Chapter 6

1. Chapter 6 Operations Technologies

2. Some Production Technologies NC-machines (Numerically Controlled) Robots AIS (Automatic Identification Systems) • e.g., bar codes, magnetic strips, OCR CAD (Computer Aided Design) CAM (Computer Aided Manufacturing) CIM (Computer Integrated Manufacturing) FMS (Flexible Manufacturing System) ASRS (Automated Storage & Retrieval System) AGV (Automatic Guided Vehicle)

3. New Technology Adoption What are some advantages/disadvantages of adopting new technologies? How can you justify adopting new technologies? • cost savings vs. strategic benefits What are some impacts that new technologies have on employees? Examples of how new technology improves operations

4. Automating an Existing Process Always try to simplify the process first. Why? Employee issues • involvement in simplifying process • training on new automation • possible job reassignment • labor union negotiations

5. Northrop Grumman Searches for New Production Technology Northrop Grumman is a military aircraft manufacturer in the U.S. Aircraft assembly is an expensive operation because of the labor intensity and sporadic quality problems involved in drilling millions of holes each year. Over 70,000 holes are manually drilled and fastened per shipset in each of Northrop Grumman’s military airframes, accounting for nearly 44% of the total assembly costs. The current method of hole drilling and countersinking for fastener installation uses unique drill fixtures for each assembly and subassembly to be processed, at an average cost of $50,000 each. Well over 900 conventional drill fixtures are required for an airframe assembly on each program. Each drill fixture is constructed through a laborious process. Variation exists in the quality of drilled holes because each drill operator controls the drilling speed and feed as a hole is made with an air-powered, hand-held drill. Northrop Grumman is very interested in finding new production technology to modernize its manufacturing operations, particularly its hole drilling process. The objective of its modernization is to identify automation opportunities for its assembly lines that will increase flexibility while simultaneously reducing touch labor costs and improving quality. In addition, to increase the quality and efficiency of assembly processes, areas must be identified where automation will eliminate the need for many of the assembly fixtures and drill templates currently in use, thereby reducing recurring and non-recurring tooling costs.

6. ASRS in Hospital Pharmacies It stocks shelves. It fills prescriptions. It even bills patients automatically. But the one thing it won’t do is talk back to the boss. This automatic storage and retrieval system (ASRS) is finding its way into hospitals around the country. Dubbed the “Pharmacy Robot”, this new, high-tech computer system can stock and retrieve drugs flawlessly in record time. In an age of managed health care companies’ never-ending efforts to be more efficient, the idea of an automated prescription-filling system immediately caught on in the 1990s. Hospitals were interested in ensuring accuracy and reducing the possibility of human error. Out of the 30 million prescriptions the “robots” have filled so far, there have been zero errors. Pittsburgh’s Mercy Hospital got its ASRS in September 1994, one of the first in the country to install such a system. After one year the ASRS was responsible for filling 85 percent of the hospital’s prescriptions. The Pharmacy Robot is not allowed to handle controlled and dangerous substances, refrigerated drugs, and doses that are larger than the five-inch bags used with the system. The ASRS is connected to the hospital’s computer system and recognizes any possible drug interaction problems or allergies. It can stock 1,000 doses of medications in just 20 minutes. The Pharmacy Robot looks more like a video camera on a pole than the typical robots in movies. It sits in a 35-foot long glass tunnel and hydraulic air pumps whoosh it back and forth on a metal rail. An infrared eye passes over bar codes on little bags of medication just as they are sucked off racks with suction cups, to be deposited in labeled bins taken to patients’ bedsides. The size of each robot varies from hospital to hospital, depending on space and needs. The Pharmacy Robot has seen great success so far, which will most certainly continue. It can process information in just a few seconds that may have taken pharmacists hours or even days. And it frees up pharmacists from nominal tasks so they can do more counseling for their patients.

7. Communications Technology Demolishes Time & Distance A group of computer programmers at Tsinghua University in Beijing is writing software using Java technology. They work for IBM. At the end of each day, they send their work over the Internet to an IBM facility in Seattle. There, programmers build on it and use the Internet to zap it 5,222 miles to the Institute of Computer Science in Belarus and Software House Group in Latvia. From there, the work is sent east to India’s Tata Group, which passes the software back to Tsinghua by morning in Beijing, back to Seattle and so on in a great global relay that never ceases until the project is done. “We call it Java Around the Clock,” says John Patrick, vice president of Internet technology for IBM. “It’s like we’ve created a 48-hour day through the Internet.” The Internet and computer networks enable companies to work globally in ways they never could before.

8. Managing a Company with SAP’s ERP Software SAP is the market leader in Enterprise Resource Planning (ERP) software. Its R/3 software allows a company to integrate and better manage most of its business and operations functions. The following description of how R/3 works illustrates how a customer order triggers a chain reaction of events throughout a hypothetical shoe company. Ordering—A sales rep from the shoe company takes an order for 1,000 blue tennis shoes from a Brazilian retailer. From her portable PC, the sales rep taps into the R/3 sales module back at the U.S. headquarters, which checks the price, including any discounts the retailer is eligible for, and looks up the retailer’s credit history. Availability—Simultaneously, R/3’s inventory software checks the stock situation and notifies the sales rep that half the order can be filled immediately from a Brazilian warehouse. The remaining shoes in the order will be delivered in five days direct from the company’s factory in Taiwan. Production—R/3’s manufacturing software schedules the production of the sneakers at the Taiwan factory, meanwhile alerting the company’s warehouse manager in Brazil to go ahead and ship the 500 shoes to the retailer. An invoice gets printed up—in Portuguese. Manpower—That’s when R/3’s human resources module identifies a shortage of workers at the Taiwan factory to handle the order and alerts the personnel manager of the need for temporary workers. Purchasing—R/3’s materials-planning module notifies the purchasing manager that it’s time to reorder blue dye, rubber, and shoelaces. Order Tracking—The customer logs on to the shoe company’s R/3 system through the Internet and sees that 250 of the 500 shoes coming from Taiwan have been made and dyed. The customer also sees there are 500 red tennis shoes in stock and places a follow-up order on the Internet. Planning—Based on data from R/3’s forecasting and financial modules, the CEO sees that colored tennis shoes are not only in hot demand but are also highly profitable. He decides to add a line of fluorescent footwear.