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3 Operations Processes
Operations processes are the activities involved in the transformation of inputs into outputs. Each activity adds value so that the output has a greater value than the cost of inputs.

1.3.1 Inputs Inputs are the resources put into the operations process such as raw materials, skilled labour, machinery, transform customers (haircuts), transform information (newspaper) and transform materials (iPhone). Transformed Resources Transformed resources are those inputs that are changed or converted in the operation process. The transformed resources are: Materials Information Customers

Transforming Resources Transforming resources are those inputs that carry out the transformation process. They enable the change and value adding to occur. The transforming resources are: Human Resources Facilities

1.3.2 Transformation Processes The transformation process is where operations convert inputs into outputs. Manufactures create tangible products and service providers create intangible products.

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The Four Vs

Influence of Volume The most effective way of ensuring lower costs of production is to make a large amount of the same product. The high cost of this specialised mass production equipment is spread with output so, the greater the volume, the lower the costs are for each unit of the product.

Influence of Variety Sometimes customers want variety or flexibility rather than the lowest prices. This refers to the flexibility of the business to meet customers individual needs. It will cost more for providing a variety of products than a standardised product, therefore prices are higher.

Influence of Variation Changes in demands (Seasons, Weather, Climate, Events) Example: Surf shop selling snow gear in winter.

Influence of Visibility High visibility involves high customer contact; low visibility involves low customer contact. E.g. Shoes store online (low customer contact compared to Athletes Foot (high customer contact). Costs higher for more customer contact because of staff training and staff in general.

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Sequencing and Scheduling Sequencing and Scheduling helps with structuring and ordering the transformation process. Sequencing is the order of the operations process. Scheduling is the length of time taken to do the activities in the transformation process. Gantt Charts A Gantt chart outlines the activities that need to be performed, the order they should be performed and how long each stage will take. Three advantages are, it makes mangers plan the steps, timelines when the steps should be finished and it makes it easier for mangers to monitor the actual progress of the project.

Critical Path Analysis A critical path analysis shows the tasks that need to be done and minimum time needed for each task. They can be created to have multiple tasks being done at the same time. Each step scheduled must be finished to create the finished product.

1.3 Operations

Technology, Task Design and Process Layout

Technology Machinery and equipment used to create/ deliver products are the process technology. Has a huge effect on quality, speed, flexibility, customization and cost of the transformation process

Task Design The way the overall transformation is cut down into manageable tasks. Task design is concerned with working out the most effective and efficient transformation process. Also it is concerned with error free processing, minimum time and lowest cost with highest degree of flexibility.

Process layout Process layout refers to physical location of transformation resources. This determines the flow of resources through operations. The aim is to create the most efficient and effective way to set up operation. Bad layout can increase time the taken to produce the product.

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Monitoring, Controlling and Improvement

Monitoring Monitoring involves the measuring of all aspects of operations KPIs (Key Performance Indicators), from supply chain management and the use of inputs, through to the transformation process and then outputs. Examples of KPI are: inventory turnover, process flow rates, IT and maintenance costs, defect rates, repair rates and warranty claims. Mangers can measure KPIs against targeted levels and competitors to view performance.

Controlling Occurs when KPIs are assessed against predicted targets and corrective action is taken as required. Compares actual KPIs to expected targets.

Improvement Improvement refers to systematic reduction of ineffectiveness and wastage, poor work processes and the elimination of any bottlenecks (slow points in production line). Areas of improvement can be: Time, Process Flows, Quality, Cost and Efficiency. Continuous improvement involves the ongoing commitment to achieving perfection. Even though this will never be reached it creates a striving culture.

1.3 Operation Processes

1.3.3 Outputs Outputs are the product or service made from the transformation processes that can be intangible or tangible

Customer Service Customer service can be the reason why a customer chooses one product rather than its competitors product. It is concerned with resolving problems customers experience, answer their questions effectively and make the interaction between the customer and service provider pleasant. Management focus is to maximise reliability One key consideration for customer future purchases from business

Warranties Post sale factors, such as availability of parts, customer service, maintenance and particularly warranty can make a product stand out from its competitors. A contractual agreement between the customer and product manufactory By law products must be fit for purpose sold Unwritten promises under common law to get fair value