ben andersen mba, engadine high school teaching busi… · the plan • cover sections of the...
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Operations Management
EBE NSW Professional Development Event – “Teaching the HSC Course (Year 12) in Business Studies for the First
Time?” held on 14 September 2017
Ben Andersen MBA, Engadine High School
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The Plan
• Cover sections of the course
• Make links to other functions (M), (F) and (H)
• Provide hyperlinked examples and case studies
• Ask questions at any stage!
• Access this presentation afterwards, with hyperlinks to articles / videos / podcasts to use with your students
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Operations Management - Role • Making products / delivering services
• Coordinating resources, process-orientation
• Core act of the business
• Major cost centre (F) - inputs, labour, processing, inventory, QM costs…
• Seeking innovation (M) and efficiency (F)
• Ever-evolving, continual adaptation and investment (F)
• Model under threat from continual improvement / change
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Cost Leadership
• Refining and squeezing all costs from an existing model in order to:
• Compete on price (M), undercut competitors and capture market share and growth (M) (F)
• Maximise profit margins, keep price same and target costs (F)
• Systems-focused (O) (F)
• ALDI – enormous growth, streamlined model, dedication to customer
• Here, here and here for ALDI articles
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Product Differentiation
• Dedication to continual advancement in product offering (M)
• Competitive advantage through:
• Innovation and new products (first-mover)
• Premium positioning - margins high (M) (F)
• R&D (F) / human-focused (H)
• Google (Alphabet) – Core business plus range of ‘projects’ (bets on the future)
• Here and here for Google links
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Most companies pursue BOTH
• Few firms have a single focus upon ONE
• Most aim to simultaneously:
• Target costs and improve synergies AND
• Innovate and differentiate
• This is very hard to do – consolidation and disruption at the same time!
• Domino’s – new menu (M), higher positioning (M) (F) and new systems / technologies to cuts costs (O) (F)
• Domino’s articles here and here.
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Interdependence
• Indicated throughout presentation with (O), (M), (H) and (F)
• Brief mention and overview at start, but continual weaving throughout topic
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Influences on Operations
• Factors that force firms to alter their operational systems and processes
• External influences - beyond control of firm
• Firms relentlessly and ruthlessly seek competitive advantage over rivals (M)
• Change is imperative (M), hard to manage (H), expensive (F) and risky
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Influences on Operations
• What students need to know:
• Memorise and identify influences
• Definition of each influence
• How each might be impacting specific businesses
• Evaluate impact
• Then, perhaps, recommend strategies to counteract the influence…
• Know difference between legal compliance and ethical responsibility…
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Influences on Operations
• Globalisation –
• Amazon, Fast Fashion, Containerisation.
• Technology –
• Uber Vs Cabcharge, Tesla Vs Carmakers, Purplebricks Vs Estate agents
• Quality expectations –
• Woolworths culls Homebrand
• Cost-based Competition –
• Amazon Vs Retailers, ALDI Vs duopoly
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Influences on Operations
• Government policies –
• Clean Energy Target, Intervention in gas market, Trump
• Legal regulation –
• Lock-out laws in Sydney, WHS
• Sustainability –
• Managing climate risk, Qantas
• CSR –
• K-mart’s supply chain, K-Mart policy
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Operations Process
• The systematic process through which various resources are combined and utilised to produce output
• Every business (even direct rivals) have differences in process
• HUGE difference between goods manufacturing and service provision
• Capital intensive (good)
• Labour intensive (service)
• Inputs – Transformational Process - Output
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Operations Process
• What students need to know:
• Memorise and use key terminology
• Relationship between variables
• Apply 4 Vs to a variety of businesses
• Key differences between a service process and manufacturing process – inputs, tech, tasks, layout
• How to interpret CPA sequencing / scheduling tools
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Inputs
• Transformed – undergo change (F) (O)
• Transforming – performs that change (F) (H)
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Transformational Process
• 4Vs
• Volume – how much?
• Variety – level of customisation and complexity?
• Variation in demand – seasonal?
• Visibility – customer presence?
• Technology, task design, layout
• Critical Path Analysis (CPA)
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Transformational Process
• Volume / variety trade-off • Usually inversely proportional
• High volume = low level customisation
• High level customisation = low volume
• Impacts technology required, layout utilised and task design of human resources
• More complexity slows things down… but can offer more value (M) (F)
• Mass-customisation is a possibility; listen here.
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Operations Process
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Operations Process
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Operations Process
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Operations Process
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Transformational Process
• Consider the retail operations of the local branch of the Commonwealth Bank…
• Range of output / services provided - ?
• Inputs - ?
• Layout - ?
• Technologies - ?
• 4 Vs - ?
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Transformational Process
• Critical Path Analysis (CPA) identifies the sequence of activities upon which, if there are delays in an individual activity on the path, it delays the entire project.
• Other paths have ‘slack’ – there can be delays without affecting overall project delivery
• 0-1-8 = 35 days
• 0-2-5-6-7-8 = 83 days
• 0-3-5-6-7-8 = 78 days
• 0-4-5-6-7-8 = 73 days
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Transformational Process
• National Geographic Megafactories Series ONE
• Search YouTube for ‘How stuff is made’ … millions of cool vids
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Monitoring and Controlling
• Linear process – unlike other circular processes
• Identify problems and apply interventions along the sequence to improve process efficiency / performance / remove bottlenecks
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Operations Strategies
• Proactive interventions made to operational processes to improve firm performance and efficiency
• What students need to know:
• Memorise and define each strategy
• Use terminology relevant to each strategy
• Apply strategies to a range of case studies
• Evaluate strategies in a range of contexts
• Draw implications from the application of operations strategies on other key functions (high order)
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Operations Strategies
• Performance objectives
• Measure KPIs to determine weaknesses / opportunities to make efficiency gains (F)
• Set targets / performance benchmarks (H)
• Must be relevant to firm
• McDonald’s increasing drive-thru speed
• Qantas reducing costs
• Microsoft Surface fail on reliability
• Centrelink dependability fail
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Operations Strategies
• New Product Design
• Operational tinkering through R&D
• Adaptations / innovations to drive sales and profitability (M) (F)
• Dedicated team of researchers (H)
• Risky if failure to gain traction
• 3M culture of innovation
• Google’s Nest
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Operations Strategies
• Supply Chain Management
• Relationships between upstream and downstream firms
• Logistics / administration / reliability / lead times / quality
• Cost of Goods Sold (F) and Accounts Payable (F)
• Global sourcing and ethics
• Oz retailers shamed for low transparency of SCM
• Vertical integration
• Apple’s epic supply chain
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Operations Strategies
• Outsourcing
• Non-core functions to specialist firms
• Cost advantages (F) and higher quality (O) (M)
• Loss of IP control – redundancies / retraining (H)
• Global outsourcing – currency risk (F)
• Gone too far?
• Boeing’s difficulties
• Outsourcing victories
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Operations Strategies
• Technology • Utilise new technology to drive down costs (F) and gain
competitive advantage (M)
• Leading edge (first mover)
• Source of finance / Leasing (F)
• Speed, quality, reliability of output (M)
• Redundancies (H)
• Aurizon – driverless trains
• Fortescue – technology productivity gains
• Impact of automation – article and video
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Operations Strategies
• Inventory Management • Acquisition and storage of stock
• Both ends of production (input and output)
• Various sub-strategies to apply in different contexts
• Liquidity and Working Capital Management (F)
• Costs of holding stock (F)
• Dick Smith’s woes
• Toyota and JIT
• Disadvantages of JIT
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Operations Strategies
• Quality Management
• Methods to ensure output dependability
• Reduction in defects (F) (M)
• Lower unit costs of production (F) (M)
• TQM – employee involvement (H)
• Victorinox Swiss Army Knife
• Tesla ensuring quality
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Operations Strategies
• Resistance to change
• Not really a strategy in and of itself
• All operations strategies DO require change
• Best to consider ways to introduce that change to minimise negative impact on firm (H)
• Toyota’s retrenched workers still love the company…
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Ideas, assessment and tools • Use ‘Lotto’ PPT to prompt students to
consider differences between operations in a variety of businesses..
• Assessment tasks: • Comparison research report between secondary
and tertiary operations
• Global operations research report on business of students’ choosing
• Use previous HSC style questions to create your own weekly short response session..
• Use these study note templates for students to ensure they have information for the whole course.
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