Lecture 5 – Using Technology Principles of Business Operations

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Learning Objectives

On completion of this topic, students will be able to:

• Understand the different types of technology used

in manufacturing and service operations

Principles of Business Operations

Topic 5:
Using Technology © NCC Education Limited

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Understanding Technology in
Introduction
Operations 1

• Technology has fundamentally changed how • Technologies fall into two basic groups
organisations create goods and services – Hard
• Technologies allow organisations to meet the – Soft
needs and wants of their customers better than
ever before • Both of these can be used in manufacturing and
• But technology has its problems, as you will see … service operations

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Understanding Technology in Understanding Technology in

Operations 2 Operations 3

Hard Technologies Soft Technologies

• These are equipment and devices used in the • These provide data to facilitate the creation and
creation and delivery of goods and services, e.g. delivery of goods and services, e.g. computerised
manufacturing machines information systems

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Lecture 5 – Using Technology Principles of Business Operations

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Understanding Technology in
Manufacturing Technologies
Operations 4
• Important to select the right technology for the job
• Organisations use a combination of hard and soft • Efficient operations require careful planning of machines
technologies to create value for their customers and people in the layout of the operations
• People must be trained to use technology correctly
• These combinations are limited only by the • Performance should be continually monitored and improved
imagination of the organisations themselves where possible
• Scheduling should be designed to meet customer deadlines
• Quality must be ensured

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Service Technologies 1 Service Technologies 2

• Service technologies often use the Internet

• Financial services – for example eBanking
• eServices create and deliver: time, place, • Government services – for example paying tax
information, entertainment and exchange value to online
customers and/or support the sale of goods • Entertainment – booking cinema tickets
• Health – booking hospital appointments online
• Some examples follow on the next slide … • Transport – texting train and bus times
• Etc.

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Class Activity Technology Value Chains 1

• Work in groups of about 5

• Think of any “service” that you have received in the last few • Whilst there are many forms of technology value
days that involved information technology chains – three dominate:
– What was the technology used for? How did you access the
information? How did the information support the service? Anything • Business-to–Business (B2B)
else important worth noting?
• Business-to-Customer (B2C)
• 10 minutes
• Customer-to-Customer (C2C)
• Feedback to the class
• 5 minutes

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Lecture 5 – Using Technology Principles of Business Operations

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Technology Value Chains 2 Technology Value Chains 3

• Value chains used to have several links, such as • Interestingly, the Internet has also created a whole
suppliers, warehouses, distributors, shops, etc. host of intermediaries that were not possible
• The Internet has reduced the number of links for before.
many operations, e.g. Amazon deals directly with
the final customer and has cut out intermediaries • These collate information from various sources for
• BUT … the customer and present the information in a
unified, user-friendly manner, e.g.
MoneySupermarket.com

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Business Intelligence 1 Business Intelligence 2

• Business intelligence systems collect data from

across the organisation into a common database • Data warehouse is a specially designed database
• Centralises or aggregates historical data from
• This allows for easy access to the information multiple sources within an organisation
• Consolidates the data in consistent formats for
subsequent query and analysis

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Relationship Between Data

Business Intelligence 3
Warehouse and Data Mining
• Data mining is an analysis tool used to identify
meaningful patterns and relationships in data
Data Sources Data Data Mining
Warehouse
• This can be useful for marketing purposes Information from a
range of business
Extract, Transform and
Load (ELT)
Data collated and
tables merged
Extract, Transform and
Load (ELT)
Solving specific
problems
processes Data organised in Searching for
consistent formats patterns

• For example – identifying that customers who

bought a certain book would also be interested in
the accompanying DVD, etc.

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Lecture 5 – Using Technology Principles of Business Operations

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Integrated Operating Systems 1 Integrated Operating Systems 2

• Integrates key processes and systems and shares Computer-Integrated Manufacturing Systems
information through the value chain
• Four major characteristics: • Use hardware, software databases and
– Focuses on the main structure and processes of the communications to automate and control
industry
production
– Addresses key decisions to serve customers in the best
possible way • Used from design stages through manufacturing to
– Collects, stores, analyses and disseminates information
distribution
– Capable of making key decisions anywhere along the • Examples include Computer-Aided Design (CAD)
value chain and Computer-Aided Manufacturing (CAM)

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Integrated Operating Systems 3 Integrated Operating Systems 4

Enterprise Resource Planning

Benefits of CIMS include:
• Decrease in engineering design costs • Combines each department’s information into a
• Increase in productivity single integrated system with a common database
• Increase in equipment utilisation
• Reduction in work-in-progress and lead times • Provides timely analysis of data and information
• Improvement in quality relating to all aspects of the organisation’s sales,
customer data, manufacturing data, departments,
etc.

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ERP Integrates All Aspects of a Business Integrated Operating Systems 5

Financial
Management
Customer Relationship Management (CRM)

Customer
• Strategy designed to learn more about customers
Supply Chain
Relationship
Management
Management
wants, needs and behaviours
ERP
System

• Used to build customer loyalty and consequently

Human
Resource
Manufacturing
Resource
increases revenue and profits
Management Planning

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Integrated Operating Systems 6 Integrated Operating Systems 7

CRM capabilities include: Revenue Management Systems

• Segmenting markets – demographic or behavioural
• Tracking sales trends and promotional • Used for forecasting demand and allocating assets
effectiveness
across market segments
• Identifying which customer should be the focus of
targeted marketing initiatives
• Forecasting customer retention • Used for making bookings, determining
• Studying which goods and services are purchased overbooking strategies and pricing strategies to
together charge different customers, etc.

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Integrated Operating Systems 8 Benefits of Technology

Typical users of Revenue Management Systems: • Drives the global economy

• Creates new industries
• Hotels • Merges otherwise separate industries
• Airlines • Improves productivity
• Cruise ships • Enhances quality
• Car rentals • Increases flexibility
• Theatres • Reduces response times
• Restaurants • Frees people from boring and dangerous jobs

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Challenges of Technology Impacts of Technology

• Damage to reputation through technology failures • Technology increases pressure on frontline

• Designing effective facilities for customers to return workers
goods or terminate services
• Protecting customer privacy and financial details • Managers must make good decisions about what
• Information overload technologies to use, and how they are to be
• Security of data introduced in the workplace
• Continually having to learn new technologies to
keep pace with developments • Customisation - focus on niche markets and
targeting customers

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Class Activity Conclusions

• Work in groups of about 5 • Organisations use both hard and soft technologies
across the value and supply chains
• For any organisation that you are familiar with …
- Provide three examples of how technology has changed
• The Internet is changing the way organisations and
this organisation’s operations in the past five years society interact with each other
• 10 minutes
• Technology has many benefits, but can cause
problems for organisations and individuals if not
• Feedback to the class
implemented wisely
• 5 minutes

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References

• Evans & Collier (2007) “Operations Management:

An Integrated Goods & Services Approach”,
Thomson Topic 5 – Using Technology

Any Questions?

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