Lecture Fundamentals of operations management (4/e): Chapter 5 - Davis, Aquilano, Chase

Chapter 4 The Role of technology in operations, after studying this chapter you will be able to: Introduce the different ways in which technology can add value to the operations function within an organization, identify the various ways in which technology can be used in a manufacturing company, describe enterprise resource planning (ERP) systems and how they impact an organization,...

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Managerial Issues

Managerial Issues

• Advances in technology are changing the way in

which both manufacturing and service operations are designed

• Technology is a tool, not an end in itself

• Importance of maintaining compatibility between

technology and the organization’s other elements

• The need for continuous training in the use of

technology

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• Technology’s Impact on Traditional Tradeoffs

–Tradeoffs are no longer valid—technology

allows firms compete on several dimensions at once.

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How Technology Impacts  Operational Performance

How Technology Impacts  Operational Performance

Exhibit 4.1

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Technology in Manufacturing

Technology in Manufacturing

Automation Development

Machining centers Operations where tools are change

automatically as part of the process

Numerically controlled

(NC) machines Manufacturing equipment that is directly controlled by a computer

Industrial robots Programmable machines that can

perform multiple functions

Computer-aided

(or –assisted) design

Designing a product using a specially equipped computer

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Technology in Manufacturing (cont’d) Technology in Manufacturing (cont’d)

Automation Development

Flexible manufacturing

system (FMS Manufacturing facility that is automated to some extent and

produces a wide variety of products

Computer-integrated

manufacturing (CIM)

Integration of all aspects of manufacturing through computers

Islands of automation Automated factories or portions which

include NC equipment, automated storage/retrieval systems, robots, and machining centers

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Information Technology Information Technology

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Functional Areas as Independent Operations

Functional Areas as Independent Operations

Exhibit 4.3a

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ERP Systems Link Functional Areas with a  Common Software Platform and Database

ERP Systems Link Functional Areas with a  Common Software Platform and Database

Exhibit 4.3b

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Source: AMR Research

Total ERP Software and Services Revenue =

$18.2 billion

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Evolution of ERP Systems

Evolution of ERP Systems

• ERP Systems Origins

–An outgrowth of Materials Requirements

Planning (MRP) systems in the 1960s–70s

–Adoption of ERP systems updated the entire

information technology infrastructure of firms.

• Benefits of ERP Systems

–Reduction in database errors

–Faster customer response

–Faster order fulfillment

–Better overall communication

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Evolution of ERP Systems (cont’d)

Evolution of ERP Systems (cont’d)

• Why ERP Systems Fail

–Lack of top management commitment

–Lack of adequate resources

–Lack of proper training

–Lack of communication

• Criticisms of ERP Systems

–Constraints of a single ERP system versus a

mixture of Best of Breed software products

–Inflexibility of the built-in business model of

ERP systems

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• Decrease in the Importance of Location

–Lower costs for delivery of products and

services increases remote points of access and reduces the need for specific service locations

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–More economical (for the firm) and efficient (for

the customer) forms of service

• Increase in Disintermediation

–Technology brings buyers and sellers closer

together, eliminating intermediate steps or

organizations.

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–Effectiveness in serving customers

• Areas for Integration

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• Economies of scale in consolidating operations.

• Reduced labor costs through replacement of

manpower and increased labor productivity.

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Intranet Internal network providing limited access

by individuals within an organization

Extranet A resource-limited network open only to

specified internal and external users

Electronic Data Interchange

Value-added network (VAN) A third party service that is used in

conjunction with EDI to provide the link to customers and suppliers

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The Role of the Internet, Intranet, Extranet and EDI in an Organization

The Role of the Internet, Intranet, Extranet and EDI in an Organization

Exhibit 4.7

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Types of E­Services Types of E­Services

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Challenges for E­Tailers

Challenges for E­Tailers

• Infrastructure

–Developing the structure to efficiently and

quickly deliver goods to customers.

• Lack of tangibility

–Having no physical presence to which

customers can turn with problems.

• Differentiation

–Creating a unique on-line presence that sustains

growth.

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Technology Issues

Technology Issues

• Overcoming Barriers to Entry (Customer)

–“Fear of the unknown”

–Lack of knowledge by the customer

• Training and Support

–Worker skill development through hands-on

training in the new technology.

–Customer familiarization with technology.