1. The Role of Technology in Operations
DAVIS
AQUILANO
CHASE
PowerPoint Presentation by
Charlie
Cook
F O U R T H E D I T I O N
chapter 4
The Role of Technology in Operations
© The McGraw-Hill Companies, Inc., 2003

2. Chapter Objectives
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.
Demonstrate the different ways in which technology can be integrated into service operations.
Present a framework for defining the different types of e-services that are currently being offered.
Fundamentals of Operations Management 4e

3. 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.
Fundamentals of Operations Management 4e

4. How Technology Affects Operations
Traditional Tradeoffs
Low costs
Speed of delivery
Quality of product/service
Customization
Technology’s Impact on Traditional Tradeoffs
Tradeoffs are no longer valid—technology allows firms compete on several dimensions at once.
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5. How Technology Impacts Operational Performance
Exhibit 4.1
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6. Technology in Manufacturing
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7. Technology in Manufacturing (cont’d)
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8. Major Categories of Software Systems in Manufacturing
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Exhibit 4.2

9. Information Technology
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10. Functional Areas as Independent Operations
Exhibit 4.3a
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11. ERP Systems Link Functional Areas with a Common Software Platform and Database
Exhibit 4.3b
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12. Example of How SAP’s R/3 System Integrates an Organization
Exhibit 4.4
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13. Leading ERP Software Companies and Respective Market Shares
Total ERP Software and Services Revenue = $18.2 billion
Exhibit 4.5
Source: AMR Research
Fundamentals of Operations Management 4e

14. 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
Fundamentals of Operations Management 4e

15. 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
Fundamentals of Operations Management 4e

16. Technology Trends in Services
Increase in Self-Service
Reduces labor costs
Speeds up service
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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17. Methods of Pricing to Encourage Self-Service
Exhibit 4.6
Source:
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18. Technology Trends in Services (cont’d)
Shift from Time-dependent (Synchronous) to Non-time Dependent (Asynchronous) Transactions
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.
Fundamentals of Operations Management 4e

19. Integrating Technology into Services
Integration Benefits
Efficiency in operations
Effectiveness in serving customers
Areas for Integration
Strategic planning
Improved performance
Faster service
Improved customer knowledge
Increased product customization
Fundamentals of Operations Management 4e

20. Integrating Technology into Services (cont’d)
Areas for Integration (cont’d)
Increased efficiency
Economies of scale in consolidating operations.
Reduced labor costs through replacement of manpower and increased labor productivity.
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21. Categories of E-Services
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22. The Role of the Internet, Intranet, Extranet and EDI in an Organization
Exhibit 4.7
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23. Types of E-Services
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24. Challenges for E-Tailers
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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25. 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.
Fundamentals of Operations Management 4e