TOPIC 4 THE OPERATIONS MANAGEMENT FUNCTION

1. TOPIC 4THE OPERATIONS MANAGEMENT FUNCTION LESSON 2

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.

3. Operations Systems Inputs Processes Outputs Farmer Machinery Storage Bins Planting Pest spraying Fertilising Harvesting Wheat for export

4. Operations System • Billabong • Clothing – sold in Japan • Sunami + Earthquake = no sales • Wholesale distribution affected and pacific sales

5. 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.

6. 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?

7. 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.

8. 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.

9. Service • Outputs that are not visible. • Operations process is not as recognisable as the manufacturing of goods. • Lawyer • Accountant • Fortune teller!

10. 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!

11. Trades and Services • http://www.peterstevens.com.au/ • http://www.subaru.com.au/ • http://www.ford.com.au/servlet/Satellite?pagename=DFY/AU

12. 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.

13. Service Organisation • Peter Stevens Motorcycles Sells new motorcycles. Services them. Customer surveys provide feedback on satisfaction of the good and the service.

14. 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.

15. Operations Managers at Work • Oversees the transformation of inputs into outputs. • Involves decision making. • Involves some planning • Involves the implementation of strategies.

16. Operations Managers at Work • Optimise resource allocation, increase productivity and achieve quality. PRODUCTIVITY = Production per worker per hour

17. 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!

18. 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.

19. 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...

20. Rip Curl Pty Ltd

21. Operations Managers at Work Organising, Leading and Controlling • Allocate human resources • Oversee storage of materials • Check on finished products and stock.

22. Operations Managers at Work Organising, Leading and Controlling • Motivate employees • Monitor productivity • Control the operating system Billabong http://www.billabong.com/

23. 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.

24. Operations Manager at Work SKILLS • Competent in the skills we have studied. • Good communicator • Time manager • Delegator • Negotiator

25. Operations manager at Work SKILLS • Team leader • Able to manage stress • Problem solver • Ethical and with socially responsible attitudes. • Can make decisions!

26. 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

28. 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????

29. 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.

30. Productivity ratio • Outputs produced in comparison with inputs used X 100/1 • = outputs / inputs Iluka productivity = zircon / costs

32. Productivity http://www.icongrouponline.com/pr/Iluka_Resources_Limited_AU/PR.html Benchmarks are used against other companies when we can establish productivity measures.