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CIE A Level Business Your notes

Operations Strategy
Contents
Operational Decisions

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Operational Decisions
Your notes
Resources & Operational Decisions
Operational decisions are impacted by, and have an impact on, business resources

Business resources include:

Capital
Employees, including contractors
Property and land
Machinery and equipment, including IT hardware
Intellectual property such as patents
Databases and key software and hardware

When operational decisions are made, care needs to be taken to ensure that the appropriate
resources are in place or that adequate plans are made to ensure that they will be in place when
needed
This may involve
Purchasing new facilities, such as land or property
Investing in new production equipment or hardware
Hiring new workers or training existing staff
Obtaining legal protection for inventions
Updating systems to ensure information is up-to-date and complete

Without the appropriate resources, operations decisions may be delayed or require significant
amendment
This may impact on the operations function's ability to achieve its overall targets and limit its
contribution to achieving business objectives

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Information Technology & Operational Decisions

Businesses are increasingly using a range of technologies to automate production processes Your notes
Diagram: IT Technology used in Operations

Information technology can be applied to a range of operations processes, including design,

manufacture, safety and logistics
Computer-aided design (CAD)
The process of digitally creating design simulations of products in 2D or 3D
It can also include the use of computer software to create mapping processes for industrial machinery,
e.g. the movements required by a robotic arm in a television factory

Evaluation of CAD in operations

Advantages Disadvantages

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Lower product design costs as the need to Bespoke or complex design software is usually
produce expensive prototypes is eliminated very expensive
Your notes
High levels of accuracy reduce the chance of Design and production employees need
production errors and defects, leading to high extensive training to ensure designs are
quality output transformed into finished products effectively

Quicker design development reduces the time Computer processing and storage capacity
taken to bring a product to market may need upgrades

Computer-aided manufacturing (CAM)

The use of computers to assist in operations of a manufacturing plant, such as production processes,
planning, management, transportation and storage

Computer-integrated manufacturing (CIM)

The complete automation of a manufacturing plant, with all processes functioning under computer
control with digital information tying them together

Evaluation of CAM and CIM in operations

Advantages Disadvantages

Production can take place with minimal human High initial cost of hi-tech equipment that will
input, reducing labour costs need ongoing maintenance and upgrades

Often linked directly to CAD systems, it allows Equipment failure and breakdowns can cause
for mass customisation as changes are be significant disruption to production
made to work in progress
Output is only as good as the system's
IT-controlled production systems are usually programmer - if faulty code is not detected and
highly accurate, generating high quality output corrected, product quality will be impacted

Drones
Unpiloted aircraft are being used to carry out an increasing range of business tasks, including package
delivery, photography and security
E.g. Large agriculture businesses use drones to spot failing crops and areas of concern in large
fields, mapping boundaries and even applying pesticides

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Evaluation of IT in Operations
The installation and maintenance of IT technology in production is likely to incur significant costs Your notes
Purchasing IT hardware and software may require external finance, such as loans which will need to
be repaid with interest
Employees will need training in order to safely and effectively operate technology
Down time as technology is installed and workers are trained, it impacts output levels

Businesses must be sure that this capital expenditure is outweighed by gains in productivity and
improvements in quality and flexibility
Higher levels of productivity may only be achieved with high levels of output
Automation usually works best in the manufacture of standardised products
Flexibility in production refers to how easy it is to install machinery and switch to different
machinery which is required to manufacture different products (known as retooling)
The most flexible technology is also likely to be the most costly

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Artificial Intelligence & Operational Decisions

Artificial intelligence can be used in a range of ways to enhance business operations Your notes
In financial institutions such as banks and insurance companies, AI systems can identify
customers' financial and behavioural patterns to identify potential instances of fraud
In grocery retail, AI systems can be used to monitor and control storage environments, such as
freezers, to ensure that products are kept in optimum conditions
In manufacturing, AI can be used to schedule upgrades and maintenance to reduce the amount of
production down time

Robots are programmed to collect information from their environment using sensors and use artificial
intelligence (AI) to improve production performance
E.g. Hotel chain Yotel employs ‘robotic staff’ that can move around anywhere in the hotels,
carrying guests' luggage, delivering laundry, cleaning rooms and making coffee

Robots can perform various business tasks

Business uses of Robots

In manufacturing and Warehouses and logistics In agriculture, tasks such as

assembly lines, robots can businesses can use robots to planting, harvesting and
increase productivity and move and transport goods spraying crops can be carried
accuracy E.g. Quiet Logistics uses out by robots
robots that ‘do all the walking’ E.g. Japanese food producer
in its distribution hubs Spread’s robotic farm
harvests 30,000 heads of
lettuce every day

In medicine robots can be Robots can be sold as toys or Remote-controlled robots

used in surgical procedures to used in amusement parks to can be programmed to carry
increase precision and reduce provide entertainment out hazardous testing and
the risk of errors R&D processes

The use of robots in particular presents a range of advantages and disadvantages related to
productivity, quality and flexibility

Advantages & Disadvantages of Using Robots in Business

Advantages Disadvantages

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Increased productivity as robots can work High initial investment of purchasing and
continuously without breaks or fatigue setting up robotic systems
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Improved consistency and accuracy as robots Maintenance costs as robots require regular
can perform tasks with a high level of precision maintenance and repairs, which can add to the
and accuracy overall cost

Robots can perform tasks that are dangerous or Lack of flexibility as robots are programmed for
hazardous for humans, improving safety specific tasks and cannot adapt easily to new
situations or tasks
Robots can help reduce labour costs in the long
run Increased use of robots can lead to job losses in
some industries

The Need for Flexibility

Businesses should have the flexibility to change output volumes, timescales and product
specifications for several reasons
The level of demand can change with little warning
Supplies may become unavailable
Customers may delay orders or require rapid delivery of orders
Customers may demand variations to products

Flexibility can be improved in a number of ways

Outsourcing some production to trusted manufacturers
Employing multi-skilled workers and investing in their training and development
Holding buffer stock to ensure increased demand can be met
Investing in advanced machinery that is capable of mass customisation
Investing in buildings and land to extend production premises

Exam Tip
You may be asked to analyse the impact of IT and AI on a business. Their contribution to improving
flexibility should be one of your key arguments - the case study may give you some ideas on how the
business in question could apply them.

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Process Innovation
Process innovation involves identifying new ways to organise and carry out production processes Your notes
In recent years, organisations have made some notable improvements production processes that
have had a significant impact on productive efficiency

Examples of Process Innovation

Amazon IKEA UK Passport Agency & Borders

Agency

Amazon provides detailed IKEA's EPOS system provides In the public sector, the
package tracking, allowing its accurate stock availability decision by the UK Passport
online customers to provide information on its website, Agency and Borders Agency
details such as a safe place to ensuring customers are not to introduce biometric
leave deliveries, reducing the disappointed when they travel passports has allowed fast-
need to return undelivered significant distances to track lanes at airports to be
items to warehouses purchase items introduced, reducing queue
times for travellers

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Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP) uses bespoke software platforms to manage and integrate the Your notes
essential parts of the business operations
ERP solutions have evolved over the years, and many are now web-based applications that users
can access remotely

ERP can help a business plan resources by integrating planning, the purchasing of inventory, sales,
marketing, finance, design and production, and human resources
It collects information about the activity and state of different production stages, allowing the
different functional areas to communicate and share information easily

Evaluation of ERP Systems

Benefits Limitations

Improved accuracy and productivity due to Bespoke ERP systems are expensive to install
better synchronisation between functional and maintain, and will involve significant short-
areas term upheaval to a businesses operations

Improved planning of budgets and resources ERP systems do not always eliminate
with real-time data, from a single system that inefficiencies within a business and rarely
contains all relevant data improve every aspect of production - they are
not a panacea
Greater efficiency as information can be
accessed and used quickly to improve A company's reluctance to abandon old
processes working processes will limit the effectiveness of
ERP systems
Functional areas collaborate and share
knowledge, which can improve productivity and ERP systems cannot be successfully
employee satisfaction implemented during a period of significant
business change

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