a hub in Dubai, and passengers then transfer to an Emirates flight to go to Europe. Qantas passengers also pay lower prices because Emirates had lower unit variable costs than Qantas in Dubai. ● They negotiate lower fuel costs than smaller airlines as they use a much greater quantity of fuel it requires. ● Standardisation. The more variations to Qantas’ services like the types and frequency of routes the higher production cost per unit. Qantas has recently cut back on some services to destinations to reduce costs. ● Qantas adopted latest computer technology for online booking and ticketing; more recently it moved to online check in thus eliminating the need for Qantas staff to be available to interface the customer.
● Interdependence with other key business functions
Human Resources: Recruitment of staff, training and developing staff, retaining staff through monetary and non-monetary rewards to the consumer electronics industry being very competitive, technical and innovative, Apple hires technically savvy staff, from product development to retail staff.
Finance: Monitor, record, and analyse financial transactions, as well as provide periodic reports on the financial performance for operational management and decision making flexibility of each supplier's layout allows Apple to shift resources to other products if volume or demand changes. This is done without too much disruption to the pricing strategies that Apple employ.
Marketing: Providing marketing requirements, which operations then takes to determine the capabilities and constraints in pricing, product design, promotion use of customer feedback, primary and secondary market research from previous sales of the iPad provided Apple with benchmarks for Apple iPad Pro sales.
2. Influences on operations management ● Globalisation
Globalisation refers to the removal of trade barriers between nations. It is characterised by an increasing integration between national economies and a high degree of transfer of (FOP) capital, labour, intellectual capital and ideas, financial resources and technology.
● Globalisation and operations management Global customers seek global brands and tend to seek standardised products. Product design must meet the needs of global consumers , and choice of location for manufacturing facilities, quality management , logistics and inventory management processes, are all oriented towards a global market. Manufacturing plants allow for massive economies of scale advantages is an example of this as they design their shoes in Japan but manufacture them in China for a global market production of services on a global scale within sectors such as finance , travel & tourism services, software development and telecommunications also have significant implications on operations processes.
The influence of globalisation has allowed for the integration of economies, enabling McDonald’s to transfer capital, labour and intellectual capital to more than 36,000 restaurants in over 100 countries. Globalisation has consequently had a significant impact on the way McDonald’s organises its operations management. In 2015, McDonald’s was ranked 9th on the Forbes’ list of the world’s most valuable brands (based on the total market value of its shares outstanding). McDonald’s 2015 Annual Report records sales for that year at almost US$83 billion, showing that the company has been successful in adapting to changing global conditions.
● Supply chain management and the global web The supply chain refers to the range of suppliers a business has and the nature of its relationship with those suppliers. Businesses need a predictable and reliable supply chain that is highly responsive to changes in demand as experienced by the business. Sourcing requires finding the suppliers needed so that production processes can be smooth flowing.
Global web refers to the network of suppliers a business has, chosen based on lowest overall cost & risk , and maximum certainty in quality & timing of supplies. In supply chain management, 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 is in appropriate proximity to the suppliers.
● Imitation, innovation and the supply chain Imitators tend to create products similar to existing products , but aim to do so at a lower cost. Reverse engineering involves a business purchasing and taking apart the competitor’s product to see how it is made. The imitating business then attempts to create their own version of the product from the component parts, by using different materials and at a lower cost.
Innovations occur when the business creates new products , and leads the market. They may improve an existing product or create products that solve problems in a way not previously done. Alternatively, innovation may make a technological breakthrough. It affects operations processes by differentiating products and new to the market, resulting in the supply chain being shaped around the need for innovation. Businesses may seek supply chains that exclusively provide particular supplies to them.
Qantas has been increasingly outsourcing functions like maintenance and IT to reduce operational costs. More than 70% of Qantas’ assets are geared to the global market. Expansion into new and emerging overseas markets is essential for Qantas to achieve its growth potential, a continuing return to shareholders, the service it provides to customers and the spread of Qantas as a brand name recognised internationally. Qantas set up a number of low cost airlines in Asia under the Jetstar brand to take advantage of the growth in that region. However, operating globally can introduce overseas companies which can compete for cost leadership. Qantas has to compete in an uneven playing field; 70% of the 40 airlines which fly to and from Australia receive financial and bureaucratic assistance from their governments, distorting the market and making it difficult for Qantas to compete. $374mil
From personal experience and market research, Crumpler realised that existing messenger bags did not satisfy the expectations of customers. Quality, versatility and durability were key features desired by consumers to protect fragile electronic devices such as laptops and cameras. Consequently, Crumpler bags are water-resistant as they are made from a tough, rip-resistant nylon shell. In addition, the bags have an inner protective lining and padding. Although more expensive than other similar bags, customers equate price with quality and are obviously satisfied with the product as sales have increased each year the business has been in operation. This has caused customer satisfaction to rise to 93%, as they are pleased with the high quality good they receive. The constant pressure on operations at Qantas is to ensure customer expectations are fully met, and if possible, to be exceeded. This includes arriving and departing on time and comfort based features such as online check in, self check in kiosks, in-flight entertainment and specially designed menus etc.
● Cost-based competition
Cost-based competition is derived from determining break-even point and then applying strategies to create cost advantages over competitors. ● Fixed costs are those costs that do not change regardless of the level of business activity. ● Variable costs are those that vary in direct relationship to the level of business activity.
In highly competitive markets , cost-based competition can shape the operations function in competing businesses. Cost-based competition recognises that prices cannot keep increasing ; therefore, reducing costs is a way to maximise profits when revenues are fixed.
● Cost-based competition and operations management It is a feature of operations management when businesses bring a cost leadership approach (focus on minimising costs while maintaining profit margins) to the operations function.
Qantas faces significant competitor growth in all markets which impacts on their market share and profitability. This means an ongoing focus on cost minimisation. Many of Qantas competitors have significant cost and structural advantages such as lower labour costs, tax, airport charges, cheaper financing and favourable depreciation. To achieve the lowest competitive cost, Qantas has sought to introduce technology, seel alliances, outsource, reform human resource practises and restructure. Cost minimisation cannot be pursued without attention to quality - there must be a balance. Qantas has had criticism over the quality of their services with increased safety incidents and the shut down of its services in the battle with the unions in 2011. Through their introduction of the Boeing 787 and Airbus A380, as well as self check in, expenses were reduced by 9%, and they got $XYZZZ in 20XX.
● Government policies Government policies change, often due to changes in leadership or social expectations In this way, political processes can shape the way in which business operations are conducted. Policies such as tax rates, required materials handling practices, OHS standards, training and rules, employment relations, and public health, environmental, trade & industry policies all impact on business operations. As policies inform law-making and lead to business opportunities, operations managers need to be fully aware of the contemporary government policies and what they comprise.
The economic policies (monetary & fiscal) have a direct impact on the level of economic activity and therefore the demand for Qantas’ services. The Federal Government’s new policy (the Fair Work Act) is a lot more pro-worker, increasing Qantas’ operating costs. The domestic airline industry has been deregulated for some time, however recently the Federal Government has been increasing access to the Qantas protected international routes for airlines like Delta, Virgin, Emirates, Etihad, Qatar etc. The increased competition has made these routes less profitable for Qantas. In 2008, Aus and the US signed an Open Skies Agreement which removed restrictions on Aus and US services. This ensured that Qantas no longer had to pay tariffs for using American airspace. This significantly reduced Qantas’ operating costs by $XYZZZ, allowing them to achieve their strategic goal of profit maximisation.
that the finite resources are conserved and made to last longer (by recycling water for example), and developing more fuel efficient engines. For Qantas, the Boeing 787 and Airbus A380 are significantly more fuel efficient than the ones replaced. In 2012 Qantas and Jetstar operated Australia’s first commercial flights powered by sustainable bio-fuel. They produce a 60% reduction in carbon footprint. Fleet renewal offers the benefits to fuel efficiency. The new Boeings and Airbuses are significantly more fuel efficient than the ones being replaced. Qantas’ average aircraft age is now 7 years - the lowest since privatisation. Other fuel efficiency activities include using bio fuel and optimised flight planning. Fuel comprises 95% of Qantas’ emissions.
● Corporate Social Responsibility
○ The difference between legal compliance and ethical responsibility
Corporate social responsibility (CSR) refers to open and accountable business actions based on respect for people, community/ society and the broader environment. Businesses must do more than just comply with laws and regulations; the driver of corporate decision making is not just profitability, but rather something that more broadly reflects a range of social expectations.
The difference then between legal compliance and ethical responsibility is that legal requirements require that a business follows the prescribed standards of behaviour. Ethical responsibility sees businesses meeting all of their legal obligations but also following the intention of the law. By demonstrating ethical responsibility, a business shows that they value more than making the maximum profit as they allocate more money than required to comply with the law. Compliance typically falls in a number of areas for business. These areas include: ➔ Labour law compliance: minimum wages, workers compensation and health and safety laws. ➔ Environmental and public health compliance : regulations stopping dumping & pollution, waste disposal standards. ➔ Business licensing rules : training / certification, placing conditions on operations (such as restricted working hours, zoning restrictions, and content and disclosure restrictions). ➔ Taxation : levies, taxes imposed on profits. Used to encourage / penalise particular activities. ➔ Trade practices and fair market dealings: market power, misleading conduct, product safety. ➔ Migration and rules around the use of offshore skilled labour: minimum labour standards. ➔ Intellectual property: copyright, patents, trademarks, designs, original ideas and artistic works. ➔ Financial and accounting regulations and corporations law: standardise rules around financial records. ➔ Human rights: rules restricting discrimination.
Onshore outsourcing involves the use of domestic businesses as the outsourcing provider ( YOU DO THE WORK). Offshore outsourcing involves taking the activities to a provider in another country.
Ethical responsibility involves businesses going beyond the law and taking into account broader social, community and environmental concerns. In manufacturing operations there are significant differences in international standards for labour in terms of wages, health & safety etc. The International Labour Organization (ILO) aims to: ➔ promote rights at work ➔ encourage decent employment opportunities ➔ enhance social protection and strengthen dialogue in handling work-related issues Workplace issues that are raised are put into a report discussed in the International Labour Conference. If 2/3 of the nations in the ILO agree to this, it becomes an International Labour Standard.
● In respect of cultural diversity, Qantas’ Reconciliation Action Plan focuses on employing Indigenous people. ● It is estimated that aviation accounts for 2% of greenhouse gases. Qantas has invested millions to reduce carbon emissions. They launched a new scheme in 2007 that gives passengers the option of paying extra to offset the carbon dioxide emitted by their flight. ● New aircrafts are now being delivered to use less fuel per passenger. ● They donate millions to charitable causes across the community, environment, education and the arts. ● The are reducing their energy use and cutting emissions from their flights and property.
○ Environmental sustainability and social responsibility
Businesses are being asked to take increasing responsibility for the protection of the environment. The social conscience of responsible business owners (and, increasingly, government legislation) has led them to adopt policies of conservation, recycling and restoration. The principle of ecological sustainability requires businesses to evaluate the full environmental effects of their operations. In response to concerns about climate change, the community increasingly expects businesses to: ➔ Adopt greenhouse abatement (reduction) measure ➔ Encourage the development of long-term sustainable strategies
A socially responsible business tries to achieve 2 goals - expand the business and provide for the greater good of society. Customers can stop buying a from a business if they learn that that it is not socially responsible, but reward socially responsible businesses by purchasing more of their products.
Crumpler acts in a socially responsible manner by ensuring the durability of its products. It is possible to recycle an input (nylon). Crumpler is an ethical business, however, they do no run the factories in Vietnam directly. They subcontract their production to factories that may potentially have substandard labour practices. Crumpler acknowledges a responsibility to be aware of the conditions and enforce a code of conduct to improve them. They
○ Transforming resources: human resources, facilities
Transforming resources are those inputs that carry out the transformation process. They enable the change and value adding to occur. The 2 main transforming resources are: 1. Human resources: Employees are said to be the single most important input into business. Staff that are well qualified, hardworking 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.
In Qantas, staff assemble the inputs, operate and maintain machinery and equipment in processes, fulfil the sales function, distribute the output and deal with customers. They maximise the use of HR as transforming inputs by ensuring all employees from cleaners and baggage handlers to the pilots and sales managers are of high priority to the business, and do so through correct maintenance of their staff (through monetary and non-monetary rewards). Financial rewards include wage increases and extra pay based on performance and cash bonuses for outstanding results, such as when they rewarded a group of 25,000 staff with a one-off $3000 bonus. Non-financial rewards include more flexible working hours, job autonomy, and award recognition. HR managers focussed on: ● Flatter management structures - meaning there is fewer layers of middle management and widening span of control allowing flexibility and adaptability for its employees. This also increases communication between employees at all levels and managers. Through doing so, the business’s vision is easily communicated throughout the business, encouraging and motivated the HR department to more productively do their tasks. ● More emphasis on Training and Development used to improve productivity, quality of outputs and Qantas specifically uses online learning to train staff offering a database, email system and discussion system. ● Emphasis on much more flexible working conditions, increased paid maternity leave from 6-10 weeks, up to 10 days career 39 leave per year and building of Family-Friendly services such as child care facilities in large Australian hubs such as Sydney, Melbourne and Brisbane.
Increased productivity of employees has enabled Qantas to create a higher quality service directly to customers and increase customer satisfaction by 23% in 2015, according to an exit survey conducted monthly. Therefore, Qantas recognised HR as a major transforming output, and focussed on this department to enhance the quality of service.
2. Facilities: The plant and machinery used in the operations processes. The business decides: ○ whether required facilities should be located in a large site or divided among numerous smaller sites ○ what impact zoning and other restrictions will have upon the facilities size and location ○ special conditions, such as energy and water requirements ○ the most efficient plant design
○ the optimum plant and process layout
These are the physical assets owned or leased which are required to produce the business output. For Qantas, this includes the terminal buildings and their contents, maintenance facilities, spare part holdings, aircraft and computers. Qantas are constantly improving their facilities to carry out the best quality service to their customers. This is important, as customers directly interact with facilities and their perception of the business is partly based on how well the facilities cater to their needs. Qantas invests greatly into the maintenance of their facilities to provide the best quality service to their customers. In 2013, Qantas opened its new $80 million state of the art catering centre within their lounge at Brisbane airport. The new facility will ensure the freshest and highest quality meals are served.
● Transformation processes ○ The influence of volume, variety, variation in demand and visibility
Volume. How much output is produced. The transformation process must be able to adjust quickly to the inevitable changes in volume ordered; not being able to produce enough leads to lost sales; producing too much leads to wastage and / or higher inventory costs. 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 (time taken for an order to be fulfilled from the moment it is made).
Every year, an average of 1 million customers visit McDonalds each day in Australia = high volume. Thus, McDonalds follows an efficient process layout (batch processing) and product layout (assembly line production) to produce its products, while keeping to its predetermined lead time targets. The volume required demands this process layout because it requires the process to be the most efficient possible, so that employees work to their maximum potential, and equipment and machinery are used to their full productivity. Further, the inventory management of McDonalds is heavily influenced by the sheer volume they need to produce. They have large warehouses placed in prime position for all their stores within the region. The volume influences the location of the warehouse because of the expense of distribution – maximum resources need to be delivered to the stores at the lowest cost possible. This is done by placing warehouses and distribution centres to be the shortest distance possible from all stores.
Variety. The mix of outputs produced. The more variations the more complex is the transformation process. The greater the variety, the more flexible the transformation process needs to be to change from one product to another, and, in general terms, the more expensive the process will be.
Crumpler needs to be able to provide a variety of styles and models for its product. Each model of bag needs to be produced in different sizes and a range of colour options. Thus, they use a batch-type production method. The
McDonalds mainly has direct contact with its customers – it receives its feedback through online forms, calling the customer service lines and emails. In 2010, it ran a survey around NSW regarding the idea of McDelivery – it sent surveys to its customers’ inboxes to gather their thoughts on the idea. Its surveys revealed that over 68% of its customers were ‘in favour’ of the service. Thus, in 2013, they conducted a trial run in partnership with Menulog. This led to the manipulation of its logistics and distribution and needed to manipulate its lead times targets as part of its monitoring processes. Some branches delivered breakfast, while others dinner – however the most common time was 5-9 pm. Their customer contact once again provided them feedback of its success – this time, using indirect contact eg. Sales reports, they noticed an improvement in sales revenue. The minimum order requirement of $25 had meant that more people were purchasing higher value items from McDonalds, because of the benefit of it being delivered. The service was so successful that it continues to exist today in many stores.
○ Sequencing and scheduling: Gantt charts, critical path analysis
Sequencing refers to the order in which activities in the operations process occur. Scheduling refers to the length of time activities take within the operations process. When planning operations processes that involve activities central to transformation, the 2 main scheduling tools are Gantt charts and critical path analysis (CPA). 1. Gantt charts These charts outline: ● The activities that need to be performed ● The order in which they should be performed ● How long each activity is supposed to take
Advantages of Gantt Charts ● Force a manager to plan the steps needed to complete a task and to specify the time required for each task ● They make it easy to monitor actual progress against planned activities
2. Critical Path Analysis (CPA) Critical Path Analysis (CPA) is a scheduling method that shows what tasks need to be done, how long they will take and what order is necessary to complete those tasks. The critical path is the shortest length of time it takes to complete all set tasks necessary to complete the process. As each activity on the schedule must be completed to make the final product, the critical path is the longest path through the process.
This case study focuses on Network Rail’s (NR’s) use of sequencing and scheduling through the construction/ repair of the Leven Viaduct in Cumbria in March 2006. NR’s sequencing and scheduling process included: ● the activities that need to be completed ● the sequencing of these activities ● the timing of the start and completion of these activities ● budgeting of costs involved. Through careful planning, the project was completed in 16 weeks half the time originally anticipated.
To increase efficiency and reduce time of the operations process, NR created a critical path analysis to schedule and sequence their tasks effectively. NR’s Leven Viaduct engineers were dealing with a project which involved hundreds of separate processes. They used spreadsheets, Gantt charts and computer models to give them a detailed picture of all of the stages involved. They created a spreadsheet which identified the budgeted costs of each of the steps involved in their project. As a result they were aware at all times of the cost implications of each stage of the project, and the importance of getting each step in the sequence finished on time. Delays can add extra costs to a project and can involve financial penalties for being late. Every day they kept a close eye on where the project had got to. This enabled them to put in extra resources whenever there was a delay, particularly along the critical path; ensuring they always stayed on track and ensured an efficient and productive production process.
The time spent in putting the plan together was well worth it. Careful planning meant the project ran smoothly which led to cost and time savings later on. NR finished their project in half the time anticipated, reducing costs and legal fines for delay. Their effective scheduling and sequencing of tasks enabled them to engage in a more efficient production process. The impressive performance of the Leven Viaduct Project, significantly improved NR’s brand image and enabled them to engage in further projects and become the owner and infrastructure manager of most of the rail network in England, Scotland and Wales. Their outstanding performance in the repair of the Leven Viaduct,
- Task design
- Job description
- Job specification
- Recruitment.
- Selection
Task design is the way in which McDonald’s organises the transformation process into smaller tasks. Task design may overlap with the job descriptions created by the human resources division of a firm. The purpose of task design is to assist the employees to be able to complete the job at hand and consists of breaking down the work into several jobs. Collectively, all tasks contribute to the final goal of delivering the company good or service. Task description includes a breakdown of tasks that key crew members need to follow. For example, the person receiving the order at the first contact point at the Drive Thru should follow a process such as: 1. Greet the customer in a friendly manner 2. Take the order and ask if the customer would like anything else 3. Confirm the order by repeating it to them 4. State the total and direct them to the next window where they will pay
The order-taking process takes 17 seconds on average in McDonalds drive thrus (for 2-3 items). Unit sales increase 1% for every 6 seconds saved at the drive-thru. Speed in the drive thru is also greatly influenced by accuracy, so leveraging the latest digital technology for enhanced order taking is another way to impact speed of service. Digital headsets, menu boards, and preview boards are all important pieces to ensuring accuracy and improving the drive-thru experience. McDonalds generates 65% of its sales in the USA from drive-thru customers. Since the majority of sales come from the drive-thru window, the customer experience must be great; which can only be done when it is fast, convenient and follows a clear process
Plant layout is the arrangement of equipment, machinery and staff within the facility. There are several different ways to organise the physical layout of a plant depending on the type of manufacturing operations conducted by the firm. ● Process layout: the arrangement of machines such that the machines and equipment are grouped together by their function. ● Product layout: the manufacturing of a high volume of constant quality goods. ● Fixed position layout: operation arrangement where employees and equipment go to the product.
Process layout: McDonald’s invests a lot of time and money in ensuring the kitchen and restaurant layout is organised in a manner that promotes work flow and ease of access to required equipment and machinery. McDonald’s test kitchen is a facility that can replicate any McDonalds restaurant around the world. It features three kitchens over 3500 square metres. The test kitchen is a centre for innovation and is where new products and processes are tested. Their layout minimises delays in materials handling and customer movement, maintains flexibility, uses labour and space effectively, and provides for effective maintenance; this all maximises productivity and serves as a sustainable competitive advantage due to the amount of care put into developing a layout that functions to maximise productivity and convenience.
○ Monitoring, control and improvement
Monitoring ● Monitoring is the process of measuring actual performance against planned performance. ● Typically arranged around the needs to measure KPIs
Control ● Control occurs when KPIs are assessed against predetermined targets and corrective action is taken if required. ● Comparing what was intended to happen with what occurred. If there is a discrepancy between performance and goals, changes can be made.
Improvement ● Improvement refers to a systematic reduction of inefficiencies and wastage, poor work processes and the elimination of any bottlenecks. ○ A bottleneck is any aspect of the transformation process that slows the overall processing speed leading to a backlog of incompletely processed products.
APPLE: With Apple suppliers, there is a high level of supervision as many workers are unskilled and line configurations of tasks need continual monitoring and control checks to improve time management, minimise poor process flows, assess and meet KPIs, improve quality, cost and efficiency. Technicians are of high importance for quality control. Quality improvement - the iPhone 6 has a precision metal band which is prone to scratching. Continuous customer feedback and frustrations about receiving new products with scratches have led to tighter production standards and tougher quality tests and controls, leading to longer lead times.
● Outputs Outputs refer to the end result of the business efforts - the good or service that is provided or delivered to the customer. The operations manager must be able to link transformation processes to the activities performed by other
operations notes
Subject: Business Studies- Unit 4
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