Setting operational objectives

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Define operations management
The process that uses the resources of an organisation to provide the right goods and services for the customer.
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Define operational objectives
Specific, focused targets of the operations management function within an organisation.
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Define unit cost and the equation
The cost of producing one unit of product. Unit Costs = Total Costs / Units of Output
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Reasons for implementing operational objectives?
Set a focus for decision making and effort, provide a yardstick against which success and failure can be measured, improve coordination by setting a common purpose and to improve efficiency by examining the reasons for success or failure.
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State some key operational objectives.
Costs, Quality, Speed of response, Dependability, Efficiency&flexibility, Environmental and Added Value.
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Define costs as an operational objective
Need to make sure operations are cost-effective and its measured through unit costs. Costs vary in terms of productivity, efficiency and scale of production. Businesses want to reduce unit costs, FC and VC.
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Define quality as an operational objective
The better the quality the better the competitive edge a business has over another. Better quality means increases in sales volume which means there will be repeated purchases&they can charge a higher price. Measured through waste, reliability etc.
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Define efficiency and flexibility as operational objectives
Product F=switching production from one product to another. Volume F= changing the level of output of a product in accordance to customer demand. Mix F= Providing a wide range of alternative versions. Delivery F= adapting to quick changes in the time
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Define speed of response as an operational objective
Time taken for a customer requirement to be fulfilled. Measured by the different in time between a customer requesting a good&the time taken for them to receive it. Quick response means high customer loyalty&satisfaction.
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Define dependability as an operational objective
Measures whether a business is on time in providing for its customers needs. For services=the consistency of quality or the punctuality. For products= whether its durable, long lasting and unlikely to break.
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Define environmental objectives within operations
Businesses have the duty of care for the environment. A business can attract more customers&workers if they have a positive attitude towards improving the environment. EG- Recycling can help a business save costs.
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Define added value as an operational objective
Process of increasing the worth of resources by modifying them. When value is added to inputs to create outputs. EG- Increasing labour intensive production for flexibility or offering an addition services (farmers offer holiday accommodations).
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Internal influences on operational objectives
Corporate objectives, finance, HR, resources available and the nature of the product.
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External influences on operational objectives
Market factors, technological change, suppliers, legal factors, political factors, environmental factors, economic factors, competitors actions and performance.
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Benefits of adding value
Can sell for a higher price, create a point of difference with competitors, protection against competitors offering lower prices and focuses business on its target market segment.
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Drawbacks of adding value
Higher costs, and can create friction (e.g. unhappy stakeholders due to change).
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Other cards in this set

Card 2

Front

Define operational objectives

Back

Specific, focused targets of the operations management function within an organisation.

Card 3

Front

Define unit cost and the equation

Back

Preview of the front of card 3

Card 4

Front

Reasons for implementing operational objectives?

Back

Preview of the front of card 4

Card 5

Front

State some key operational objectives.

Back

Preview of the front of card 5
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