OPERATIONS The term production and operations tend to be interchangeable today the main feature of operations is that there is an input, process, output with primary and secondary industries it is easy to identify the 3 elements, not so obvious with the tertiary sector Definition could be “bringing a product into being”

The Role and Importance of Operations Purchasing of Raw Materials to meet Production requirements Managing Stock Role of Operations Using quality techniques to ensure maximum quality output is achieved from minimum inputs Ensuring appropriate methods of production are used Warehousing and distribution of finished products

The Role and Importance of Operations Operations is important because: it is one of the CORE activities of any business It produces the products and services which enable the business to make a profit

OPERATING SYSTEMS All operating systems have 3 distinct phases Inputs Processes outputs Raw materials Labour Using different stocks in order to produce a different product The actual goods

Operations Management Operations Management is concerned with the efficient conversion of an organisations resources into goods or services that it has been set up to provide. This can be subdivided into 3 key areas: The purchase and storage of raw materials; The production and storage of finished goods The distribution of finished goods

INPUT, PROCESS, OUTPUT Production Systems Throughout the operations process decisions have to be made about the nature of that process. Planning - What to produce? Production – How to produce it? Purchasing – cost, quantities, quality? Warehousing and storage (including stock control) Distribution – In-house or outsourced? Each of these interact with other functional areas of the Organisation. ?

PRODUCTION PLANNING Planning will involve deciding on the best production method for the type of goods or product the company makes. Ideally production should be at a constant level however this is very difficult to achieve. It is likely that production levels will vary over time due to: Changes in consumer demands Staff shortages Machine breakdowns Maintenance requirements

PRODUCTION SYSTEMS IN MANUFACTURING This is looking at: the layout of the factory (where each stage of production takes place) by which machine or worker, how many workers/how many machines. The splitting up of the production process into small stages or different jobs is called the division of labour. A successful system will need a flow of stocks from one job to another to make sure that there are no delays due to shortages or bottlenecks

The main factors taken into consideration when deciding which production system to use are: the nature of the product – different products made in different ways the quantity to be produced – mass production techniques different to customised products the resources available – finance, number and skills of staff, size and capacity of factory Stage of development of business – small businesses tend to have limited capacity and lack of resources as business grows they can extend product range

The main factors taken into consideration when deciding which production system to use are: Labour intensive vs Capital intensive Labour intensive is where the cost of labour is greater than the cost of capital. In the UK labour is expensive and therefore there are very few companies which are labour intensive. In other parts of the world labour is cheap and therefore cost-effective. Availability of technology Continuing developments in technology (CAM,CAD,automation) allow businesses to design, develop and produce products more quickly. Robots can carry out very complicated tasks very quickly and with a high degree of accuracy – they can do jobs which humans can’t and there is less wastage and more consistent quality.

Labour Intensive Production This occurs when: The cost of labour is cheap and readily available The product requires craftsmanship to produce The business is small and does not have the money to purchase expensive equipment Disadvantages of labour intensive production: Skilled workers are expensive to pay Production is limited to small scale Cannot take advantage of economies of scale Consistent quality is hard to achieve

Capital Intensive Production This occurs when: A standard product is being produced with standard operations Labour supply is scare or expensive Consistency of product and quality is required economies of scale are desirable Continuous production is required Disadvantages of Capital Intensive Production: Set-up costs are very high Lost production time during breakdowns or maintenance is very costly Individual customer requirement cannot be met Worker motivation can be low due to repetitive work

OPERATIONS QUESTIONS Describe the role of Operations in an organisation. (4) Suggest why operations is considered by many organisations to be important. (2) Describe the main factors which should be taken into consideration when deciding which production system to use. (4) Explain the disadvantages of a labour-intensive system of production. (2) Justify the use of a labour-intensive system of production. (2) Explain the disadvantages of a capital -intensive system of production. (3) Justify the use of a capital -intensive system of production. (2) Ideally production should be at a constant level for good planning. Outline four factors that might result in variable production levels. (4)