Unit 5: Operations Management

the process of transforming resources (inputs) into outputs to achieve business objectives

When wholesalers break larger units of product into smaller units to deliver to retail outlets.

A production is using more physical capital (machines) relative to labour.

A production process that uses more human labour relative to physical capital.

Producing unique items that are tailor made to meet the needs of individual customers.

• Flexibility and high quality

• High cost and time consuming

A production method that involves producing similar items in groups.

• Economies of scale and lower risks

• Lower worker motivation

The production of large amounts of standardised products on an assembly line.

The production of large quantities of goods that can be adjusted to customer specifications.

a set of strategies to reduce waste in the production process. Based on two strategies:

• continuous improvement (kaizen): involves businesses holding regular, scheduled meetings where staff are invited to suggest improvements.

• just-in-time (JIT) production: Raw materials or other inputs are ordered and delivered immediately before their use, so that stock (inventory) can be minimized.

A design and production process that aims to work more like nature, by designing systems that feed back outputs as inputs.

• Using cradle-to-cradle strategies may increase costs of production for a business in the short term. However, businesses can see reduced costs in the long term

the inspection of a product in order to find defects and remove them before they are delivered to customer

Strategies to prevent defects and improve products.

• Quality circles: A group of employees who meet regularly to discuss potential improvements to product quality.

• Benchmarking: The process of a business comparing itself with industry leaders on certain criteria, to learn from other’s techniques.

• Total quality management (TQM): Every employee is jointly responsible for maintaining the overall quality of the final product.

A project planning tool that shows the minimum time period that a project needs to be completed.

• outsourcing: When a business takes an internal function and has it performed externally by another person or business.

• insourcing: When a business decides to have its own personnel perform tasks or operations previously performed by an external organisation.

• offshoring: When a business moves some of its business operations to another country.

• reshoring: When a business moves an operation that is performed in another country back to the company’s home country.

The steps a company takes to limit the damage caused by an unpredicted event or crisis.

• Contingency Plan: When an organisation creates an action plan to follow in case a crisis occurs.

The development of a new method of production.

When a product is marketed to a new target audience.

A change that fundamentally alters an entire industry.

• Netflix revolutionised the home entertainment industry with its streaming service.