TOPIC 4THE OPERATIONS MANAGEMENT FUNCTION

LESSON 2

OUTPUTS

The finished product or service from the process of production.

Offered for sale in a market.

Output quality depends on the input quality and what happens in the transformation process.

Operations Systems

Inputs Processes Outputs

FarmerMachinery

Storage BinsPlanting

Pest sprayingFertilisingHarvesting

Wheat for export

Operations System

Billabong Clothing – sold in Japan Sunami + Earthquake = no sales

Wholesale distribution affected and pacific sales

Operations Manager

Handles the decisions made in the everyday operation of the organisation.

Works with the people, machinery, information and materials that they have.

Looks at the corporations goals and objectives and follows the plans.

Billabong – where to now?

Life after the disaster in Japan. A rebuilding phase for the company. Look to countries that have less

natural disasters for a place to build new wholesale outlets?

Manufacturing and Service Organisations.

Most organisations offer a good or a service.

Corporations are classified like this and accounting systems are based on this breakdown.

Manufacturing or Trading

Tangible output Sold in a market as a good either by a

retailer or a wholesaler. Can be a material that is later value

added. May become a material that becomes

part of the production process.

Service

Outputs that are not visible. Operations process is not as

recognisable as the manufacturing of goods.

Lawyer Accountant Fortune teller!

Trades and Services

Offer both Goods and Services

Peter Stevens Motorcycles – Melb

Offers sales and service.

Has ‘demo ride days’ where potential customers can ride 3 new bikes of their choice. May 2010 - Demo day Melbourne and the new

Honda 1300 Chopper – nice!

Trades and Services

http://www.peterstevens.com.au/

http://www.subaru.com.au/

http://www.ford.com.au/servlet/Satellite?pagename=DFY/AU

Service Organisation

Intangible Outputs High customer contact Outputs may be consumed at the

point of sale. Outputs can be customised Productivity measured in a different

way than goods.

Service Organisation

Peter Stevens

Motorcycles

Sells new motorcycles.

Services them.

Customer surveys provide feedback on satisfaction of the good and the service.

Service Organisation

Australia is basically a service organisation orientated country.

We have some primary industries and mining but………..

The majority of people are employed in service organisations.

Operations Managers at Work

Oversees the transformation of inputs into outputs.

Involves decision making. Involves some planning Involves the implementation of

strategies.

Operations Managers at Work

Optimise resource allocation, increase productivity and achieve quality.

PRODUCTIVITY = Production per worker per hour

Operations Managers at Work

Plan, Organise, Lead and Control.

Crucial management functions for the operations manager who is

On the Ground Running!

At the Coalface!

Operations Managers at Work

PLANNING Operations managers have a unique

insight into the organisation and may be involved in all levels of planning.

Essential to strategic management process due to their ability to observe and reflect on the business.

Involved in the design of operations.

Operations Managers at Work

PLANNING

Rip Curl – Made by surfers for surfers.

- Designed by surfers

- Tested and used by surfers

http://www.ripcurl.com.au The people who ran the company were –

and still are – the test pilots. There can be no more direct line of communication...

Rip Curl Pty Ltd

Operations Managers at Work

Organising, Leading and Controlling Allocate human resources Oversee storage of materials Check on finished products and stock.

Operations Managers at Work

Organising, Leading and Controlling Motivate employees Monitor productivity Control the operating system

Billabong

http://www.billabong.com/

Billabong BBG (asx code)

Share price 1 Nov 2010 A$8-25

Share price today A$6-66

11 May 2011

Billabong has lost 25% of its capital due to the events outlined in the announcement.

Operations Manager at Work

SKILLS Competent in the skills we have

studied. Good communicator Time manager Delegator Negotiator

Operations manager at Work

SKILLS Team leader Able to manage stress Problem solver Ethical and with socially responsible

attitudes. Can make decisions!

Operations manager at work

Role Determined by the organisations

structure. Eg top down approach sees a direct

line of authority Functional model led by department

Operations Managers at Work

The relationship between operations, productivity and business competiveness.

Close and direct relationship Efficient operations = high productivity A key to global competitiveness Billabong – where to now????

Operations manager at Work

Productivity Can be expressed as a ratio Investors look at this to establish a

firm’s competitiveness and ultimate value as a share investment.

Taken from Annual Return document.

Productivity ratio

Outputs produced in comparison with inputs used X 100/1

= outputs / inputs

Iluka productivity = zircon / costs

Productivity

http://www.icongrouponline.com/pr/Iluka_Resources_Limited_AU/PR.html

Benchmarks are used against other companies when we can establish productivity measures.