Principles of Business Operations

Topic 5:
Using Technology © NCC Education Limited
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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
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Introduction

• Technology has fundamentally changed how

organisations create goods and services
• Technologies allow organisations to meet the
needs and wants of their customers better than
ever before
• But technology has its problems, as you will see …
Understanding Technology in
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Operations 1

• Technologies fall into two basic groups

– Hard
– Soft

• Both of these can be used in manufacturing and

service operations
Understanding Technology in
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Operations 2

Hard Technologies

• These are equipment and devices used in the

creation and delivery of goods and services, e.g.
manufacturing machines
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Understanding Technology in
Operations 3

Soft Technologies

• These provide data to facilitate the creation and

delivery of goods and services, e.g. computerised
information systems
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Understanding Technology in
Operations 4

• Organisations use a combination of hard and soft

technologies to create value for their customers

• These combinations are limited only by the

imagination of the organisations themselves
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Manufacturing Technologies

• Important to select the right technology for the job

• Efficient operations require careful planning of machines
and people in the layout of the operations
• People must be trained to use technology correctly
• Performance should be continually monitored and improved
where possible
• Scheduling should be designed to meet customer deadlines
• Quality must be ensured
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Service Technologies 1

• Service technologies often use the Internet

• eServices create and deliver: time, place,

information, entertainment and exchange value to
customers and/or support the sale of goods

• Some examples follow on the next slide …

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Service Technologies 2

• Financial services – for example eBanking

• Government services – for example paying tax
online
• Entertainment – booking cinema tickets
• Health – booking hospital appointments online
• Transport – texting train and bus times
• Etc.
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Class Activity
• Work in groups of about 5

• Think of any “service” that you have received in the last few
days that involved information technology
– What was the technology used for? How did you access the
information? How did the information support the service? Anything
else important worth noting?
• 10 minutes

• Feedback to the class

• 5 minutes
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Technology Value Chains 1

• Whilst there are many forms of technology value

chains – three dominate:
• Business-to–Business (B2B)
• Business-to-Customer (B2C)
• Customer-to-Customer (C2C)
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Technology Value Chains 2

• Value chains used to have several links, such as

suppliers, warehouses, distributors, shops, etc.
• The Internet has reduced the number of links for
many operations, e.g. Amazon deals directly with
the final customer and has cut out intermediaries
• BUT …
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Technology Value Chains 3

• Interestingly, the Internet has also created a whole

host of intermediaries that were not possible
before.

• These collate information from various sources for

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 systems collect data from

across the organisation into a common database

• This allows for easy access to the information

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Business Intelligence 2

• Data warehouse is a specially designed database

• Centralises or aggregates historical data from
multiple sources within an organisation
• Consolidates the data in consistent formats for
subsequent query and analysis
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Business Intelligence 3

• Data mining is an analysis tool used to identify

meaningful patterns and relationships in data

• This can be useful for marketing purposes

• For example – identifying that customers who

bought a certain book would also be interested in
the accompanying DVD, etc.
Relationship Between Data
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Warehouse and Data Mining

Data Sources Data Data Mining

Warehouse
Information from a Data collated and Solving specific
Extract, Transform and Extract, Transform and
range of business Load (ELT) tables merged Load (ELT) problems
processes Data organised in Searching for
consistent formats patterns
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Integrated Operating Systems 1

• Integrates key processes and systems and shares

information through the value chain
• Four major characteristics:
– Focuses on the main structure and processes of the
industry
– Addresses key decisions to serve customers in the best
possible way
– Collects, stores, analyses and disseminates information
– Capable of making key decisions anywhere along the
value chain
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Integrated Operating Systems 2

Computer-Integrated Manufacturing Systems

• Use hardware, software databases and

communications to automate and control
production
• Used from design stages through manufacturing to
distribution
• Examples include Computer-Aided Design (CAD)
and Computer-Aided Manufacturing (CAM)
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Integrated Operating Systems 3

Benefits of CIMS include:

•Decrease in engineering design costs
•Increase in productivity
•Increase in equipment utilisation
•Reduction in work-in-progress and lead times
•Improvement in quality
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Integrated Operating Systems 4

Enterprise Resource Planning

• Combines each department’s information into a

single integrated system with a common database

• Provides timely analysis of data and information

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

Financial
Management

Customer Supply Chain

Relationship Management
Management
ERP
System

Human
Manufacturing
Resource Resource
Management Planning
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Integrated Operating Systems 5

Customer Relationship Management (CRM)

• Strategy designed to learn more about customers

wants, needs and behaviours

• Used to build customer loyalty and consequently

increases revenue and profits
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Integrated Operating Systems 6

CRM capabilities include:

•Segmenting markets – demographic or behavioural
•Tracking sales trends and promotional effectiveness
•Identifying which customer should be the focus of targeted
marketing initiatives
•Forecasting customer retention
•Studying which goods and services are purchased together
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Integrated Operating Systems 7

Revenue Management Systems

• Used for forecasting demand and allocating assets

across market segments

• Used for making bookings, determining

overbooking strategies and pricing strategies to
charge different customers, etc.
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Integrated Operating Systems 8

Typical users of Revenue Management Systems:

•Hotels
•Airlines
•Cruise ships
•Car rentals
•Theatres
•Restaurants
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Benefits of Technology

• Drives the global economy

• Creates new industries
• Merges otherwise separate industries
• Improves productivity
• Enhances quality
• Increases flexibility
• Reduces response times
• Frees people from boring and dangerous jobs
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Challenges of Technology

• Damage to reputation through technology failures

• Designing effective facilities for customers to return
goods or terminate services
• Protecting customer privacy and financial details
• Information overload
• Security of data
• Continually having to learn new technologies to
keep pace with developments
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Impacts of Technology

• Technology increases pressure on frontline

workers

• Managers must make good decisions about what

technologies to use, and how they are to be
introduced in the workplace

• Customisation - focus on niche markets and

targeting customers
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Class Activity

• Work in groups of about 5

• For any organisation that you are familiar with …

- Provide three examples of how technology has changed
this organisation’s operations in the past five years
• 10 minutes

• Feedback to the class

• 5 minutes
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Conclusions

• Organisations use both hard and soft technologies

across the value and supply chains

• The Internet is changing the way organisations and

society interact with each other

• Technology has many benefits, but can cause

problems for organisations and individuals if not
implemented wisely
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References

• Evans & Collier (2007) “Operations Management:

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

Any Questions?