TECHNOLOGY

AND
OPERATIONS
MANAGEMENT
GROUP 2
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 Definition of Technology
3.1 - Understanding Technology in Operations
3.1a - Manufacturing Technology
3.1b - Computer-Integrated Manufacturing Systems (CIMSs)
3.1c - Advances in Manufacturing Technology
3.1d - Service Technology
3.2 - Technology in Value Chains
3.3 - Benefits and Challenges of Technology
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3.4 - Technology Decisions and Implementation

  TECHNOLOGY-both physical and information- has dramatically
changed how work is accomplished in every industry, from mining
to manufacturing, to education, to healthcare.
 Technology is the enabler that makes today’s service and
manufacturing systems operate productively and meet customer
needs better than ever.
 Technological innovation in goods, services, manufacturing, and
service delivery is a competitive necessity.
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 3.1 Understanding Technology in
Operations
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 We may categorize technology into two basic groups:
HARD TECHNOLOGY SOFT TECHNOLOGY
 Refers to equipment and devices that  Refers to the application of the Internet,
perform a variety of tasks in the creation computer software, and information
and delivery of goods and services. systems to provide data, information, and
 Some examples of hard technology are analysis and to facilitate the creation and
computers, microprocessors, optical delivery of goods and services.
switches, satellites, sensors, robots,  Some examples are database systems,
automated machines, bar-code scanners, artificial intelligence programs, and voice-
and radio-frequency identification (RFID) recognition software.
tags.
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 3.1a Manufacturing Technology
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 Common issues regarding technology:
 The right technology must be selected for the goods that are produced.
 Process resources, such as machines and employees, must be set up and
configured in a logical fashion to support production efficiency.
 Labor must be trained to operate the equipment.
 Process performance must be continually improved.
 Work must be scheduled to meet shipping committments/customer promise
dates.
 Quality must be ensured.
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 3.1b Computer-Integrated
Manufacturing Systems (CIMSs)
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 Computer-Integrated Manufacturing Systems (CIMSs)
 Represent the union of hardware, software, database management, and communications to
automate and control production activities, from planning and design to manufacturing and
distribution.

Numerical Control (NC)

 The roots of CIMs began with numerical control (NC) machine tools, which enable the
machinist’s skills to be duplicated by a programmable device (originally punched paper tape)
that controls the movements of a tool used to make complex shapes.

Computer Numerical Control (CNC)

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 Are NC machines whose operations are driven by a computer.

 Robot
 is a programmable machine designed to handle materials or tools in the performance of
a variety of tasks.
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 Computer-Aided Design/Computer-Aided
Engineering (CAD/CAE)
 enables engineers to design, analyze, test, simulate, and “manufacture” products before
they physically exist, thus ensuring that a product can be manufactured to specifications
when it is released to the shop floor.

Computer-Aided Manufacturing (CAM) systems

 involves computer control of the manufacturing process, such as determining tool
movements and cutting speeds.
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 Flexible Manufacturing Systems (FMSs)
 consists of two or more computer-controlled machines or robots linked by automated handling devices such as
transfer machines, conveyors, and transport systems. Computers direct the overall sequence of operations and route
the work to the appropriate machine, select and load the proper tools, and control the operations performed by the
machine.
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 CIMS Facts
According to the National Research Council, companies with computer-integrated
manufacturing system experience have been able to:

 decrease engineering design costs by up to 30 percent;

 increase productivity by 40 to 70 percent;

 increase equipment utilization by a factor of 2 to 3;

 reduce work-in-process and lead times by 30 to 60 percent; and

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 improve quality by a factor of 3 to 4.

 3.1c Advances in Manufacturing
Technology
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  3-D PRINTING, technically called additive manufacturing. This is the process of
producing a three-dimensional solid object from a digital model file. “Additive” means
that successive layers of material such as plastics, ceramics, or glass are built up rather
than attained by traditional machining processes such as milling or drilling, which
remove materials.
 NANOTECHNOLOGY involves the manipulation of matter on atomic, molecular,
and supramolecular scales, thus bringing with it super-precision manufacturing.
Currently applied mostly in space technology and biotechnology, it is going to play an
indispensable role in every manufacturing industry in the future. In many ways, it has
already changed the world.
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 Examples of application in nanotechnology include:
 Faster computer processing.
 Superconductive materials based on carbon nanotubes lifting magnetic cars and
trains.
 Smaller memory cards that have more memory space.
 Clothes that last longer and keep the wearer cool in the summer.
 Bandages that heal wounds faster.

All of these advances-and more that are on the horizon-will

continue to make OM a challenging and exciting field.
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 3.1d Service Technology
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  SERVICE TECHNOLOGIES are used behind the scenes to facilitate your
experience as a customer.
 Technology is used in many services, including downloading music, banking,
automated car washes, voice recognition in telephone menus, medical
procedures, hotel and airline kiosks, and entertainment such as the robots used
in Disney World’s Hall of Presidents and Country Bear Jamboree attractions.
 E-SERVICE refers to using the Internet and technology to provide services that
create and deliver time, place, information, entertainment, and exchange value
to customers and/or support the sale of goods.
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 3.2 Technology in Value
Chains
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  Technology, especially the Internet and e-communications, is changing the
operation, speed, and efficiency of the value chain and presents many new
challenges to operations managers.
 Business analytics plays a critical role in managing value chains, particularly for
integrating and analyzing data throughout the value chain within an information
systems framework.
 CUSTOMER RELATIONSHIP MANAGEMENT (CRM) is a business
strategy designed to learn more about customers’ wants, needs and behaviors in
order to build customer relationships and loyalty, and ultimately enhance
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revenues and profits.

 CRM helps firms gain and maintain competitive
advantage by:
 segmenting markets based on demographic and behavioral characteristics;
 tracking sales trends and advertising effectiveness by customer and market
segment;
 identifying which customers should be the focus of targeted marketing
initiatives with predicted high customer response rates;
 forecasting customer retention (and defection) rates and providing feedbacks
as to why cutomers leave the company.
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  identifying which transactions are likely to be fraudulent;
 studying which goods and services are purchased together, and what
might be good ways to bundle them (i.e., the customer benefit
package);
 studying and predicting what Web characeristics are most attractive
to customers and how the website might be improved; and
 linking the previous information to competitive priorities by market
segment and process and value chain performance.
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 3.3 Benefits and
Challenges of Technology
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 Example Benefits and Challenges of Adopting Technology
BENEFITS CHALLENGES
 Creates new industries and opportunities.  Higher employee skill levels required,
 Restructures old and less productive industries. such as information technology and
 Integrates supply and value chain players. service management skills.
 Increases marketplace competitiveness and  Integration of old (legacy) and new
maintain the survival of the firm. technology and systems.
 Provides the capability to focus on smaller target  Job shift and displacement.
market segments through mass customization.  Less opportunity for employee creativity
and empowerment.
 Protecting the employee’s and customer’s
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privacy and security.

 Example Benefits and Challenges of Adopting Technology
BENEFITS CHALLENGES

 Improves/increases productivity, quality,  Fewer human service providers, resulting

in customer ownership not being assigned,
customer satisfaction, speed, safety, and
nonhuman service encounters, and
flexibility/customization-does more with
inability of the customer to change
less.
decisions and return goods easily.
 Lowers cost  Information overload
 Raises world’s standard of living  Global outsourcing and impact on
 Monitors the environment and health of domestic job opportunities

the planet.  Enforcement of regulations and laws to

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support sustainability goals.

 3.4 Technology Decisions
and Implementation
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 Scalability
 is a key factor that affects technology decisions.

 is a measure of the contribution margin (revenue minus variable costs) required to deliver a good
service as the business grows and volumes increase.
 is a key issue in e-commerce.

High Scalability
 is the capability to serve additional customers at zero or extremely low incremental costs (e.g.,
Monster.com).

Low Scalability
 implies that serving additional customers requires high incremental variable costs.
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