TECHNOLOGY AND OPERATIONS MANAGEMENT

1. OM2 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT DAVID A. COLLIER AND JAMES R. EVANS

2. Chapter 5 Learning Outcomes l e a r n i n g o u t c o m e s LO1Describe different types of technology and their role in manufacturing and service operations. LO2Explain how manufacturing and service technology is strengthening the value chain. LO3 Explain the benefits and challenges of using technology. LO4Describe the processes of technology development and adoption.

3. Imagine a team of employees that works 16 hours a day, seven days a week. They never call in sick or show up late. They demand no benefits, require no health insurance, no coffee breaks, and receive no paychecks. They never complain. Sounds like a bunch of robots, huh? They are, in fact, robots--and they're dramatically changing the way Staples, the largest distributor of office products in the United States, delivers thousands of orders to its customers. Having people run around a warehouse looking for those items is expensive, especially when the company promises next day delivery. When customer orders come in, the computer tells the 2 feet high, the 3-foot-long machines where to find racks with the appropriate items; the robots, following a network of evenly spaced bar-code stickers spread across the floor, locate the racks, slide beneath them, and lift them in the air. Chapter 5 Technology and Operations Management

4. They then carry them to picking stations and wait patiently as humans pull the correct products and place them in boxes. When orders are filled, the robots neatly park the racks back among the rest. When they run low on power, they head to battery-charging terminals, or, as warehouse personnel say, "They get themselves a drink of water." Overall, average daily output is up 60%. Chapter 5 Technology and Operations Management What do you think? In what ways has technology benefited your life and work as a student?

5. Chapter 5 Technology and Operations Management • Importanceof Technology • Virtually everything that is done in a business depends on some type of technology. • Technology is evolving at an extremely rapid pace. • Technological innovation in goods, services, manufacturing, and service delivery is a competitive necessity.

6. Chapter 5 Technology and Operations Management • Hard technologyrefers to equipment and devices that perform a variety of tasks in the creation and delivery of goods and services. • Soft technologyis the application of the Internet, computer software, and information systems to provide data, information, and analysis and to facilitate the accomplishment of creating and delivering goods and services.

7. Chapter 5 Technology and Operations Management RFID • Radio frequency ID (RFID) tags are the modern successor to bar codes. • RFID tags are tiny computer chips that transmit radio signals and can be mounted on packages or shipping containers to help organizations identify product locations and movement. • RFID tags are being embedded in virtually everything, from clothes, to supermarket products, to livestock, to prescription medicines, and have been used to monitor residents in assisted living buildings and track the movements of doctors, nurses, and equipment in hospital emergency rooms.

8. Chapter 5 Technology and Operations Management • Manufacturing Technology Tours • Making jigsaw puzzles consists of three major steps: making puzzle pieces, making puzzle boxes, and final assembly (see diagram on next slide). • Manufacturing motorcycle transmission gears: Mazak machining center can operate unattended for hours—highly automated production (see diagram on slide 8). • Many manufacturing industries use specialized technology.

9. Production Process for Jigsaw Puzzle Making

10. Photos courtesy of Andrews Products, Inc. Examples of Machining Technology

11. Exhibit 5.1 E-Commerce View of the Value Chain

12. Chapter 5 Technology and Operations Management • Integrated Operating System (IOS) • Integrate hard and soft technology across the organization, allowing managers to make better decisions and share information across the value chain. • Computer integrated manufacturing systems (CIMS), enterprise resource planning (ERP) systems, and customer relationship management (CRM) systems are IOSs.

13. Chapter 5 Technology and Operations Management • Computer-Integrated Manufacturing Systems • Computer-integrated manufacturing systems (CIMS) represent the union of hardware, software, database management, and communications to automate and control production activities. • A robotis a programmable machine designed to handle materials or tools in the performance of a variety of tasks.

14. Chapter 5 Technology and Operations Management • CIMS • CAD/CAE enables engineers to design, analyze, test, simulate, and “manufacture” products before they physically exist. • CAMinvolves computer control of the manufacturing process. • Flexible manufacturing systems (FMS)consist of two or more computer-controlled machines linked by automated handling devices.

15. Chapter 5 Technology and Operations Management • Enterprise Resource Planning • Enterprise Resource Planning (ERP)systems integrate all aspects of a business—accounting, customer relationship management, supply chain management, manufacturing, sales, human resources—into a unified information system and provide more timely analysis and reporting of sales, customer, inventory, manufacturing, human resource, and accounting data.

16. Chapter 5 Technology and Operations Management • Enterprise Resource Planning (ERP) • Two prominent vendors of ERP software are SAP and Oracle. • ERP allows departments to share information and communicate with each other easily. • ERP is not about software, but about changing the way the organization and its operations are managed.

17. Chapter 5 Technology and Operations Management • Customer Relationship Management Systems • 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 revenues and profits.

18. Chapter 5 Technology and Operations Management • Service Technology • Service technologies are used behind the scenes to facilitate your experience as a customer. • E-servicerefers 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.

19. Chapter 5 Technology and Operations Management • Service Technology • Many health care facilities are adopting electronic medical record (EMR) systems that can be easily integrated with medical records, billing, patient scheduling, and accounting (see text box). • Technology at UPS such as handheld devices, UPSnet, UPS Mail, etc. (see text box).

20. Chapter 5 Technology and Operations Management Service Technology Automation is found in many areas of services, including automated car washes, robotic surgery, mail sorting machines, delivery of medical records within hospitals, automated one-man garbage trucks, fetal monitors, electronic hotel keys and locks, airline auto-pilot, and entertainment using robots such as Disney World’s Hall of Presidents and Country Bear Jamboree.

21. Chapter 5 Technology and Operations Management UsingTechnology to Improve Library Service The Metropolitan Library System in Oklahoma City is implementing a new scanning system that uses radio-frequency identification (RFID) tags to keep track of books. The program will cost the library system about $400,000. The system is designed to speed up check-out times. Up to five books can be checked in or out at once. One of the most helpful features is a new shelf scanner. Librarians used to check books one at a time, making sure they were on the right shelf and in the right place. Library productivity will also increase.

22. Chapter 5 Technology and Operations Management • Technology in Value Chains • Four major types of business relationships: • B2B: Business to Business • B2C: Business to Customer • C2C: Customer to Customer • G2C: Government to Customer • Electronic transaction capability allows all parts of the value chain to immediately know and react to changes in demand and supply.

23. Exhibit 5.2 Example Benefits and Challenge of Adopting Technology

24. Chapter 5 Technology and Operations Management • Making Technology Decisions • Scalability is a measure of the contribution margin required to deliver a good or service as the business grows and volumes increase. • High scalabilityis the capability to serve additional customers at zero or extremely low incremental costs (e.g., Monster.com). • Low scalabilityimplies that serving additional customers requires high incremental variable costs (e.g., see WebVan). • Many of the dot.coms that failed in the year 2000 had low scalability and unsustainable demand.

25. Chapter 5 Technology and Operations Management • How Intel describes the history of technology • revolutions: • Stage I. Birth • Stage II. Turbulence • Stage III. Build-out • Examples: • Global Digital Revolution (see text box) • U.S. Railroad Industry

26. Chapter 5 Case Study on RFID Bracket International-The RFID Decision Case Study By searching the Internet and library, summarize the advantages and disadvantages of RFID systems. How does RFID compare to bar-coding? Did you find any RFID applications for services? (maximum of two pages) What is the payback for this possible RFID adoption? What do you recommend Mr. Bracket do in the short- and long-term? Explain your reasoning.

27. Exhibit Extra Examples of Service Technology