This assessment task addresses the following key knowledge as outlined in Unit 3: Area of Study 3: (VCAA Study design) • the opera/ons func/on and its rela/onship to business objecIves and business strategy;
• characteris/cs of opera/ons management within large-‐scale manufacturing and service organisa/ons;
• key elements of an opera/ons system (inputs, processes and outputs) in different types of large scale organisa/ons;
• producIvity and business compeIIveness, their importance for and impact on the opera/ons system;
• strategies adopted to opImise operaIons, including: • – faciliIes design and layout • – materials management • – management of quality • – extent of the use of technology; • ethical and socially responsible management of an operaIons system. • 3
The key skills that this assessment task addresses include the ability to:
• accurately use relevant management terms; • research aspects of opera/ons management using print and online sources;
• analyse business informa/on and data; • apply opera/ons management knowledge and concepts to prac/cal and/or simulated situa/ons;
• discuss key aspects of opera/ons management; • analyse strategies that arise through prac/ces within opera/ons management.
How to prepare??
• Know each dot point in study design. • Use Wiki resources, (including past sacs) • Use Edrolo • Complete past VCAA exam ques/ons
The opera/ons func/on and its rela/onship to business objecIves and business strategy;
• Opera/ons func/on: The opera/ons func/on transforms inputs into outputs for sale through a range of processes. It is the core func/on or purpose of an organisa/on because it is what generates revenue for a business.
• The core objec/ve of all organisa/ons is to efficiently produce a good or service. Opera/ons management is the strategy used to achieve this objec/ve.
• Opera/ons must work within a framework of what the organisa/on aims to achieve. ie. Its objec/ves.
• The opera/ons management func/on has a considerable influence on the quality, cost and availability of an organisa/on's goods or services.
• These, in turn, have a direct bearing on whether the organisaIon achieves its other main objecIves — specifically, to increase profitability, to increase market share, to provide a reasonable return for investors or to contribute to the wellbeing of the community.
The opera/ons func/on and its rela/onship to business objecIves and business strategy; (conInued)
• The design of the operaIons system has an impact on the achievement of business objecIves.
• For example, the extent and use of technology has an impact on whether an LSO achieves its objecIves. The use of technology eg computers, robo/cs decreases the need for human labour, reduces disrup/ons caused by human error and minimises both labour costs and the /me it takes to complete tasks, while, at the same /me, increases the quality of the tasks completed.
Characteris/cs of opera/ons management within large-‐scale manufacturing and service organisa/ons; (ie know the differences between the two)
• A manufacturer will transform inputs into tangible products. • Tangibles are physical products which can be handled and stored before they are sold to the consumer, such as bread, clothing or a car.
• In manufacturing organisa/ons, produc/on and consump/on occur at different /mes.
• The produc/on process and consump/on are not linked. That is, there is liZle customer involvement in produc/on.
• Manufacturers usually mass-‐produce standardised products (products with the same characteris/cs).
Characteris/cs of opera/ons management within large-‐scale manufacturing and service organisa/ons; (ie know the differences
between the two)
• A service organisa/on will transform inputs into services. • Services are intangible, which means that they cannot be stored.
• In a service organisa/on, produc/on and consump/on occur at the same /me. For example, transport. The customer may actually need to be present when the service is being delivered.
• Can customise to meet the needs of par/cular clients
Characteris/cs of opera/ons management within large-‐scale manufacturing and service organisa/ons; (ie know the differences between the two)
• SAC/exam hint • Also provide examples from case study (if specified) or else provide your own examples.
• refer to a large-‐scale organisa/on of your choice.
Examples of Goods & Service providers
Goods provider Service provider
Clothing manufacturer Food Bakeries Car manufacturer So_ drinks Furniture
Travel agency Transport Hotels Hospitals Airport Schools/ universi/es
Inputs • Resources needed to make a product or service • Staff, Informa/on, raw materials, physical facili/es, capital equipment, financial resources
Transforma/on/Processes • Tasks, ac/vi/es, strategies used to transform the inputs into outputs.
Output • The actual good produced or the service provided
Type of LSO Inputs Processes Output
Airport Ground staff, pilots, cabin crew, security, plane, terminals
Passenger arrives and checks in, goes through security checks, proceeds to the departure gate, boards the plane, flys to des/na/on.
Passengers arriving safely WITH luggage.
Car manufacturer Workers, robots, car parts, produc/on line.
The shell of the car moves along the produc/on line having parts added by robots and workers.
Car
SAC/Exam Hint • Key elements of an opera/ons system. • List, define and provide specific examples from case study. QuesIon 1E 2012 VCAA exam (2 marks) 2e. Describe one difference between the opera/ons management of a manufacturing
organisa/on, such as Websters, and a service organisa/on. QuesIon 3C 2011 (3 marks) Outline three differences between the opera/ons management of service and manufacturing organisa/ons.
VCAA 2010 Exam
QuesIon 4 (6 marks) • The Charity Founda/on is a service organisa/on assis/ng children who have been affected by natural disasters. It aims to raise money and collect goods to distribute to children in need.
• Iden/fy and explain the key elements of The Charity Founda/on’s opera/ons management system. In your answer provide one example of each key element.
Strategies adopted to op/mise opera/ons
Facili/es Design & Layout
Materials Management
Management of Quality
Technology
Facili/es and Design Layout
• When choosing the best loca/on & layout, an opera/ons manager needs to consider whether or not there is:
• enough physical space for the an/cipated volume of produc/on • effec/ve use of produc/on equipment and technology • an adequate loca/on of stock and warehousing requirements • an efficient flow of the good or service through the system • conformity with legal regula/ons (such as site and building constraints and occupa/onal health and safety standards).
VCAA Exam 2011 QuesIon 2C • Freda Campbell is sejng up a new business in Melbourne that will manufacture and sell furniture.
• Iden/fy, describe and jus/fy a facili/es design and layout strategy that Freda could use for manufacturing the furniture. (5 marks)
QuesIon 2d. The key elements of an opera/ons management system are inputs, processes and outputs.
• Discuss how ethical and socially responsible management prac/ces could affect each of these elements. (6 marks)
Fixed posiIon layout
• Used for big project produc/on. • Eg. large-‐scale, bulky ac/vi/es such as the construc/on of bridges, ships, aircra_ or buildings.
• More efficient to bring materials to the site; workers and equipment come to the one work area. This layout is used when it would be too difficult to move the product.
• Disadvantage is storage — materials needs change constantly and it can be hard to find space to store them safely.
Product layout
• Machinery and equipment are arranged in line and components are added to the product in a sequence of steps.
• A motor vehicle being produced on an assembly line is an example of this type of layout.
• Best suited to the manufacture of high-‐volume, standardised goods. • The product would normally move along a highly automated produc/on line, using a conveyor belt.
• Costs, reduced because of the use of technology and staff complete specialised tasks.
• It can, however, be very expensive to set up a capital-‐intensive, automated assembly line. Also, staff can become bored with repe//ve, low-‐skilled ac/vi/es. A problem on the produc/on line can some/mes mean that the whole factory needs to be shut down.
Process (func/onal)Layout • Equipment and machinery which perform a similar func/on are arranged
together. • Suited to organisa/ons which deal with a variety of products. • A manufacturer of sports shoes or brake pads, for example, would commonly
use this type of layout. • A process layout lends itself to batch produc/on, as in the case of a bakery,
where different types of breads, rolls or buns are manufactured in limited numbers. Each batch would be completed at a produc/on stage and then would move on to another stage.
• In service organisa/ons such as banks or hospitals, a process layout is used to deal with the different needs of customers. A disadvantage of this layout is that the work for staff can be monotonous if they are only involved in one stage of the process.
Retail layout • Exposure is a cri/cal considera/on to the layout of retail stores.
• Stores such as Kmart and Big W channel customers through departments or sec/ons.
• They are exposed to other aisles or sec/ons as they move from one point to another.
• It can be difficult to move efficiently from one part of the store to another because barriers are established to ‘showcase’ or ‘display’ items for sale. Retailers such as Coles and Woolworths use approaches such as:
• loca/ng high-‐impulse or high-‐margin products in prominent loca/ons, o_en at the end of aisles or near checkouts
• loca/ng ‘high-‐draw’ items such as bread and dairy products on opposite sides of the store
• loca/ng ‘power items’ (high-‐priority items for most shopping trips) at intervals throughout a series of aisles.
Office layout • Efficient movement of informa/on and proximity to resources (such as the
photocopier, computers, printers and storage areas) are priori/es for the layout of an office.
• Loca/ng worksta/ons together in departments that are required to communicate constantly may also be important.
• In a manufacturing organisa/on, the office layout is o_en informal and may overlook the factory floor so managers can easily supervise. For a service provider, such as an accountant or a doctor, clients need to feel welcome, but privacy is a concern, so the layout of the office should reflect this.
• An office might also need to provide a space (such as a lunch room) that enables employees to take a break from the work environment if required. Personal storage space and mee/ng rooms may also be required. Office layout is o_en open plan or in pods. With staff working closely together a code of conduct is o_en adopted called ‘cubicle e/queZe’. This really means watch the sights, sounds and smells — it may even advise what lunch foods might be cubicle unfriendly.
Materials management • Materials management is a strategy which opera/ons
managers use to op/mise opera/ons. • Materials management involves managing the use, storage and delivery of materials to ensure the right amount of inputs are available when required.
Master producIon scheduling
• (MPS) describes what is to be produced and when. • Schedule linked to specific delivery dates or contracts for delivery in the future.
Materials requirements planning • (MRP) is completed a_er the organisa/on has a clear understanding of the quan//es to be produced and the /me frame involved. It is an itemised list of all materials involved in produc/on to meet the specified orders. Such planning must consider:
• lead /mes required by suppliers — that is, whether items need to be ordered weeks or months in advance
• the exact number of inputs to complete the task • the amount of stock (inventory) on hand • purchasing procedures — for example, whether the organisa/on wishes to take advantage of bulk purchasing discounts offered by suppliers.
Just in Time
• (JIT) system of inventory control. • This approach makes sure that the right amount of materials will arrive just as they are needed for produc/on.
• Reduces storage costs and reduces the risk of any waste occurring in storage, thus increasing compe//veness. However, supplier deliveries must be reliable and must be received at the appropriate /me.
The management of Quality • Quality management is the strategy which an organisa/on uses to make sure that its product meets customer expecta/ons. Three quality approaches are
• quality control, • quality assurance and • total quality management (including employee empowerment, con/nuous improvement and improved customer focus).
When managing quality, LSOs will: • minimise waste and defects • strictly conform to standards • reduce variance in final output.
Quality control • Quality control reduces problems and defects in the product using inspec/ons at
various points in the produc/on process. • Many organisa/ons have minimised errors and waste by ensuring that standards
are met. • Specifica/ons or benchmarks are set before the physical checks are completed.
Actual performance is then compared to the established criteria. If the established standards are met it is likely that the business will be mee/ng customer expecta/ons. Compe//veness increases as the costs associated with waste and faulty products are reduced.
• In a service organisa/on, an inspec/on of employee performance can be used as a means of quality control. A bank might inspect teller accuracy, speed or courtesy. In a call centre calls might be monitored for quality assurance and control purposes.
Quality assurance • A quality system is in place to ensure that set standards are
achieved. • Eg. Cer/fied to the ISO 9002 standard. • The ISO 9000 series of quality cer/fica/ons is a widely used interna/onal standard. ‘ISO’ stands for Interna/onal Organiza/on for Standardisa/on. Mee/ng these interna/onal Standards is voluntary, but many organisa/ons comply with their requirements to remain compe//ve locally and interna/onally.
• The ISO provides guidelines on how organisa/ons should establish quality assurance systems by adop/ng specific procedures, controls, and recording and documenta/on measures.
Total quality management • (TQM) is a commitment to excellence that emphasises con/nuous improvement in all aspects of an organisa/on's opera/on by sharing responsibility among all the members of the organisa/on.
• The aim of TQM is to create a defect-‐free produc/on process, and maintain a customer focus in opera/ons.
• Improves the price compe//veness of an organisa/on, but can also improve product quality, allowing the business to aZain compe//ve advantage.
• To achieve TQM objec/ves a number of approaches may be used, such as employee empowerment, con/nuous improvement and improved customer focus
Quality circles
• Teams of up to 10 workers meet regularly to solve problems related to process, design or quality.
• The groups o_en make presenta/ons to management with their ideas, in order to improve the performance of the organisa/on.
• Such programs have resulted in substan/al cost savings for organisa/ons —
ConInuous improvement
• Involves a constant evalua/on of, and improvement in, the way things are done in an LSO.
VCAA 2012 Exam QuesIon 1 In the chocolate industry, four large-‐scale organisaIons dominate the market, collecIvely
accounIng for 92% of all chocolate sales. Currently these four organisaIons compete on price. The smallest of the four organisaIons, Websters, is less able to take advantage of economies of scale than the three larger organisaIons. As a result, Websters has decided to focus on compeIng on quality rather than price to ensure its long-‐term success. Sam Webster, grandson of the founder of the business, is currently the CEO and has idenIfied that numerous changes must be made. As the focus of Websters shias to quality, it will need to measure quality as part of its operaIons management. A human resources audit has idenIfied that the current staff do not have the necessary capabiliIes to implement this change. To allow the staff to develop the necessary capabiliIes, Mr Webster has idenIfied two preferred opIons. • improve the capabiliIes of the current staff • purchase and import state-‐of-‐the-‐art equipment from Belgium While the purchase of equipment will be more expensive iniIally, it will improve producIvity and reduce waste and carbon emissions in the longer term.
b. IdenIfy and explain two methods from the strategy of managing quality that Websters could use to ensure a high-‐quality chocolate product. (4 marks)
Use of technology • RoboIcs describes special forms of technology capable of complex
tasks. Robots are used in engineering and specialised areas of research, as well as on assembly lines where a programmable machine capable of doing several different tasks is required.
• Robo/cs allows a degree of precision and accuracy generally unmatched by human labour.
• In addi/on, robots work without complaint or demands for wage rises in condi/ons that would be soul destroying and o_en dangerous for employees.
• Robots and robo/cs are very high cost items that are unaffordable for most small and medium-‐scale manufacturers
Computer aided design (CAD) • (CAD) so_ware generates three-‐dimensional diagrams from a set of given input data (parameters); once the design has been created, it can be viewed from mul/ple angles, assis/ng both the designer and the end user to visualise what will be produced. It is used in a range of organisa/ons.
Computer aided manufacture
• (CAM) is so_ware used to allow the manufacturing process to become computer directed by designing and controlling the process.
• The CAD so_ware can be linked to CAM so_ware to manufacture designs that are accepted by clients. CAM can also be used more broadly to calculate how much of each input would be required
Computer integrated manufacturing
• (CIM) uses a computerised system to combine CAD and CAM to manage the en/re produc/on process. Product design, analysis, planning, purchasing, cos/ng, inventory control and distribu/on can be controlled by computer
VCAA 2013 Exam
Ques/on 2d. • Discuss the likely consequences of banks or other large-‐scale organisa/ons introducing new technology to op/mise opera/ons. (6 marks)
• ethical and socially responsible management of an operaIons system.
• Define ethics & social responsibility. • Managing inputs appropriately • Managing suppliers appropriately • Managing staff appropriately • Managing the customer rela4onship appropriately
VCAA 2010 Exam
QuesIon 5 (6 marks) • Ethical and socially responsible management is an important part of an opera/ons management system.
• Iden/fy and describe two opera/ons management strategies. Discuss the benefits to an organisa/on of adop/ng an ethical and socially responsible approach to management in these areas.
VCAA 2013 Exam • Alice Smith has read the biographies of many great business leaders. She would like to follow in the footsteps of these successful leaders. Alice has just taken over as the CEO of The Traveller’s Helpmate, a business that publishes print and online travel guides. Her observa/on is that her staff are professional, highly educated and independent. In private conversa/ons, some staff have said that they felt underappreciated by the previous CEO as posi/ve feedback was rarely provided.
Ques/on 3c. • Alice wants The Traveller’s Helpmate to be seen as ethical and socially responsible. To meet this goal, she is reviewing the key elements of her opera/ons system.
• Describe one ethical and social responsibility issue that Alice may consider from each of the three elements of the opera/ons system. (6 marks)
ProducIvity and business compeIIveness, their importance for and impact on the opera/ons system;
What is produc/vity? • Produc/vity is the ra/o of outputs to inputs and is a measure of the efficiency of produc/on.
• It is the number of goods or services produced by an organisa/on compared to the inputs required to produce those goods or services.
• Produc/vity increases when a business increases output levels without increasing inputs OR when it decreases the inputs required and keeps output at the same level.
Factors that determine the level of producIvity at a large-‐scale organisaIon.
• The skill level and training of staff. • The use of technology. • The quality and maintenance of equipment and facili/es. • The layout of facili/es. • Communica/on processes between management and staff and between staff.
• Workplace safety.
Improving produc/vity
• Improved communica/on between management and employees. • management style -‐ Par/cipa/ve management styles can increase worker
produc/vity. • human resources strategies eg recogni/on and reward programs aimed at
improving worker mo/va/on. • Automa/ng work processes. • Improving the design and layout of facili/es in a workplace .
• ‘Business compe//veness’ refers to the ability of an organisa/on to sell products in a market.
• Compe//ve advantage occurs when an organisa/on is able to produce goods or services beZer than its compe/tors. Eg providing a par/cular product or service faster, beZer or cheaper than rival organisa/ons.
Organisa/ons essen/ally compete in two ways: • cost — providing customers with lower priced goods or services
• differen/a/on — providing customers with superior value in terms of service (flexibility, speed, quality) or added features compared to lower priced compe/tors.