OPTIMISING OPERATIONS CHAPTER 8 OPTIMISING OPERATIONS

Strategies to optimise operations The optimisation of operations involves maximising productivity and the quality of production, while at the same time achieving ethical, social and business goals. Overall, this improves business competitiveness.

Strategies to optimise operations One way of optimising operations is via technology. This includes automation of production lines, CAD, CAM, robotics and the use of the internet (including websites and the cloud).

Strategies to optimise operations Automation - replacement of human activity with technology Automation of production lines, - process where raw materials enter and finished products leave with little or no human intervention Discuss Advantages Disadvantages

Strategies to optimise operations Technology Developments CAD – Computer aided Design - computer program that facilitates creation and modi cation of design CAD speeds up the process of product design and increases accuracy. It is costly to introduce but saves time and money in the long term.

Strategies to optimise operations Technology Developments CAM – Computer aided Manufacturing – Using CAM, large sections of production can be controlled with greater ef ciency, fewer errors and less staff. Time is saved and fewer mistakes made.

Strategies to optimise operations Technology Developments robotics – use of robots to perform manual tasks, a form of automation Robots are programmable machines with the ability to detect changes in the environment. Initially built to complete repetitive tasks, modern robots are beginning to have a degree of arti cial intelligence.

Strategies to optimise operations Technology Developments The use of the internet (including websites and the cloud). Have heavily impacted on the service based businesses. For example - GPS – Global positioning services – Postage Online bookings and appointments Online communication Scanners

Strategies to optimise operations Technology Developments The use of the internet Web page development Ecommerce – buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet Advantages of ecommerce STOP

Materials management Materials management refers to the inward flow of materials. This includes the procurement and storage of raw materials, work-in-progress inventory and finished goods from production to consumption.

Materials management

Materials management A materials manager must consider where raw materials are being sourced from, and aim to get the right goods, at the right price, at the right time. Considerations include supplier lead-in time, as well as future price changes.

Materials management A master production schedule (MPS) shows the timeframe for production. It allows the operations manager to assess capacity and reallocate resources to meet production needs. Materials requirement planning (MRP) works backwards from MPS. By specifying output requirements, an MRP system determines material requirements and timeframes.

Materials management An important aspect of operations is inventory management. Inventory involves the storage of raw, unfinished and completed goods. Inventory takes up space, and therefore costs money. Effective inventory management aims to have enough raw materials for production, while clearing finished products as quickly as possible.

Materials management Advances in technology, particularly automated warehousing equipment, has greatly improved efficiency through easier stock movement. A just in time (JIT) inventory management system aims for the absolute minimum amount of inventory at each stage of the operations process. Advantages & Disadvantages of Just in Time (JIT) inventory management system include page 166

Materials management It is important for operations managers to consider transport and distribution (logistics). This involves moving materials as efficiently as possible.

Materials management Quality in operations refers to both the quality of the finished product, as well as the quality of the operations system. A good quality operations system will reduce waste and defect rates, improving the business’s competitiveness. QUALITY = Durability Performance Design Reliability Consistency Ease of use Features Speed of service Sales service

Materials management Quality control involves a series of checks along the production process. The idea is to ensure outputs meet the required standard, and that any issues are addressed as soon as possible. If a defective product ends up in the market, the producer sometimes issues a product recall to rectify the issue.

Materials management Quality assurance is built into the operations process. It usually involves certification from a third party, demonstrating that the goods being produced meet minimum environmental, ethical or quality standards. Standards include ISO 9001 Australian Standard

Materials management Quality assurance process 1 Organisation employs a consultant to advise on quality standards to be met in order to obtain certification 2 Adjustments in processes and procedures made in line with standards expected in order to achieve certification 3 Certification granted by standards authority 4 Right granted to use standards authority logo in organisation literature and marketing

Materials management Total quality management (TQM) is a holistic approach to improving quality, not just in operations but in the business as a whole.

Materials management Total quality management (TQM) – Core concepts 1 Continuous process improvement 2 Customer focus: everyone has a customer 3 Defect prevention – proactive approach to quality 4 Universal responsibility Quality is everyones responsibility

Improving productivity through lean management and waste minimisation Rising costs and public pressure has meant that many companies have moved away from waste treatment to a waste reduction approach. This approach can be summarised by the ‘4Rs’: Reduce Reuse Recycle Recovery

Improving productivity through lean management and waste minimisation Another method of waste reduction is lean management. Lean management is an ongoing process that looks at the whole operations process and tries to eliminate the elements that do not add value to the finished product.

Improving productivity through lean management and waste minimisation Steps in Lean Production include; 1  Identify what customers will pay for a product (value). 2  Identify all steps taken in the operations system (process mapping). 3  Make everyone in the organisation responsible for identi cation of areas of waste/improvement on a continuous basis (continuous improvement – Kaizen). 4  Implement improvements to: minimise inventory levels - maximise production flow produce items when required (pull production - from customer demand) do it right the first time (quality). 5  Empower workers and make them responsible for developing strategies to eliminate waste. 6  Partner with suppliers.