TECHNOLOGY AND

OPERATIONS MANAGEMENT
CHAPTER 3
LEARNING OBJECTIVES

After studying this chapter, you will be able to:

3.1 Describe different types of technology and their roles in

manufacturing and service operation.

3.2 Explain how manufacturing and services technology and

analytics strengthen the value chain.

3.3 Explain the benefits and challenges using technology.

3.4 Describe key technology decisions.
INTRODUCTION

Internet of Things (IoT) - refers to physical products

with embedded sensors that are connected to the

Internet.

Such as smart watches and fitness devices, thermo-

stats, lighting, security, and refrigerators

INTRODUCTION

Technology - the enabler that makes today's

service and manufacturing systems operate

productively and meets customer needs better

than ever.
UNDERSTANDING TECHNOLOGY IN OPERATIONS

Hard technology - refers to equipment and devices that

perform a variety of tasks in the creation and delivery of

goods and services.

Some examples of hard technology are computers,

microprocessors, optical switches, satellites, sensors,

robots, automated machines, bar-code scanners, and

radio-frequency identification (RFID) tags.

UNDERSTANDING TECHNOLOGY IN OPERATIONS

Soft technology - refers to the application of the Internet,

computer software, and information systems to provide

data, information, and analysis and to facilitate the

creation and delivery of goods and services

Some examples are database systems, artificial

Intelligence programs, and voice-recognition software.

UNDERSTANDING TECHNOLOGY IN OPERATIONS

Information technology (IT) provides the ability to inte-

grate all parts of the value chain through better

management of data and information.

This leads to more effective strategic and operational

decisions to design better customer benefit packages that

support customers' wants and needs, achieve competitive

priorities, and improve the design and operation of all

processes in the value chain.

MANUFACTURING TECHNOLOGY

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.

MANUFACTURING TECHNOLOGY

COMMON ISSUES REGARDING TECHNOLOGY:

Labor must be trained to operate the equipment.
Process performance must be continually improved.
Work must be scheduled to meet shipping

commitments/customer promise dates.

Quality must be ensured.
COMPUTER-INTEGRATED MANUFACTURING
SYSTEMS (CIMSs)

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.

COMPUTER-INTEGRATED MANUFACTURING
SYSTEMS (CIMSs)

Numerical Control (NC) - It is a machine tools, which

enable the machinist's skills to be duplicated by a
programmable device that controls the movements of a
tool used to make complex shapes.
COMPUTER-INTEGRATED MANUFACTURING
SYSTEMS (CIMSs)

Computer numerical control (CNC) - Machines are NC

machines whose operations are driven by a computer.

COMPUTER-INTEGRATED MANUFACTURING
SYSTEMS (CIMSs)

Robot - A programmable machine designed to handle

materials or tools in the performance of a variety of

tasks.

This can be "taught" a large number of sequences of

motions and operations and even to make certain

logical decisions.
COMPUTER-INTEGRATED MANUFACTURING
SYSTEMS (CIMSs)

CAD/CAE - Also known as computer-aided design or

computer-aided engineering.

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-INTEGRATED MANUFACTURING
SYSTEMS (CIMSs)

CAM - Also known as computer-aided manufacturing.

Involves computer control of the manufacturing process,

u-such as determining tool movements and cutting

speeds.
COMPUTER-INTEGRATED MANUFACTURING
SYSTEMS (CIMSs)

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.

ADVANCES IN MANAFACTURING COMPANY

Innovations in technology have changed manufacturing

in many industries. The technology is expanding the

customer benefit package, allowing consumers to

create custom cases for mobile phones.

3-D printing, technically called additive manufacturing

- this is the process of producing a three-dimensional

solid object from a digital model file.

ADVANCES IN MANAFACTURING COMPANY

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.
SERVICES TECHNOLOGY

E-service - The most common service technology in

used today involves the internet.

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.

TECHNOLOGY IN VALUE CHAINS

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.

In some cases, technology provides the capability to

eliminate parts of the traditional value chain structures
and streamline operations
TECHNOLOGY IN VALUE CHAINS

Customer Relationship Management (CRM) - A business

strategy designed to learn more about customers' wants,

needs, and behaviors in order to build customer relationships

and loyalty, and ultimately enhance revenues and profits.

A typical CRM system includes market segmentation and

analysis, customer service and relationship building, effective

complaint resolution, and cross-selling of goods and services

TECHNOLOGY IN VALUE CHAINS

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

TECHNOLOGY IN VALUE CHAINS

CRM helps firms gain and maintain competitive advantage by:

forecasting customer retention (and defection) rates and

providing feedback as to why customers leave the

company
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)

TECHNOLOGY IN VALUE CHAINS

CRM helps firms gain and maintain competitive advantage by:

studying and predicting what Web characteristics are

most attractive to customers and how the website might

be improved
linking the previous information to competitive priorities by

market segment and process and value chain performance

BENEFITS AND CHALLENGES OF TECHNOLOGY
EXAMPLE BENEFITS AND CHALLENGES OF

ADAPTING TECHNOLOGY

BENEFITS CHALLENGES

Creates new industries and job Higher employee skill levels required,

opportunities such as information technology and

service management skills

Restructures old and less integration of old (legacy) and new
productive industries technology and systems

Integrates supply and value chain job shift and displacement

players
EXAMPLE BENEFITS AND CHALLENGES OF

ADAPTING TECHNOLOGY

BENEFITS CHALLENGES

Increases marketplace
less opportunity for employee

competitiveness and maintains the

creativity and empowerment
survival of the firm
Provides the capability to focus on
protecting the employee's customer's

smaller target market segments

privacy and security
through mass customization
EXAMPLE BENEFITS AND CHALLENGES OF

ADAPTING TECHNOLOGY

BENEFITS CHALLENGES

Improves/increases productivity,
fewer human service providers,

quality, customer satisfaction, speed,

resulting in customer ownership not

safety, and flexibility/ customization-

being assigned, nonhuman service
does more with less encounters, and inability of the

customer to change decisions and

return goods easily

EXAMPLE BENEFITS AND CHALLENGES OF

ADAPTING TECHNOLOGY

BENEFITS CHALLENGES

Lowers cost information overload

Raises world's standard of living global outsourcing and impact on
Monitors the environment and
domestic job opportunities
health of the planet enforcement of regulations and laws

to support sustainability goals

TECHNOLOGY DECISIONS AND IMPLEMENTATION

The goal of the operations manager is to provide the best

synthesis of technology, people, and processes; this

interaction is often called sociotechnical system.

TECHNOLOGY DECISIONS AND IMPLEMENTATION

Designing sociotechnical system includes:

making decisions about job specialization versus enlargement
employee empowerment
training
decision support systems
teams and work groups
job design
recognition and reward
career advancement
facility and equipment layout
TECHNOLOGY DECISIONS AND IMPLEMENTATION

A key factor that affects technology decisions is scalability

Scalability is a measure of the contribution margin (revenue

minus variable costs) required to deliver a good or service as

the business grows and volume increase; a key issue in e-

commerce.
TECHNOLOGY DECISIONS AND IMPLEMENTATION

High Scalability is the capability to serve additional

customers at zero or extremely low incremental costs.

If an organization establishes a business where the

incremental cost (variable cost) to serve more customers is

zero, then the firm is said to be infinitely scalable.

Low Scalability implies that serving additional customers

requires high incremental variable costs.

Thank You!