OM2
CHAPTER 5
TECHNOLOGY AND
OPERATIONS MANAGEMENT
DAVID A. COLLIER
AND
JAMES R. EVANS
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
Chapter 5 Learning Outcomes
learning outcomes
LO1 Describe different types of technology and
their
role in manufacturing and service operations.
LO2 Explain how manufacturing and service
technology
is strengthening the value chain.
LO3 Explain the benefits and challenges of using
technology.
LO4 Describe the processes of technology
development
and adoption.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
22
Chapter 5 Technology and Operations Management
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.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
33
Chapter 5 Technology and Operations Management
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%.
What do you think?
In what ways has technology benefited your life and
work as
a student?
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
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Chapter 5 Technology and Operations Management
Importance of 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.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
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Chapter 5 Technology and Operations Management
Hard technology refers to equipment
and devices that perform a variety of
tasks in the creation and delivery of goods
and services.
Soft technology is 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.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
66
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.
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
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77
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 hourshighly automated
production (see diagram on slide 8).
Many manufacturing industries use
specialized technology.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
88
Production Process for Jigsaw Puzzle Making
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Examples of Machining Technology
Photos courtesy of Andrews Products, Inc.
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
1010
Exhibit 5.1
E-Commerce View of the Value Chain
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
1111
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.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
1212
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 robot is a programmable machine
designed to handle materials or tools
in the performance of a variety of
tasks.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
1313
Chapter 5 Technology and Operations Management
CIMS
CAD/CAE enables engineers to design,
analyze, test, simulate, and
manufacture products before they
physically exist.
CAM involves computer control of the
manufacturing process.
Flexible manufacturing systems
(FMS) consist of two or more computercontrolled machines linked by
automated handling devices.
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
1414
Chapter 5 Technology and Operations Management
Enterprise Resource Planning
Enterprise Resource Planning (ERP)
systems integrate all aspects of a
businessaccounting, customer
relationship management, supply chain
management, manufacturing, sales,
human resourcesinto a unified
information system and provide more
timely analysis and reporting of sales,
customer, inventory, manufacturing,
human resource, and accounting data.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
1515
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.
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
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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.
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
1717
Chapter 5 Technology and Operations Management
Service Technology
Service technologies are used behind
the scenes to facilitate your experience
as a customer.
E-service refers 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.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
1818
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).
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
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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 Worlds Hall of
Presidents and Country Bear Jamboree.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
2020
Chapter 5 Technology and Operations Management
Using Technology 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.
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
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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.
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
2222
Exhibit 5.2
Example Benefits and Challenge of Adopting Technology
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
2323
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 scalability is the capability to serve
additional customers at zero or extremely low
incremental costs (e.g., [Link]).
Low scalability implies that serving additional
customers requires high incremental variable
costs (e.g., see WebVan).
Many of the [Link] that failed in the year
2000 had low scalability and unsustainable
demand.
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
2424
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
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2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
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2525
Chapter 5 Case Study on RFID
Bracket
International-The
RFID Decision
Case Study
1. 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)
2. What is the payback for this possible RFID
adoption?
3. What do you recommend Mr. Bracket do in
the short- and long-term? Explain your
reasoning.
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
2626
Exhibit Extra
OM2, Ch. 5 Technology and Operations Management
2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
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Examples of Service Technology
2727