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5.1 The role of operations management 2014 syllabus

Material gleaned from the Stimpson and Smith Cambridge BM 2015 text and the OUP 2014 BM Course Companion
by

Deborah Kelly

on 12 June 2017

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Transcript of 5.1 The role of operations management 2014 syllabus

5.1 The role of operations management
operations management and its relationship with other business functions
operations management in organizations producing goods and services
operations management strategies and practices for ecological, social and economic sustainability.

Key Concept - strategies focused on sustainability in the use of resources
BMW - DRIVING ULTIMATELY SUSTAINABLE MACHINES


Sean Noonan is BMW's vice president. He considers that sustainability is entrenched in BMW's corporate strategy and culture.
Sustainability - promotes inter-generational equity, ie production enables consumption of goods and services for the people of today without compromising consumption for future generations.
BMW has a top down philosophy in which the goals set are not just
environmental
but also
economic
and
social
. "We have a Sustainability Board, which is composed of the BMW AG Board of Management which agrees our sustainability strategy. The individual business decisions are responsible for the implementation of the strategy to realize the objectives and ensure sustainability is implemented throughout our value-added chain and supplier chain. The company employees are directly involved." For us, feedback is extremely positive," Noonan said. For example, production line associates are helping to reduce waste-to-landfill to zero by sorting waste. "Such actions empower and educate the associates."

BMW does what is can to help associates (as employees are called) perform their work in a comfortable setting. "The Spartanburg, South Carolina, plant has always had a cooling system since it gets pretty hot in the summer, Noonan said. "We recognized early on that our associates need to be comfortable while they work, and we installed air conditioning on the plant floor to make their jobs easier."
BMW's business impacts on the environment, its customers and the society as a whole. "Our business does have an impact - from a sustainability and environmental standpoint, we are a manufacturing facility using resources, and it is very important to BMW to minimize that impact, Noonan said. 'We need to ensure all associates are aware of our responsibility for sustainability in our production.'

BMW continues to invest heavily in hybrid and electric vehicles, specifically the upcoming i3 and i8 models, which are part of the BMW i sub-brand within BMW. The i3, for example, is being specifically manufactured for use in big cities and the i8 elsewhere.
Source: www.sustainable planet.com
Points to consider:

Give examples of the resources BMW needs to manufacture vehicles.
Why do you think "sustainability" is given such high importance within the BMW group?
Is it possible for car manufacturing ever to be truly sustainable?
INTRODUCTION: THE NATURE OF OPERATIONS
Operations management used to be known simply as "production management". This may still be appropriate in secondary-sector industries producing goods from factories, however, the name switch allows all businesses whether in primary, secondary or tertiary production to be analyzed when considering "the management of operations.

Operations management is concerned with the use of resources called inputs - land, labour and capital - to provide outputs in the form of goods and services. In doing this, operations managers must be concerned with:

efficiency of production
- keeping costs as low as possible will help to give competitive advantage

quality
- the good or service must be suitable for the purpose intended

flexibility and innovation
- the need to develop and adapt to new processes and new products is increasingly important in today's dynamic business environment
Operations managers are aiming to produce goods and services of the required quality, in the required quantity, at the time needed, in the most cost-effective way.
RELATIONSHIPS BETWEEN OPERATIONS AND OTHER BUSINESS FUNCTIONS
Operations management decisions can never be taken in isolation to the rest of the business. Coordination between business functions is essential if obvious problems are to be avoided.

Operations managers need to ensure that the appropriate quantity of the good or service is made available so that the
marketing departmen
t may successfully sell it profitably.

Operations managers need to work closely with the
human resources department
so that the appropriate numbers of suitably qualified workers are employed.

Operations decision, such as expanding capacity, often require funding - frequent liaison with the
finance department
is essential.
OPERATIONS MANAGEMENT: THE PRODUCTION PROCESS
In all businesses at all stages of production, the production process is basically the same. "Inputs" are converted or transformed into "outputs". This is sometimes called the transformation process. This process applies to both manufacturing and service industries. Production means the making of tangible goods, such as computers and the provision of intangible goods, such as banking.

The aim in all cases is to "add value" to the inputs that are brought in by the business so that the resulting output can be sold at a profit.
The degree of value added to the inputs will depend on a number of factors - not all of them operations management issues.

the design of the product or the nature of the service.
the efficiency with which the input resources are combined and managed.
Being able to convince consumers to pay for for the good or service than the cost of the inputs.
RESOURCES
All business operations require resources - these are the production inputs.

Land - all business need somewhere to operate from, even if it is the home office of a sole trader operating an internet-based website design service. Some businesses require large sites for the extraction of minerals or the manufacture of finished products.

Labour - all business activity require some labour input. This can be the manual labour of a gardener or the mental skills of a research scientist.

Capital - this refers to the tools, machinery, computers and other equipment that businesses use to produce the goods and services they sell. Capital can also mane the amount the owners have to invest to set it up.
ECOLOGICAL, SOCIAL AND ECONOMIC SUSTAINABILITY - THE ROLE OF OPERATIONS MANAGEMENT
"Planet, people, profit - this is the commonly held view that businesses have a wider role in the local, national and global communities than just "making money". It is also known as the
triple bottom line
- suggesting that businesses performance should be assessed not just in terms of profit but also by measuring the impact on the environment and society.

Some businesses (social enterprise) are set up with the specific aim of achieving the triple bottom line. However, other businesses - large multinationals to small local businesses - are becoming increasingly focused on satisfying environmental and social goals as well as financial ones.
Ecological sustainability:

Operations management can achieve greater ecological sustainability by:

reducing waste at all levels of the organization
using less energy and sourcing energy from renewable sources where possible
reducing water use and recycling water
reducing the use of non-renewable resources in production
designing products that use recycled materials or allow materials to be recycled at the end of useful life
designing products that use less harmful energy sources
Social sustainability
- operations management can achieve greater social sustainability by:

designing production systems that are safe and healthy for employees
designing work and workplaces to allow for social interaction
creating jobs in low-income or deprived areas - this may mean relocation of operations facilities
reducing the negative impact of production on communities - eg cutting harmful pollution.
Economic sustainability - operations management can achieve greater economic sustainability by:

managing and maintaining operational assets - equipment, machinery and buildings - so that they have extended lifespans and do not need to be replaced through damage or unnecessary wear and tear.
increasing the efficiency of the production processes to improve business competitiveness
researching and developing products and processes that create customer interest and create value.
The common theme with ecological, social and economic is the
long term
. Sustainability means undertaking activities today that do not damage the ability of future generations to undertake the same activities.
Economic sustainability


the need to use available resources and raw materials to their best advantage, ultimately ensuring profitability and financial performance.
Ecological sustainability -

the need to take ecological factors into account when making business decisions (especially about nature and ecosystems).

"Without efficient operations, leading to products and services that customers are satisfied with, success in other business functions is not possible."
Social sustainability
-

the need to take human factors into account, both internally (eg workers) and externally (eg local community), when making business decisions.
Triple bottom line
-

the need to take economic, social and ecological factors into account when making business decisions.

Triple bottom line - organizations have a responsibility to people, planet and profit. In operations management given the scarcity of resources and the need for environmental sustainability organizations need to ensure that in addition to profit, they consider the "wider "picture of their economic activity.
TOK
-
Are good working conditions universally the same all over the world, or could they vary by country or culture?
BE A THINKER ....

1. How can you link "sustainability: and the "triple bottom line" to notions that you have studied in unit 1, such as corporate social responsibility (CSR) and social enterprise?

2. Consider one organization that you have studied. How important is "triple bottom line" in the decisions made by senior managers? Why?

3. Can you think of examples of situations of conflict between different types of sustainability (economic, social and ecological)?
DO:

The Casa Blanca Eco-lodge case study is an example of one small business and its strategies and practices for economic, social and ecological sustainability.

The Topcas Ecolodge.
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