Globalization - Transforming Inputs Into Outputs

Role Transforming inputs into outputs - Production Competitive advantage Strategic role The strategic role of operations is to achieve either a cost leadership approach or to differentiate the businesses products from competitors. Long term Good/service differentiation Improve/alter product from competitors – more expensive - Better quality, faster delivery, more customised, more features Despite higher costs its more luxury Cost leadership aims to have lowest prices and most price competitive in the market - Lower cost manufacturer in industry Economies of scale -- small profits margin, high volume sales Goods and services in different industries Goods      Services Tangible  Intangible Inventory  Customisable Capital intensive (machines)  Labour intensive Same product (easier productivity  Different result every time measure) Both use technology, satisfying customer needs and make decisions on capacity, location, and physical layout Influences Globalisation Removal of barriers of trade between nations - Increased competition Global businesses Different currencies Trade agreements Global consumers Apple – production done in Foxconn – cheaper Qantas – Asian trade agreements Technology Technology is an integral part of a business and it can lead to a business losing or gaining a competitive edge over other competitors selling the same good or service. - Robotics – robots in production line to increase productivity/efficiency Computer aided design (CAD) – using computers to prototype products electronically Computer aided manufacture (CAM) – production efficient production lines Quality expectations Quality expectations refers to the expectations of consumers with regard to cost, quality, condition and location of a product. - Quality price match – high quality high price etc Reliability – how the product can continue to be used etc cars Durability – how many times it can be used Cost-Based Competition Cost based competition is derived from determining the break even point and then applying strategies to create cost advantages over competitors. - Economies of scale Cost leadership Government policies - Fiscal policies/ monetary policy Tariff/quota removal – limits/taxes charged on other country importing goods Legal regulations - WHS Environment Protection Act 1999 Competition and consumer Act 2010 – set out rules on how businesses must operate with each other and warranties etc Fair Trading Act 1987 Environment Exposure of a company doing bad environment practices – reputation reduced Must be aware of: - Resource depletion Pollution Disposal Corporate social responsibility business actions based on respect for people, community/society and the broader environment - Human rights/resources Corruption/bribes Transparency/honesty - Ethics vs law – morally correct decisions – e.g looking out for community Processes Inputs - Transformed resources (materials, information, customers) – things that are used Transforming resources (Human resources, facilities) – things that are used to carry out Transformation Processes - Physical alteration, transportation, protection, inspection Job (high customisation, low output) / batch (Groups) /flow (low customisation, high output) Influenced by 4 V’s - Volume – how much needed to produce Variety – how much variety of same product e.g. car models Variation (in demand) – increased sales during seasonal upswings, decreased sales in down periods Visibility – customer can see business production – feedback etc Scheduling and sequencing - Task analysis breakdown Gantt chart – scheduling tool Critical path analysis (longest path) – sequencing tool Technology - Leading edge – newly established technology Flexibility Competitive edge Less waste Better understand customer needs Task design - how tasks will be completed/broken down into separate steps/ ongoing improvements process and product layout The organisation of the physical layout of an office/warehouse will have an effect on the efficiecnny of a workplace. There are three types:  Process layout The workplace process is the arrangement of machines and equipment so that the machines and equipment are grouped together by the function they perform.  Product layout The product layout is where the equipment arrangement relates to the sequence of tasks performed in manufacturing a product.  Fixed position layout Fixed position layout is where the employees and equipment come to the product. Monitoring, controlling and improvement - Monitoring: the process of measuring performance by comparing planned performance to actual. Controlling: when corrective action is applied to a product in order for it to meet specified expectations. – planned vs actual Improvement: refers to the systematic reduction of inefficiencies and wastage, poor work processes and the elimination of bottlenecks. Outputs Finale g/s sold to customers/businesses Customer service - Communication Customer returns Complaints Customer interction Warranties - Ensure quality Free from defects and faults Set but Competition and consumer act Strategies Performance Objectives Not possible to achieve all 5 goals – balance out – customer expectations, demand etc - Quality – quality of product/service to meet customer demands Flexibility – how quickly operations can adjust in the market Customisation – creation of goods/services that meet customer needs Dependability – reliable the product/service is Speed – time taken for production to respond to changes in market demand Cost – minimisation of operations expenses New Good/service design and development - Lengthy, expensive process which identifies many alternatives Must pass filters to pick best alteration Supply chain management - Good/service delivered quickest cheapest and most dependable way Find suppliers who are reliable cheap and high quality Reduce lead time – time taken when ordering and receiving input = greater profit/flexible production Affected by business size, location, transport, cost/availability, fragile - Trend: rationalization – reduce number of suppliers Better to have long term contracts with less suppliers and bulk purchasing (economies of scale) Three key aspects of supply chain management;    Logistics – a broad term referring to the distribution but includes transformation, the use of storage, warehousing and distribution centres, materials handling and packaging. Ecommerce – involves the purchasing and selling of goods and services via the internet. Global Sourcing – the purchasing of inputs for the transformation processes. Decreases costs access to new technology and information. Increased complexity, not seen as ethical, decreased control. Cheaper resources and manufacturing in specialised countries Outsourcing Outsourcing involves the use of external providers to perform business activities. Outsourcing will lower costs and reduce work load. Advantages: efficiency and costs, increased accountability and access to new skills Disadvantages: communication and language issues, decreased control over quality, seen as a less ethical business. Loss of control Technology - Equipment to help perform functions quicker at cheaper costs Leading edge – innovative/new/riskier tech = comp advantage Established – tried/proven tech e.g airport checkouts Inventory Management Right stock held at right time, prevent dead stock and stock out Holding stock Advantages:    Ensures adequate supply for production/sale Reduced lead times between order and delivery Ability to store stock allows a business to take advantage of buying in bulk Disadvantages    Large amounts of inventory are expensive to keep Slow moving stock is money tied up and not generating income It is difficult to accurately monitor and track inventory Inventory valuation methods LIFO – Last in First Out - most recently bought is sold first good for bulky items or non-perishables FIFO – First in First Out - oldest stock sold first - good for perishable items JIT – Just in Time - hold min stock possible = reduced costs and increased efficiency (risky) Quality management Quality control: quality control involves checking transformed and transforming resources in all stages of the production process for problems and defects. The process of identifying where any improvements need to be made. Quality assurance Attempts to improves and stabilise production, to minimise issues that led to the defects in the first place. Process of setting a procedure of preventing defects in production. Proactive rather than reactive. Quality improvement The actual improvement of a products design or quality. Overcoming Resistance to change - driving forces poush for change, but resisting forces preventing it issues based on costs and inertia fixed by - purchasing new equipment retraining redundancy payments reorganising plant layout introducing new technology Global factors Global sourcing - low cost inputs imported – cheaper costs Economies of scale - reduced costs to make each unit when buying in bulk Scanning anjd learning - identifying and copy global trends in environment demand changes, new tech, new processes, law and policies Research and development - innovate new products and improve existing ones = long term survival - extend life cycle, reduced costs higher profits new ideas protected by copyright and patent