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Lecture

BU121 Lecture Notes - Finished Good, Global Reporting Initiative, Mass Production


Department
Business
Course Code
BU121
Professor
Roopa Reddy

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Operations Sustainability
Looking at ways to operate more sustainably for their future
Critical Success Factors indicators of business success
- Achieving financial performance
- Meeting customer needs
- Providing quality products and services most clearly linked to operations
- Encouraging innovation and creativity (which creates new products that fill customer needs)
- Gaining employee commitment (drives innovation and creativity)
3 Decisions 3 Stages
- Planning
o Starts with product - design should be driven with customer’s needs
o Production Types (how its produced which affects the processes) and Process
Mass production
Mass customization
o Choice of location and facility layout
Link between type of production, process used and layout
o Resource planning and supply chain management (growing)
Make or buy? (quantitative and qualitative decision based) outsourcing
makes managing supply chain more involved manage moving parts coming
from different countries
Inventory management timing and flow of goods liquidity and finance
- Controlling
o Routing and scheduling
How are we getting things to different locations
How are we sending this out
o Quality and cost control
Variable and fixed costs break even
Quality people expect a specific level of quality
E.g. Harley-Davidson productivity-quality connection
They became caught up is high production thinking it created better
productivity
Customers started to not like the quality
Increased foreign competitors Harley Davidson was near bankruptcy
Changed views and became successful again look in text book for
further details
Improving
Application of technology
- Trends

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Service vs. Manufacturing
- Both transform sometime of raw material into a finished good
- More obvious in a manufacturer
- In services the raw material is people requires care
o Someone with an unsatisfied need
o Performed not produced
o You have to experience
o Sometime of contact with the customer
o Focus on the process the entire experience not just the end product e.g. not just about
your finished hair style, it’s how you were treated, and service throughout your hair cut
3 main differences
- Intangible you can’t touch it – making your experience with the service is very important
o Customized to the individual
o Service can’t be stored
- Customer is part of process
o Extent of contact affects operations affects your operations
o E.g. taxes you drop your information off and he does them for you vs. your hair dresser
- Impacts capacity
o Integration of marketing (reaching your customers) and operations (target market
Demand//Capacity (how much you can produce) trade off
Your capacity can affect demand
Demand helps determine capacity
Can affect each other both ways
- Manufacture
o Set capacity slightly ahead of demand
Expensive to add inventory in small amount better to produce a little bit more
// sit idle you don’t want to have too much inventory sitting because that
money could be used in other places
In short term turn away customers or outsource at lower margins
o Seasonality shift demand and capacity
To try to offset that you try to shift demand and capacity through pricing
You could offer discounts on golf sets in the winter, etc.
- Service
o Low contact set capacity to average demand
It may take longer to process but they can normally do it
E.g. tax accountant
o High Contact set capacity at peak demand (restaurant, hair dresser, baby sitter, etc.)
Dinner, - e.g. having enough waiters for dinner time (may have extras during the
day but that’s the give and take)
Make sure you have enough to serve all customers at your peak hours
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