The Value of Setting Operational Objectives (AQA A Level Business): Revision Note

What operations management involves

• Operations management is the planning, organisation and control of how goods or services are produced so that the right quality and quantity reach customers on time and at the right cost

• Operational objectives are specific, measurable targets set for a business's operations function to aim for

• Examples may include:

  • Reducing unit costs

  • Improving quality

  • Achieving a certain level of output

Components of operations management

Designing and improving processes

• Operations managers analyse existing processes and find ways to optimise them

  • They may use tools and techniques such as process mapping and lean production to identify inefficiencies and eliminate waste

Capacity planning

• Operations managers determine the production capacity required to meet customer demand

  • They analyse historical data and market forecasts to ensure that the production resources are adequate to fulfil orders in a timely manner

Stock management

• Operations managers are responsible for managing the stock levels of raw materials, work-in-progress and finished goods

  • They aim to minimise costs while ensuring that enough stock is available to meet customer demand and allow the production process to continue without running out of resources

Supply chain management

• Operations managers work closely with suppliers to ensure the timely delivery of raw materials and components

  • They establish relationships with suppliers, negotiate contracts and monitor supplier performance to ensure a reliable supply chain

Quality control

• Operations managers implement quality control measures to ensure that the products/services meet the required quality standards

  • They develop and enforce quality assurance processes, conduct inspections and address any quality issues that arise

Continuous improvement

• Operations managers strive for ongoing improvement in processes, productivity and efficiency

  • They identify opportunities for innovation, implement new technologies or techniques and encourage a culture of continuous improvement (Kaizen) among employees

Scheduling and logistics

• Operations managers develop production schedules and coordinate the flow of materials, equipment and labour to ensure smooth operations

Operations management decision making and other business functions

• Operations can be considered the engine room of a business, but it cannot run smoothly without coordination with functions such as marketing , finance, HR and customer service

The relationship between operations and other business functions

Examples of the impact of operations decisions on other business functions