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HSC Business Studies: Operations

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john lund

on 8 October 2015

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Transcript of HSC Business Studies: Operations

Role of operation management
Influences on operation management
Operations processes
Operations strategies
Operations management is:

concerned with planning, scheduling and controlling the business inputs that are transformed into finished goods and services.

is about managing quality

is concerned with meeting customer needs
The strategic role of operations management
The strategic role of management is to allocate resources in such a way that it helps to achieve the business's goals in a dynamic and often turbulent environment.

There are two key strategies concerned with improving the competitive position of the business:

cost leadership
good / service differentiation
Increasingly the distinction between a good and service is becoming blurred as many goods have an element of service as well. It may be better to think of 'products'.
Role of operations management
is the process that is leading to the development of a single world market.
quality expectations
cost based competition
government policies
legal regulation
environmental sustainability
corporate social responsibility
is the knowledge of how things are done.
Quality expectations:
quality can be defined as meeting, or exceeding, a certain standard or customer's expectations.
Its most significant influence is on businesses that fail to adopt new technologies when competitors do.
It enables a business to source its inputs of component parts, finance, raw materials and labour from a global market and at the same time sell the finished product or service in a global market.
It is expected that businesses will produce products with a high level of quality, and there is increasing emphasis on customisation.
Cost based competition
is a strategy concerned with
driving down the costs of warehousing and transportation, and spreading overhead costs.
A low cost strategy is about providing customers with the best possible value for their money.
Government policies
impacting on business operations include regulation, subsidies and grants, taxes and tariffs that encourage or discourage aspects of operations.
Government policy can be a very important influence on affected businesses.
Legal regulations
are laws that regulate the the potentially dangerous use of machinery in a work environment.
Most responsible businesses will go beyond legal requirements by developing a culture of safety.
Environmental sustainability
is concerned with reducing the impact of products and operations practices on the environment.
Businesses are increasingly aware of the impact of green credentials on consumer choice.
Corporate social responsibility
refers to the relationship between business and the broad society and the way this relationship is perceived and managed.
Today the community has strong expectations about CSR and CSR can be utilised as a marketing tool. It involves businesses impacting in a positive way on communities and environments.
program of installing solar power to makes their stores self sufficent in energy needs is an example of a environmental response.

According to Walmart, the company’s long-term goals include reducing its greenhouse gases at its facilities around the world by 20 percent by the end of this year. As of April, 2012, 100 of its USA stores had become self sufficient in energy production.

Walmart is
an American
multinational retailer
the world's
largest public corporation
the biggest private employer in the world with
2m employees
largest retailer
in the world
controlled by the
Walton family
who own a 48% stake
Sam's Clubs
, membership only bulk stores
Effect on communities:

as Walmart grew rapidly into the world's largest corporation, many critics worried about the effect of its stores on local communities, particularly small towns with many "mom and pop" stores
academic studies show inconsistent economic impacts on local businesses; there are probably both positive and negative impacts on existing stores in the area where the new supercenter locates, but Walmart probably means existing businesses need to adapt to change rapidly
Sam's Club
2004 ........Walmart becomes aware of its
poor public relations
due to environmental factors, local community factors and human resources factors
2005 ........Walmart attacks image problems with:
less inventory, fewer brands, less clutter
wider aisles, lighting, colour schemes
new staff uniform
emphasis on store safety, cleanliness
environmental initiatives

Environmental initiatives
included spending $500 million a year to:
increase fuel efficiency in Walmart's truck fleet by 25% over three years and double it within ten
reduce greenhouse gas emissions by 20% in seven years
reduce energy use at stores by 30%
cut solid waste from U.S. stores and Sam's Clubs by 25% in three years
despite much criticism of its environmental record, Walmart took a few steps in what is viewed as a positive direction, which included becoming
the biggest seller of organic milk and the biggest buyer of organic cotton
in the world, as well as reducing packaging and energy costs
Walmart also spent nearly a year working with outside consultants to discover the company's total environmental impact and find where they could improve
they discovered, for example, that by
eliminating excess packaging
on their toy line Kid Connection, they could not only save $2.4 million a year in shipping costs but also 3,800 trees and a million barrels of oil
Walmart has also recently created its
own electric company in Texas, Texas Retail Energy,
and plans to supply its stores with cheap power purchased at wholesale prices. Through this new venture, the company expects to save $15 million annually and also lays the groundwork and infrastructure to sell electricity to Texas consumers in the future
In March 2006, Walmart sought to
appeal to a more affluent demographic
as the company launched a new
Supercenter concept
in Plano, Texas, intended to compete against stores seen as more upscale and appealing, such as Target
The new store has wood floors, wider aisles, a sushi bar, a coffee/sandwich shop with free Wi-Fi Internet access, and more expensive beers, wines, electronics, and other goods
On September 12, 2007, Walmart introduced new advertising with the slogan,
"Save Money Live Better"
Disaster relief (CSR):
in the aftermath of Hurricane Katrina in September 2005, Walmart was able to use its logistical efficiency in organizing a rapid response to the disaster, donating $20 million in cash, 1,500 truckloads of free merchandise, food for 100,000 meals, as well as the promise of a job for every one of its displaced workers
Human resources:
more than 50% of 'associates' (employees) leave within a year
Walmart has kept unions out of its 'family'
Employee Free Choice Act has not been passed
the average wage of Walmart kept a family of 4 below the poverty line
typically US $8-12 per hr
the 'Walmart cheer'
Walmart claim that if wages rise so do their prices
claim their ideal worker is extroverted and loves customers
Cost based competition
New store location is based on:
driving distance
risks and hurdles
Critics say Walmart divides communities, jobs are lost in the main street, and that local stores but back more into the community.
Other say Walmart can revive a community bring 250 jobs.
Universal sustainability index:
Walmart uses a rating system for reducing waste and increasing efficiency in its suppliers to minimise environmental impact
suppliers to Walmart have to comply or they loose the Walmart contract
Walmart China
284 stores which aim more upmarket than the USA
a contentious issue is the audit / inspection of Chinese supplier factories
Walmart has store operations in 15 countries including USA, Mexico, Canada, Brazil, Argentina, China, UK, Japan, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Chile, India.
Of 8,455 stores 4,364 are located in the USA.
Australia's minimum adult wage is $15.51 per hour or $589.30 per week. Generally, employees in the national system shouldn't get less than this.
Emirates catering
Cost based competition strategy:
focus of management has been to drive down costs and sell products at prices competing businesses were unable to match
years ago Walmart insisted that all suppliers use barcodes and this reduced Walmarts staffing needs and thus costs
Case studies
Influences on operations management
Operations processes
What are the two key strategies for improving the
competitive position
of a business?
Why has the distinction between a
good and a service
become blurred?
What is
in the business sense?
What is
operations management
What is the
strategic role
of operations management?
What are the usual six
of a business?
What are the eight
key influences
on operations?
cost based competition
with reference to
environmental responsibility
with regard to
Name two
government policies
that impact on business operations within Australia.
What is understood by
legal regulations
with regard to operations influences? Provide examples of this.
What does
stand for?
Why is it an increasingly important influence?
What do you know about
Walmart's human resources

transformed resources
(customers, information, materials)
these resources change in appearance, condition or form of the above)
transforming resources
(human resources, facilities)
these resources listed above do the transforming rather than change themselves
Transformed resources:
many businesses are concerned with changing a customer's appearance, physiological or psychological condition or physical location
Transformed resources:
many businesses transform information
Transformed resources:
many businesses transform materials
The Uniqlo FAST RETAILING Group Mission

To create truly great clothing with new and unique value, and to enable people all over the world to experience the joy, happiness and satisfaction of wearing such great clothes
To enrich people’s lives through our unique corporate activities, and to seek to grow and develop our company in unity with society

Our Values

Approaching issues from the customer perspective
Embracing innovation & challenge
Respecting and supporting individuals to foster both corporate and personal growth
Committing to ethical standards and correctness

Our Principles

We will:
Do everything possible for our customers
Pursue excellence and aim for the highest possible level of achievement
Achieve strong results through the promotion of diversity and teamwork
Move speedily and decisively in everything we do
Conduct business in a very real way based on the current marketplace, products and facts
Act as global citizens with ethics and integrity
Uniqlo is Japan's leading clothing retail chain in terms of both sales and profits.
The company also operates in China, France, Hong Kong, Malaysia, Russia, Singapore, South Korea, Taiwan, Thailand, the United Kingdom and the United States.
1997: "SPA" strategy
In 1997, they adopted a set of strategies from American retailing giant The Gap, known as
Speciality retailer

), meaning that they would produce their own clothing and sell it exclusively.
Uniqlo had begun outsourcing their clothing manufacturing to factories in China where labour was cheap, a well-established corporate practice.
Japan was in the depths of a recession at the time, and the low-cost, high-quality goods proved popular. Their advertising campaigns also proved fruitful.
Transformation processes
the influence of volume
the influence of variety
the influence of variation
the influence of visability
Sequencing and scheduling

Gantt charts and critical path analysis
Technology, task design and process layout
the machines and equipment that actually create or deliver the product are called
process technology
involved is
computer technology
(including information technology...the collection, storage, manipulation and distribution of information),
laser measuring systems
Task design:
this is the way the overall transformation process is broken down into manageable activities
Process layout:
this refers to the physical location of the transformation resources
Eg. of student research: p57
Computer-Aided Design (CAD)

CAD is the use of computer systems/software to assist in the creation, modification, analysis, or optimisation of a design. CAD software increases the productivity of the designer and improve the quality of the design.

Computer-Aided Manufacturing (CAM)

CAM is the use of computer software to control machine tools and related machinery in the manufacturing of workpieces.
CAM may also refer to the use of a computer to
assist in all operations of a manufacturing plant
, including planning, management, transportation and storage.
Its primary purpose is to create a
faster production process
and components and tooling with more precise dimentions and material consistency, which in some cases, uses only the required amount of raw material (thus minimizing waste), while simultaneously reducing energy consumption

Flexible Manufacturing System (FMS)

A flexible manufacturing system (FMS) is a manufacturing system in which there is some amount of flexibility that allows the system to react in the case of changes, whether predicted or unpredicted. This flexibility is generally considered to fall into two categories, which both contain numerous subcategories.
The main advantages of an FMS is its high flexibility in managing manufacturing resources like time and effort in order to manufacture a new product. The best application of an FMS is found in the production of small sets of products like those from a mass production.

Robotics is the branch of technology that deals with the design:
Manufacture and application of robots
Computer systems for their control
Information processing.

These technologies deal with automated machines that can take the place of humans, in hazardous or manufacturing processes, or simply just resemble humans. Many of today's robots are inspired by nature contributing to the field of bio-inspired robotics..
Monitoring, control and improvement:
plans need to be
, to ensure that what is actually happening is as was planned
is concerned with making the adjustments when things go wrong, it may mean that plans have to be worked out again
continuous improvement
is the continuous search for small incremental steps to improve the operations process
Process technologies
customer service
- What are the relative transportation cost?
- What are the relative labour costs and availability of skilled labour?
- Available land and building costs?
- What government incentives are there?
The Environment:
- How sustainable do we want the business to be?
- How to save energy?
- How to create energy for the plant?
Technology vs hand-built
- What aspects customers would appreciate hand-built?
- Where would robotics improve WHS issues?
- What degree of skills are required for employees?
- How do we improve employee morale and productivity through task design and work environment?
- Who will supply robotics?
- Who will provide our computer software (CAM and CAD)?
- What new technology can assist us?
- How much variation in demand for the product can we expect?
- How do we build flexibility in the plant?
Work Environment:
- What is the construction time frame?
- To what extent can factory design be a marketing tool?
- Can the plant build the brand and customer connection?
- Do we want customers to visit the factory?
Customer service
refers to the interactions between customers and the product or service provider. These interactions vary from eye contact to resolving problems and may be the competitive advantage a business requires
Customer relationship management
is all about understanding customer needs and working out ways to meet those needs.
are a contractual agreement between the manufacturer and the customer and they are an important part of post-sale considerations, they are a marketing tool but help protect both the consumer and the manufacturer
Operations strategies
Performance objectives:
....does the product / service conform to what the customer expects?
....has the product / service been delivered efficently?
....is the product / service reliable?
....will the product / service meet the unique needs of the customer?
....is the product being produced as cheaply as possible?
New product or service design and development:
if a manager of a business fails to improve constantly the product or service in a competitive market, it will invariably lead to a loss of customers as competing businesses improve their products
find out what is needed for total satisfaction
constantly monitor competitors
work with designers
manufacture the product or deliver the sevice efficently
'minimise the production cost
work with the design team so there are no surprises
task of providing the needed funds
finance will be needed for training, new equipment, research and development
There is a team design approach to the development of new product or service design.
Design process:
concept generation...
concept screening...
preliminary design...
evaluation and improvements...
prototyping and final design
What are the three types of
transformed resources
Explain how
can be transformed?
Name two
that can be used for
of tasks?
Explain the influence or
in the transformation process.
Explain the
terminology used in terms of technology
in operations.
What are the key customer considerations for the
Rolls Royce Trent engines?
How is BMW trying to meet customer expectations
with the new BMW 5 Series Gran Turismo?
Supply chain management:
Businesses must manage their supply chain if they are to be competitive
increasingly, global sourcing of inputs is a reality, so
are strategies for business success
logistics management
is concerned with all the business activities that acquire the materials, moving and storing them
global sourcing
is where products are acquired outside the home country, often from low wage countries such as China, Bangladesh and Thailand
in recent years
has facilitated business to business
Rolls-Royce gears up for Singapore production

By Saira Syed, Business reporter, BBC. Feb 2012
When engine start rolling off the production line in a few months' time, it will take 14 days to put one together from start to finish. Such productivity levels - which the company insists are on par with the quintessential British manufacturer's main UK facility in Derby that also makes the Trent 900 engine - were central to Rolls-Royce's decision to start manufacturing here.
Trainees are being taught specialised skills "The decision to invest in Singapore is about growth," says Jonathan Asherson, director for South East Asia at Rolls-Royce's aerospace arm. "We are going to deliver double the amount of engines by the end of this decade than we do now. "To cater for that growth we need to invest, and the investments we make need to be near our customers, and in this case to the highest-growing region for us.

Almost half of Rolls-Royce's new orders for aircraft engines last year came from airlines in this region. And the company expects orders from Asia to keep rolling in consistently for the foreseeable future. The facility in Singapore, worth US$562m, is not only Rolls-Royce's first such capital investment on this scale in Asia, it is also the only one outside the UK. Once fully operational, it will assemble and test about 250 engines a year. In seven or eight years, it is expected to be producing about half of Rolls-Royce's global output.

The decision to choose Singapore as a regional manufacturing hub was made easy by a few factors. For one, major government support came in the form of tax incentives, as well as training and innovation grants. Rolls-Royce has had a presence in Singapore for 50 years, through joint ventures and servicing for one of its biggest customers to date, Singapore Airlines. However, the biggest pull was the promise of a steady supply of highly skilled labour, through partnerships with local universities and polytechnics.

Productivity boost

Authorities, as well as the education sector, are working together to cater for Rolls-Royce's labour needs. Rolls-Royce has begun training workers such as him in droves in these kinds of specialised skills. That is what accounts for greater efficiency and speed in Singapore, compared with Derby, according to Leithen Francis from Aviation Week.

Also, in Singapore all manufacturing and assembly will be in one building, as opposed to across five different facilities in the UK. "Work practices will be different and much more specialised in Singapore," he says. "They have fewer tasks, which they get really good at, so Rolls-Royce is expecting huge increases in productivity."

But Rolls-Royce's Mr Asherson says this does not mean jobs will be leaving Derby. "The UK remains our main centre and we do service and manufacturing in the UK more than in any other place in the world." However, some of the functions and services once only performed in the UK will now also be done in Singapore.

Failure investigation

One of them is assessing what has gone wrong when things do not go as planned with their engines. The most notable incident for Rolls-Royce in recent times is the Qantas mid-air engine failure in November 2010. The Australian Transport Safety Bureau found in its investigation that a fault in a pipe 5mm in diameter caused the engine fire. It was a stark reminder that there is little room for error when it comes to the reliability of an aircraft engine. It takes only one of the 18,000 pieces in an engine to malfunction for lives to be at risk.

The Seletar campus will turn out about 250 engines a year when it is fully operational by 2015 Teo Mei Shi is part of a new "failure investigation" laboratory set up in Singapore, tasked with figuring out what went wrong when an engine malfunctions in any way. "I was sent to Derby in the UK for a year of training on how to carry out the failure investigation process - learning equipments, procedures and techniques," she says. The Trent 900 in the Qantas flight was sent to Derby for failure investigation. However, Teo is hoping that once their lab is fully functional, if there are any incidents in this region that work will fall to her team.

Although confidence looked to be shaken in the immediate aftermath, Rolls-Royce is quick to point out that customers have not been deterred. "Since that incident there have been three orders for that aircraft type and those orders have come to Rolls Royce," Mr Asherson says.

Dual advantage

His confidence seems to come from the success Rolls-Royce has had in recent years. It is now the second-largest maker of engines for large commercial planes behind General Electric, according to market research firm Ascend. In Asia, it has captured half the market.
The investment from Rolls-Royce means a major boost of 15% for Singapore's aerospace industry. By 2015 the Seletar campus will account for 0.5% of the country's gross domestic product or some 1.66bn Singapore dollars. And this British manufacturer gets to call itself a truly global engine-maker.
Rolls Royce main facility: Derby, Britain
new Singapore facility: Seletar Aerospace Park
this is an industrial park in Singapore catering to the aerospace industry
manufacturing Airbus A380 (Trent 900) and Boeing 787 (Trent 1000)
RR Selatar facility, Singapore
training workshop Sg
wide chord fan blades to
be manufactured in Sg
close to the key emerging market
government support
availability of qualified employees
How does an understanding of the influences on operations contribute to business success?
for A380
quality expectations
cost based
legal regulations
corporate social
Rolls-Royce is a global business providing integrated power systems for use on land, at sea and in the air.
Rolls Royce have not made cars since 1971, the car brand is owned by BMW.
titanium is the key metal
Improved financial planning
- TotalCare provides absolute control and visibility of engine maintenance costs. Improved budgeting and financial forecasting are achieved from managing predictable costs.
Risk transfer
- The technical and financial risk of engine fleet management traditionally carried by airlines is transferred to Rolls-Royce.
Working together in partnership
- TotalCare aligns business goals - to keep aircraft flying with minimal disruption. A win-win partnership focused on maximised operational capability.
Improved residual value
- Engines managed under a TotalCare programme generate increased residual value due to improved asset liquidity and greater confidence in build quality.
Focus on core business
- TotalCare simplifies the administrative process to support the maintenance activity enabling management and resource to be utilised on other aspects important to the customer's business.
RR Total Care: customer service

The Seletar facility is state of the art, designed to allow simultaneous assembly and testing of Rolls-Royce Trent engines under one roof. At full capacity it can produce up to 250 engines per year. Initially Trent 900 and Trent 1000 aero engines will be built here.

The Group’s first Wide Chord Fan Blade (WCFB) manufacturing facility outside the UK to manufacture hollow titanium WCFBs, a unique capability and technology which has played a key role in the success of the Trent aero engine family. At full capacity, this facility could produce over 6,000 blades per year.

An Advanced Technology Centre (ATC) is an important part of the Group’s global network of Research & Technology centres which develop advanced technologies to support core business areas.

The Regional Training Centre (RTC) is the first such training facility for Rolls-Royce in Asia. Its purpose is to develop high-value skills and nurture talent for the future.
reduce costs
access to expertise
provide greater flexibility
access to the best technology
increased transportation costs
loss of control
danger of future competition
human resource problems
language problems
is a world-leading provider of power systems and services for use on land, at sea and in the air, and has established a strong position in global markets -
civil aerospace, defence aerospace, marine engines and energy.
As a result of this strategy, Rolls-Royce has a broad customer base comprising more than
500 airlines
, 4,000 corporate and utility aircraft and helicopter operators, 160 armed forces, more than 4,000 marine customers, including 70 navies, and energy customers in more than 80 countries.
Annual revenues were
£11.3 billion in 2011
, of which more than half came from the provision of services. The firm and announced order book stood at £62.2 billion at 31 December 2011, providing visibility of future levels of activity.
employs 40,400 skilled people
in offices, manufacturing and service facilities in over 50 countries. Over 11,000 of these employees are engineers.
In 2011, Rolls-Royce invested
£908 million on research and development
, two thirds of which had the objective of further improving the environmental performance of its products, in particular reducing emissions.
Rolls-Royce supports a global network of 28 University Technology Centres, which connect the company’s engineers with the forefront of scientific research.
The Group has a
strong commitment to apprentice and graduate recruitment
and to further developing employee skills.
the supply of products for Walmart stores, often to China, reduces costs and increase profits
expansion to other countries (but withdrawal from Germany)
Walmart grew rapidly by using information technology innovations in the 1980's such as
(security devices)
vendor managed inventory
(saves employee time) to automate supply chain

products must meet or exceed
customer expectations
and be value for money
this strategy is about beating the competition on price
Walmart has their
own transportation fleet
lowest wages
possible are paid
purchases in bulk
from suppliers with discounts
becoming energy self-sufficent
technology allows Walmart to monitor their products to prevent loss and shrinkage
any future laws regarding union membership could affect their profits because of wage demands (Walmart has discouraged unionisation of their workforce)
the local governments of some communities are against Walmart introducing stores in their community
business must be aware of different policies in different countries
Walmart benefits in the USA from very low minimum wages of this country and a supply of migrant labour from Mexico
not allowing unions
Work Health Safety, Walmart must insure a safe workplace
business must be aware of different legal regulations in different countries
Walmart's environmental goals
be supplied with 100% renewable energy (solar panels)
create zero waste
sell products that sustain people and environment
suppliers have to adhere to Walmarts own Universal Sustainability Index
labelling and barcoding individual eggs to reduce waste
sustainability objectives
Walmart giving opportunities for local farmers to supply Walmart with fresh produce
Not allowing 'associates' (employees) to join unions which create high employee turnover
low wages
the influence includes
, for example, WHS laws
RR intention goes beyond this to reduce their employee time lost through accidents
each incident is reviewed at management level, to prevent the recurrence.
high tech industrial processes including exotic alloys and moulding techniques
design complexity and fine tolerances involved make
hand assembly
of the thousands of component parts necessary
in-flight service jet engines are
constantly monitored
by RR through satellite connection, computer analysis and
globalisation has led to new facilities in Singapore to manufacture jet engine wide chord fan blades (WCFB), and assemble and test
turbo fan jet engines
this is in response t the fact that
Asia is the key market
for growth in the airline industry and the availability of a
skilled labour force
RR has also opened a new mechanical test complex at Dahleitz in Germany to conduct testing for the business world-wide
planes are significant carbon emitters and the RR is committed to reducing Co2 emissions through
increasing jet engine efficiency
all waste materials are recycled
a 77% reduction in water consumption at the facility has been achieved
rather than cost based competition method RR
their product through
product design and customer service
the quality expectations are extraordinary as plane
passenger safet
y and
RR reputation
customer airline reputation
is paramount
ongoing customer (airlines) service
is important an
d RR offer "
Total Customer Care
business must be aware of different policies in different countries
the Sg government has been very active in encouraging high tech industries
with RR operations in Sg were encouraged by the building of the
aerospace industrial park
, through
advantageous tax concessions
, and through the Sg government
education system
providing suitably qualified employees
RR has been active in
activities particularly as these practices are common in markets in which they are operating
RR promote
and in particular try to encourage
females in male dominated engineering sector
community investment activities
support the Group’s strategy and future success, particularly in the areas of:
education, recruitment and employee engagement
Research the success of each business.
World's largest retailer: 200m customers per week through retail outlets, online and mobile devices worldwide
Walmart's international operations currently comprise 4,263 stores and 660,000 workers in the USA and 15 other countries
20,000 Chinese suppliers
In China, as of March 2012, Walmart owned 270 stores in 140 cities in 21 provinces
2011 US$404 billion revenues
approx US$16 billion in net profit
Rolls Royce
World's second largest aeronautical engine making company after General Electric
employs 40,000 people worldwide
RR realised the importance of the Asian market and opened a facility in Singapore
RR focus on quality and customer service (called Total Care) which is integral to safety and predictable servicing costs
customer service is vital to its airline customers, which are increasingly Asian based
In 2011, Rolls-Royce performed well in difficult market conditions and continued to invest for future growth, including £908 million in R&D.
RR currently has a £62.2bn order book
revenue 2011 £11.3 billion and underlying profit has increased 21 per cent to £1.2 billion
Inventory management
inventory management refers to the store of transformed resources waiting to be processed
the goal is to ensure there is
sufficient inventory
to maintain the operations process
advantages and disadvantages of holding inventory

valuing inventory
(last in first out) under this method the inventory is valued on the basis of the price paid for the last units purchased, the value of inventory is thus overstated reducing stated gross profit and tax paid, it is not permitted in Aust
(first in last out) under this method the inventory is valued on the basis of the cost of goods sold earlier in the year, giving a more realistic gross profit

(just in time) or
lean operations
involves eliminating any activity in the supply chain that does not add value, eliminating waste especially over-production
and failure
RR Aerospace
Importance of customer service
think also
milk chocolate utilising
Fair Trade
think also the effect the
carbon tax
on Aust. most polluting companies or
mining tax
or the
luxury car tax or how higher income taxpayers are encouraged to have private health insurance
think also the effect of continually tightening
cigarette and smoking
laws at federal, state and local levels
think also
lead over Coles gained through increased
logistics efficiency
or Kmart extending to 24hr trading
When writing a conclusion try to think a little bit laterally:

A strong awareness and understanding of the importance of the influences on the operations aspect of business will
optimise potential success
With the key case studies discussed; Walmart and Rolls Royce Aerospace, a significant observation can be made.
Both businesses have clearly recognised the importance of
dynamic Asian markets
for their future.
Walmart now has 270 stores in China, and Rolls Royce has opened a new turbo fan jet engine production facility at Seletar Aerospace Business Park in Singapore; to be at the doorstep of airline industry growth.

These case studies particularly emphasis the importance of
quality expectations
reaching markets
and generating
think also
Emirates Catering
usine technology in for example, using special process to cook food so it meets customer expectations for safety and taste
Term 2 2013
Assessment task: Term 2 Week 9/10 Trial Exam
Student activity:
Student activity:
HSC Business Studies Getting Better Results 3rd edition
Sykes and Crawford
"How to build a jumbo jet engine"
(BBC) - examines Rolls Royce Aerospace (turbo-fan jet engine) operations
"Is Walmart good for America?"
(PBS) - examines the operations, human resources and marketing of Walmart
"Megafactories - Jaguar XJ"
(National Geographic) - examines the brand and operations of Jaguar
"Megafactories - IKEA"
(National Geographic) -examines the marketing and operations of IKEA
"Megafactories - Learjet"
(National Geographic) -examines the marketing and operations of Learjet
Teaching strategies for documentaries:
Rolls Royce and Walmart - see student activity in case studies of this Prezi: students work in two groups to research and complete blank table re: influences on operations, and utilising a concise dot point form
construct a mind map of key concepts
team work: analyse some of the considerations (by posing questions) in setting up a new car assembly plant
IKEA - refer to visual cues re: IKEA in this Prezi
Fact file:


Type: Private

Industry: Retail

Founded: Sweden (1943)

Founder: Ingvar Kamprad

Headquarters: Netherlands

Area served: Worldwide

Key people: Mikael Ohlsson (Chairman and CEO)

Products: Self-assembly furniture

Revenue: €23.5 billion (2010)[1]

Net income: €2.7 billion (2010)[2]

Owner: Stichting INGKA Foundation

Employees: 127,000 (2010)

although IKEA household products and furniture are designed in Sweden, they are largely manufactured in developing countries to keep costs down
suppliers in 50 countries
, roughly ⅔2/3 of purchasing is from Europe with about ⅓1/3 from Asia, only a small amount of products are produced in North America
supplier countries rank in order:
China, Poland, Italy
and then much less,
significant design focus is given to
increasing transport efficiency
through product and packaging design and redesign
For most of its products, the
final assembly is performed by the end-user
Billy bookcase
discuss Walmart and Kmart examples p.6-9 of text
Think, Ink, Pair, Share - branding cool p.11 of text
Interdependence with other key functions

operations management refers to the activities that transform inputs into outputs of goods and services
however this process is interdependent on the other business functions of marketing, finance and human resources
discuss the contribution of the other business functions
complete Topic Test p.17-19 of text
review and discuss influences shown here
scan and read p. 21-33 of text
comprehension activity p.24-25 of text
review the sustainability strategies of Walmart
review Orica p. 26-27 of text
Google Orica pollution episodes at Botany Bay and Newcastle
discuss the impact of the different government policies illustrated here
use Google maps to analyse the Minchinbury location of its main automated warehouse
put the phrase 'chocolate and child slavery' into Google and do some research
research Cadbury and 'Fair Trade'chocolate
read Levi Straus environmental and social policy p.31-33 of text
prepare a T chart listing environmental and social factors
Environmental sustainability is concerned with air, water, waste and environmentally sustainable products and operations practices.
review the CSR aspects of the IKEA foundation
students do Topic Test p.35-37 of text
discuss the meanings of transformed, inputs and outputs
think, ink, pair and share activity p. 39 of text
analyse the visual cues for transformed resources regarding customers, information and materials that follow
discuss the impact of 'íncidents' and 'groundings' on Qantas and Rolls Royce
discuss products that can be customised
discuss the technology and factors involved in this example ... what happens to lng distance airlines that cant afford this technlogy?
discuss the movement of products to and from Australia
discuss the movement of labour to and from Australia
see case study on this Prezi
students do the 'Work in Pairs' activity p.43 of text
read p.51-53 of text
read and discuss the Pacific Brands case study p.51 of text
students do 'Think, Ink, Pair and Share' on p.53 of text
analyse the examples shown here
'Think, Ink, Pair and Share activity p. 56 of text
research activity re Pacific Brands p.52 of text
group work: researching different process technologies p.57 of text
'Think, Ink, Pair, Share p.59 of text - task design of a car assembly factory
Operations factors to consider in setting up new car assembly plant.
Jaguar Range Rover
is owned by the
Tata Group
Tata Group is an Indian multinational conglomerate company headquartered in Mumbai, India. It encompasses seven business sectors:
communications and information technology
consumer products
Tata Group has operations in more than 80 countries across six continents and its companies export products and services to 80 nations.
total quality management (TQM)
is an approach that puts improvement, particularly improving quality, at the very core of every activity in the business
just in time (JIT) or lean
production is an approach designed to meet the customer's requirements immediately with a quality product and no waste
discuss the JIT approach at Coca Cola Amatil
Think, Ink, Pair, Share - customer service experience p.61 of text
students do Topic Test p.65 of text
discuss the above and read p. 67-72 of text
'Think, Ink, Pair, Share' - quality judgements p.73 of text
read and discuss case study - Mercedes Benz individual vehicle connection to emergency services p.69 of text
'Think, Ink, Pair, Share' - products with a crucial speed performance objective p.70 of text
'Think, Ink, Pair, Share' - customistion activity p. 72 of text
'Think, Ink, Pair, Share'- Aldi and cost minimisation activity p.73 of text
'Think, Ink, Pair, Share - reflect on changing fast food menus p.73
read case study - iPad 2 p.73-75 of text
'Think, Ink, Pair, Share - research and compare competing tablets p. 75 of text
ask art / design students to explain how they decided on what to do for the project they finally decided to do
'Think, Ink, Pair, Share - idea generation p.78 of text
discuss and review the design process evident in:
the Jaguar XJ
IKEA cutlery
a new dish for Emirates catering
case study: iPad 2 Apple outsourcing component parts and quality deployment task p.79-80 of text
the 'design funnel' concept
'Think, Ink, Pair, Share' - possible product supply chain p.82 of text
case study: Aldi - supply chain management can provide a competitive advantage; students compile a list of relevant factors from the study
'Think, Ink, Pair, Share' research Aldi's cheaper claim; discuss how are Coles and woolworths partially adopting this idea p. 84 of text
discuss with examples the above factors p.86-87 of text
'Think, Ink, Pair, Share' - consider examples of outsourcing p.86 of text
writing activity - using a scaffold write a response to the advantages and disadvantages of outsourcing p.88-89
case study - digital technology (RFID) in tracking goods in the supply chain adding a competitive edge to Walmart p.90-91, students to discuss and list the advantages to Walmart
'Think, Ink, Pair, Share' - read and discuss the Russell and Taylor JIT principles p. 95 of text
Quality management
quality management is
consistent performance to customer's expectations
it is the customer who will make this judgement
good, consiistent quality is most likely to develop when there is a
culture of continuous improvement
quality control is the sampling technique that checks the quality of an item in the transformation process
aims to minimise the variations to defined limits and build systems and procedures to ensure those limits are not exceeded
employees need to be trained to assess the quality of their own work - 'self inspection'
where an independent specialist organisation inspects the systems and proceedures
'Think, Ink, Pair, Share - reflect on and research the star-rating as used on white goods p.98
Overcoming resistance to change
when managers cling to products that are dying, there is a gradual loss of customers as they change to products that better meet their needs
the reasons for managers resisting change are the financial costs, inertia and time restraints
Financial costs:
purchasing new equipment
redundancy payments
retraining costs
reorganising plant layout
this is the lack of resolve or energy to do something about a problem
the only way to change this is to change the management team
writing activity - students use a scaffold to write a response regarding how resistance to change can be overcome p. 102-103 of text
Global factors
global strategies are concerned with finding ways to improve the competitive position of the business in a global environment
these include:
global sourcing
- where products are acquired outside the supply chain
economies of scale
- greater economies of scale are possible when a global strategy is involved, these result from spreading fixed costs over increased output; diseconomies of scale can result from increased transport costs
scanning and learning
- scanning is often called data acquisition, or business information systems (BIS) to formally collect data
research and development
- this is the business function concerned with new ideas and ways of doing things
discuss some of the things scanning might reveal with a chosen product type
'Think, Ink, Pair, Share'- research the proportion of sales revenue spent on R&D, and the staff qualifications in the electronics industry p. 108
'Treasure Hunt of Management' textbook familiarity activity p. 111
review and discuss the mind map p. 3 of text
Teacher: J.W. LUND
SKU: stock keeping unit
AS/RS: automated storage and retrieval system
these methods help hasten their supply chain process
Teaching and learning strategies in this colour
Emirates Flight Catering Company has over 5,400 employees and provides in-flight catering and support services for airlines at Dubai International Airport
It provides the catering for all Emirates flights, and also for other airlines operating at the airport
The catering facility servicing the airline's flights has a design capacity of 115,000 meal tray set-ups per day
stimulus packages
Group work: visual mind maps
Aldi and operational efficiency
Which is photo is Aldi and
which is Woolworths?
Just-in-time is a stock control method
JIT aims to keep stocks held to a minimum
Production is generally made to order i.e. products have already been sold and are therefore ‘pulled’ through manufacture
Stock arrives only when it is needed (just in time)
No buffer stocks are held
Reduces storage of stock
Lowers costs of storage
Reduces chance of stock getting damaged or becoming obsolete
Less cash tied up in stock – working capital improves
Reduces risk of making unwanted products
Increases responsiveness to changes in demand in the market
Incentive to ‘get it right first time’ as there are no back up stocks
An example includes the chocolate producer, Cadbury, adopting the Fair Trade organisations certification for its milk chocolate range.

In 2010, the Philippines overtook India as the preferred location for offshore English-language business processing. It now has 12–15 per cent of the global market for business process outsourcing; 350,000 Filipinos work in call centres and 250,000 work in back-office services, such as finance and accounting, data processing and management, medical transcription, and human resources. The availability of a well-educated, low-cost workforce, together with time-zone similarities, has drawn an increasing number of Australian investors, including Telstra, ANZ, Macquarie, Jetstar, Salmat and Comscentre. Business process outsourcing is one of the sectors of the Philippines' economy that employs the middle class, hiring those who might otherwise emigrate.
Rolls Royce Aerospace and Bombardier Learjet

1. Describe the two products you have viewed.
2. Where are the respective factories located?
3. Outline the decisional factors regarding the location of the respective facilities.
4. What do the two companies operations facilities share in common in terms of:
• Parts storage and handling
• Use of jigs and task design
• Primary materials being used and engineering processes
• Assembly processes
• High technology processes and machinery
• Design and features of the factory space
• Testing procedures
5. Detail the production outputs of the respective factories.
6. What proportion of parts is made at the different factories?
7. What components of each product are sourced externally (outsourced)?
8. Why is testing so rigorous?
9. Describe the respective markets for each respective product.
10. Which product has the greater potential customisation? Describe the importance of this.
11. Describe the markets of the two companies / products.
12. Describe the brand attributes of the two companies.
13. Who are the companies’ respective competitors? Research their respective market share?
14. List management strategies in response to changes in the external environment for one or both companies.
15. Discuss a social or ethical aspect of their business operations.
16. Discuss how the issue of operations and human resources may overlap with one of these companies.
17. Traditionally the Learjet market has been focused on the USA. What market must they now additionally focus on?
18. Describe the customer requirements of the two companies / products? What is the common factor?
19. How do both companies ensure customers receive this common factor?
20. List some of the common overheads each company would face.
21. Why is warehousing of parts such a critical factor?
22. What effect did the GFC have on both companies?
23. How do both companies attempt to differentiate their products?
24. How is globalisation reflected in each product / company?
25. What is the vision of each company?
26. Is their evidence of CSR associated with either or both companies?
27. Draw diagrams to show the operations processes of one of these products. (inputs, transformation and outputs)

The Uniqlo Way: clothing giant coming to Sydney after opening Melbourne store
You have been employed by Sunshine Fruit Juices to prepare a report for management on the
issues outlined above.
In your report, recommend strategies for human resources and operations that the firm could
implement to improve its business performance.
Sunshine Fruit Juices employs 100 people in its Queensland factory and
supplies juice to large supermarket chains in Asia and North America.
Customers have recently complained that the product has been damaged and
bottles have been wrongly labelled.
An increase in industrial disputes has also occurred due to a number of recent
workplace accidents and demands from employees for higher wages.
Business Studies
Section III
20 marks
Attempt Question 25
Allow about 35 minutes for this section
Answer the question in a writing booklet. Extra writing booklets are available.

In your answer you will be assessed on how well you:
■ demonstrate knowledge and understanding relevant to the question
■ apply the hypothetical business situation
■ communicate using relevant business terminology and concepts
■ present a sustained, logical and cohesive response in the form of a business report
Business Studies

Section  IV
20 marks
Question  27  (20 marks)

In your answer you will be assessed on how well you:
■ demonstrate knowledge and understanding relevant to the question
■ apply relevant business case study/studies and contemporary business issues
■ communicate using relevant business terminology and concepts
■ present a sustained, logical and cohesive response

Assess strategies that management may use to respond to influences on operations.

VW China
VW recalls
GM fine
quality expectations
legal regulations
performance objectives
inventory management
quality management
quality expectations
cost based competition
supply chain management
inventory management
global factors
quality expectations
new product or service design and development
supply chain management
inventory management
quality management
quality expectations
new product design and development
supply chain management
inventory management
quality management
quality expectations
cost based competition
supply chain management
inventory management
global factors
quality expectations
legal regulations
performance objectives
inventory management
quality management
quality expectations
government policies
quality management
inventory management
global factors
cost based competition
environmental sustainability
supply chain management
inventory management
global factors
cost based competition
environmental sustainability
supply chain management
inventory management
global factors
quality expectations
government policies
quality management
inventory management
global factors
quality expectations
environmental responsibility
corporate social responsibility
new product design and development
supply chain management
global factors
quality expectations
environmental responsibility
corporate social responsibility
new product design and development
supply chain management
global factors
In 2007, Rolls-Royce announced plans to build its first Asian aero engine facility in the Seletar Aerospace Park, Singapore.[29] The $562m (£355m) plant complements its existing facility at Derby by concentrating on the assembly and testing of large civil aircraft turbofan jet engines. Productivity will be higher than at its plant at Derby in the UK, as the plant is fully integrated, as opposed to manufacturing occurring across five sites in the UK: a Trent 900 will take only 14 days to manufacture, as opposed to 20 in the UK. Originally expected to provide employment for 330 people,[30] by the start of production in 2012, 1,600 employees were based in Singapore.
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