OM5 - PPT - CH 5

COLLIER/EVANS
OM 5
5
Technology
and Operations
Management
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
LEARNING OUTCOMES
1 Describe different types of technology and

their role in manufacturing and service
operations
2 Explain how manufacturing and service
technology strengthen the value chain
3 Explain the benefits and challenges of using
technology
4 Describe key technology decisions
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly acce ssible website, in whole or in part. OM5 | CH5 2
Technology
• Enabler that makes today’s service and

manufacturing systems operate
productively and meet customer’s needs
• Technological innovation in goods, services,
manufacturing, and service delivery is a
competitive necessity
Understanding Technology in Operations
• Hard technology: Equipment and devices

that perform a variety of tasks in the
creation and delivery of goods and services
• Soft technology: Application of Internet,
computer software, and information
systems to:
• Provide data, information, and analysis
• Facilitate the accomplishment of creating and
delivering goods and services
Issues Faced by Organizations Regarding
Technology
• Right technology must be selected for the

goods that are produced
• Process resources must be set up and
configured in a logical fashion to support
production efficiency
• Labor must be trained to operate the
equipment
Issues Faced by Organizations Regarding
Technology
• 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
• Union of hardware, software, database

management, and communications to
automate and control production activities
• Numerical control (NC): Machine tools that
enable the machinist’s skills to be duplicated by:
- Programmable device that controls the
movements of a tool used to make complex
shapes
• Computer numerical control (CNC): NC

machines whose operations are driven by a
computer
• Robot: Programmable machine designed to
handle materials or tools in the
performance of a variety of tasks
• Emerging integrated manufacturing systems

• CAD/CAE: Enables engineers to design, analyze,
test, simulate, and manufacture products before
they physically exist
• CAM: Computer control of the manufacturing
process
• Flexible manufacturing systems (FMS): Two or
more computer-controlled machines linked by
automated handling devices
Service Technology
• Used to facilitate the experience as a

customer
• E-service: Using the Internet and technology to
provide services for create and deliver:
- Time
- Place and information
- Entertainment
- Exchange value to customers and support the
sale of goods
Technology in Value Chains
• Requires tighter integration of many of the

components of the value chain
• Intermediary: Entity that coordinates and
shares information between buyers and
sellers
• E-commerce view - New perspective and
capability for the value chain
Technology in Value Chains
• Return facilitators: Specialize in handling

aspects of:
• Customers returning goods or service and
requesting money back
• Repairing the manufactured good and returning
it to the customer
• Invoking the service guarantee
Exhibit 5.1 E-Commerce View of the Value Chain
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly acce ssible website, in whole or in part. OM5| CH5 13
Analytics in Value Chains
• Business analytics - Integrating and

analyzing data throughout the value chain
within an information systems framework
• Key information systems
• Customer relationship management (CRM)
• Enterprise resource planning (ERP)
Enterprise Resource Planning (ERP)
• Systems that integrate all aspects of a

business into an unified information system
and provide timely analysis and reporting
of:
• Sales
• Customer
• Inventory
• Manufacturing
• Human resource
• Accounting data
Enterprise Resource Planning (ERP)
• Prominent vendors of ERP software are SAP

and Oracle
• Combines each department’s information
into a single, integrated system with a
common database
• Departments can share information and
communicate with each other
Customer Relationship Management (CRM)
• Business strategy designed to learn more

about customers’ wants, needs, and
behaviors to:
• Build customer relationships and loyalty
• Enhance revenues and profits
Benefits of CRM
• 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
Benefits of CRM
• Forecasting customer retention rates and

providing feedback for reasons of losing
customers
• Identifying which transactions are likely
candidates to be fraudulent
• Studying which goods and services are
purchased together, and what will be good
ways to bundle them
Benefits of CRM
• Studying and predicting what Web

characteristics are most attractive to
customers and how the Web site can be
improved
• Linking the information above to
competitive priorities by market segment
and process and value chain performance
Exhibit 5.2 Example Benefits and Challenges of
Adopting Technology
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly acce ssible website, in whole or in part. OM5| CH5 21
Technology Decisions and Implementation
• Sociotechnical system - Provides the best

synthesis of technology, people and
processes
• Key factor
• Scalability: Measure of the contribution margin
required to deliver a good or service as the
business grows and volumes increase
Technology Decisions and Implementation
- High scalability: Capability to serve additional

customers at zero or extremely low
incremental costs
- Low scalability: Serving additional customers
requires high incremental variable costs
SUMMARY
• Technology is required in manufacturing

goods and service delivery
• Goods are manufactured by using
computer-integrated manufacturing
systems
• Key information systems that drive value
chain management
SUMMARY
• Goal of operations manager is to provide

the best synthesis of:
• Technology
• People
• Processes
KEY TERMS
• CAD/CAE
• CAM
• Computer numerical control (CNC)
• Computer-integrated manufacturing systems
• E-service
• Flexible manufacturing systems (FMS)
• Hard technology
• High scalability
KEY TERMS
• Intermediary
• Low scalability
• Numerical control (NC)
• Return facilitators
• Robot
• Scalability
• Soft technology

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COLLIER/EVANS

1 Describe different types of technology and

• Enabler that makes today’s service and

• Hard technology: Equipment and devices

• Right technology must be selected for the

• Process performance must be continually

• Union of hardware, software, database

• Computer numerical control (CNC): NC

• Emerging integrated manufacturing systems

• Used to facilitate the experience as a

• Requires tighter integration of many of the

• Return facilitators: Specialize in handling

• Business analytics - Integrating and

• Systems that integrate all aspects of a

• Prominent vendors of ERP software are SAP

• Business strategy designed to learn more

• Segmenting markets based on demographic

• Forecasting customer retention rates and

• Studying and predicting what Web

• Sociotechnical system - Provides the best

- High scalability: Capability to serve additional

• Technology is required in manufacturing

• Goal of operations manager is to provide

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