Lecture Fundamentals of operations management (4/e): Chapter 5 - Davis, Aquilano, Chase

Chapter 4 The Role of technology in operations, after studying this chapter you will be able to: 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,...

DAVIS F   O   U   R   T   H       E   D   I   T   I   O   N AQUILANO CHASE chapter The Role of Technology  in Operations © The McGraw-Hill Companies, Inc., 2003 PowerPoint Presentation by Charlie Cook Chapter Objectives 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 © The McGraw­Hill  e-services that are currently being offered Fundamentals of Operations  Companies, Inc., 2003 Management 4e  4–2 Managerial Issues 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  © The McGraw­Hill  Companies, Inc., 2003 4–3 How Technology Affects Operations 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of delivery –Quality of product/service –Customization • Technology’s Impact on Traditional Tradeoffs –Tradeoffs are no longer valid—technology allows firms compete on several dimensions at once Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 4–4 How Technology Impacts  How Technology Impacts  Operational Performance Operational Performance Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 4.1 4–5 Technology in Manufacturing Technology in Manufacturing Automation Development Machining centers Operations where tools are change automatically as part of the process Numerically controlled (NC) machines Manufacturing equipment that is directly controlled by a computer Industrial robots Programmable machines that can perform multiple functions Computer-aided (or –assisted) design Designing a product using a specially equipped computer Computer-assisted design and manufacturing system (CAD/CAM) Integration of design and production of a product through use of a computer Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 4–6 Technology in Manufacturing (cont’d) Technology in Manufacturing (cont’d) Automation Development Flexible manufacturing system (FMS Manufacturing facility that is automated to some extent and produces a wide variety of products Computer-integrated manufacturing (CIM) Integration of all aspects of manufacturing through computers Islands of automation Automated factories or portions which include NC equipment, automated storage/retrieval systems, robots, and machining centers Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 4–7 Major Categories of Software Systems Major Categories of Software Systems in Manufacturing in Manufacturing Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 4.2 4–8 Information Technology Information Technology Software Systems Enterprise Resource Planning (ERP) Provides a common software infrastructure and database Supply Chain Management (SCM) Controls interaction with suppliers in the overall supply chain New Product Development (NPD) Links the engineering function with the operations function Customer Relationship Manages the interface between the Management (CRM) firm and its customer Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 4–9 Functional Areas as Independent Operations Functional Areas as Independent Operations Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 4.3a 4–10 ERP Systems Link Functional Areas with a  ERP Systems Link Functional Areas with a  Common Software Platform and Database Common Software Platform and Database Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 4.3b 4–11 Example of How SAP’s  Example of How SAP’s  R/3 System R/3 System Integrates an  Integrates an  Organization Organization Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 4.4 4–12 Leading ERP Software Companies and  Leading ERP Software Companies and  Respective Market Shares Respective Market Shares Total ERP Software and Services Revenue = $18.2 billion Fundamentals of Operations  Management 4e  Source: AMR Research âTheMcGrawưHill Companies,Inc.,2003 Exhibit 4.5 413 EvolutionofERPSystems EvolutionofERPSystems ã 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 © The McGraw­Hill  Fundamentals of Operations  Companies, Inc., 2003 Management 4e  4–14 Evolution of ERP Systems (cont’d) 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 âTheMcGrawưHill FundamentalsofOperations Companies,Inc.,2003 Management4e 415 TechnologyTrendsinServices TechnologyTrendsinServices ã 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 Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 4–16 Methods of Pricing to Encourage Self­Service Methods of Pricing to Encourage Self­Service Fundamentals of Operations  Source: Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 4.6 4–17 Technology Trends in Services (cont’d) 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 FundamentalsofOperations Management4e âTheMcGrawưHill Companies,Inc.,2003 418 IntegratingTechnologyintoServices IntegratingTechnologyintoServices ã 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  © The McGraw­Hill  Companies, Inc., 2003 4–19 Integrating Technology into Services  Integrating Technology into Services  (cont’d) (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 Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 4–20 Categories of E­Services Categories of E­Services Category Function Internet World-wide web presence with open access to all Intranet Internal network providing limited access by individuals within an organization Extranet A resource-limited network open only to specified internal and external users Electronic Data Interchange (EDI) A network designed to support the exchange of data between the organization and its vendors and suppliers Value-added network (VAN) A third party service that is used in conjunction© The McGraw­Hill  with EDI to provide the link to customers and suppliers Fundamentals of Operations  Management 4e  Companies, Inc., 2003 4–21 The Role of the Internet, Intranet, The Role of the Internet, Intranet, Extranet and EDI in an Organization Extranet and EDI in an Organization Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 Exhibit 4.7 4–22 Types of E­Services Types of E­Services Broad Categories Specific Service Types Business-to-Consumer (B2C) E-tailers (Goods and Services) Consumer-to-Consumer (C2C) Customer Support Business-to-Business (B2B) Network Providers Government-to-Business (G2B) Information Providers Government-to-Consumer (G2C) Application Service Providers (ASPs) Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 4–23 Challenges for E­Tailers Challenges for E­Tailers • 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 Fundamentals of Operations  Management 4e  © The McGraw­Hill  Companies, Inc., 2003 4–24 Technology Issues 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  © The McGraw­Hill  Companies, Inc., 2003 4–25 ... Types? ?of? ?E­Services Types? ?of? ?E­Services Broad Categories Specific Service Types Business-to-Consumer (B2C) E-tailers (Goods and Services) Consumer-to-Consumer (C2C) Customer Support Business-to-Business... use of technology Fundamentals? ?of? ?Operations? ? Management? ?4e  © The McGraw­Hill  Companies, Inc., 2003 4–3 How Technology Affects? ?Operations How Technology Affects? ?Operations • Traditional Tradeoffs... and machining centers Fundamentals? ?of? ?Operations? ? Management? ?4e  © The McGraw­Hill  Companies, Inc., 2003 4–7 Major Categories? ?of? ?Software Systems Major Categories? ?of? ?Software Systems in Manufacturing