1. OPERATIONS MANAGEMENT INTEGRATING MANUFACTURING AND SERVICES FIFTH EDITION Mark M. Davis Janelle Heineke Copyright ©2005, The McGraw-Hill Companies, Inc. PowerPoint Presentation by Charlie Cook, The University of West Alabama

2. CHAPTER PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2005 The McGraw-Hill Companies. All rights reserved. The Role of Technology in Operations 3

3. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–3 CHAPTER OBJECTIVES Present the different types of information systems that exist in an organization. Introduce the ways technology can add value to the operations function within an organization. Identify the ways technology can be used in a manufacturing company. Describe enterprise resource planning (ERP) systems and how they can affect an organization. Demonstrate the ways technology can be integrated into service operations. Present a framework for defining the types of e-services currently being offered.

4. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–4 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.

5. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–5 Types of Computer Information Systems Finance and Accounting Decision Support Marketing Information Executive Information Artificial Intelligence Management Information Types of Computer Information Systems

6. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–6 Types of Computer Information Systems Management Information Systems –Reporting on operational effectiveness and productivity to support routine decision making Finance and Accounting Systems –Transaction processing systems that provide sales and revenue information Decision Support Systems –Help managers develop satisficing and optimization models for suitable alternatives and best solutions. –Data mining: translating patterns and relationships in data into decision-making information.

7. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–7 Types of Computer Information Systems (cont’d) Marketing Information Systems –Provide reports and research on consumer trends and preferences. Executive Information Systems (EIS) –Give top management the ability to “drill down” into the operations of the firm Artificial Intelligence –Speech recognition –Artificial vision for visual recognition systems

8. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–8 How Technology Affects Operational Performance Exhibit 3.1

9. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–9 Technology in Manufacturing

10. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–10 Technology in Manufacturing (cont’d)

11. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–11 Information Technology

12. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–12 Major Categories of Software Systems in Manufacturing Exhibit 3.2

13. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–13 Functional Areas as Independent Operations Exhibit 3.3A

14. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–14 ERP Systems Link Functional Areas with a Common Software Platform and Database Exhibit 3.3B

15. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–15 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

16. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–16 Example of How SAP’s R/3 System Integrates an Organization Exhibit 3.4

17. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–17 Leading ERP Software Companies and Respective Revenue Shares Exhibit 3.5 Source: AMR Research, “The Enterprise Resource Planning Report, 2003–2008,” May 2004. Used with permission.

18. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–18 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

19. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–19 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

20. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–20 Methods of Pricing to Encourage Self-Service Exhibit 3.6

21. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–21 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 (intermediaries).

22. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–22 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

23. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–23 Lands’ End’s website allows the customer to create a likeness of him- or herself and “try on” clothing for a custom fit.

24. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–24 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.

25. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–25 Categories of E-Services

26. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–26 The Role of the Internet, Intranet, Extranet, and EDI in an Organization Exhibit 4.7

27. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–27 Types of E-Services

28. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–28 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.

29. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–29 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

30. Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 3–30 Ethics and Privacy Issues Ethical Issues –Inappropriate access to information –Violations in accounting standards –Failure to disclose information –Nonconformance with health and safety guidelines. Privacy Issues –How much discretion and privacy will employees have in the use of their company’s cyber-resources. Organizations have a legal responsibility to control computer usage that results in abuse by their employees.