TECHNOLOGY AND

OPERATIONS MANAGEMENT
CHAPTER 5

DAVID A. COLLIER AND JAMES R. EVANS

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

5-1 Describe different types of technology and their

role in manufacturing and service operations.
5-2 Explain how manufacturing and service technology
strengthen the value chain.
5-3 Explain the benefits and challenges of using
technology.
5-4 Describe key technology decisions.

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

F ord Motor Company and Toyota, an unlikely couple, recently

agreed to jointly develop the next generation of gas-electric hybrid
systems for pickup trucks and SUVs. Toyota has built more
hybrids, but it has no hybrid pickup trucks while Ford has been a
leader in first-generation hybrids for SUVs. Their partnership
includes swapping patents, research and development, joint
supplier qualification and sourcing, and building the next
generation global supply chain that supports hybrids and ultimately
electric vehicles. Software development is also a major part of this
joint venture, since Ford’s Volt, for example, contains over 10
million lines of code. Other supply chain participants are
contributing to building out the supply chain necessary for electric
vehicles. Cracker Barrel, for example, is installing electric vehicle
chargers in 24 of its restaurants.

©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or 3
posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

What do you think?

In what ways has
technology benefited
your life and work as

a student?

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

Importance of Technology
• Technology—both physical and information—
has dramatically changed how work is
accomplished in every industry, from mining to
manufacturing to education to health care.

• Technological innovation in goods, services,

manufacturing, and service delivery is a
competitive necessity.

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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.

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

Manufacturing Technology
• The right technology must be selected for the goods that are
produced.
• Process resources, such as machines and employees, must be set
up and configured in a logical fashion to support production
efficiency.
• Labor must be trained to operate the equipment.
• Process performance must be continually improved.
• Work must be scheduled to meet shipping commitments/customer
promise dates.
• Quality must be ensured.

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

increase equipment utilization by a factor of 2 to 3;

reduce work-in-process and lead times by 30 to 60 percent.

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posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

Manufacturing Technology

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 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

• Numerical control (NC) machine tools

enable the machinist’s skills to be duplicated by a programmable device
(originally punched paper tape) that controls the movements of a tool used to make
complex shapes.

• A robot is a programmable machine designed to handle materials or tools in the

performance of a variety of tasks.

• Flexible manufacturing systems (FMS)

consist of two or more computer-controlled machines linked by automated handling
devices. Computers direct the overall sequence and multitask of operations and route the
work to the appropriate machine, select and load the proper tools, and control the operations
performed by the machine. Ex: in metal cutting and forming.

©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or 11
posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or 12
posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

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posted to a publicly accessible website, in whole or in part.
 Applications CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

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posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

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posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

Agile Manufacturing Systems

Agility is the ability to grow and succeed in an environment of constant and
unpredictable changes.

In recent years, the manufacturing paradigm has been changing from mass
production to agile manufacturing and to cope with competitive pressure
this concept emerged.

The objective is to enable manufacturing enterprises to be competitive by

dynamically reconfiguring software, equipment, and organization structure.

©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or 16
posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or 17
posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or 18
posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

Technology in Value Chains

• An intermediary is any entity—real or virtual—
that coordinates and shares information between
buyers and sellers.

• Return facilitators specialize in handling all

aspects of customers returning a manufactured
good or delivered service and requesting their
money back, repairing the manufactured good and
returning it to the customer, and/or invoking
(doing) the service guarantee.

©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or 20
posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or 21
posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

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posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

PDA:
The main purpose of a personal digital assistant (PDA) is to act as an
electronic organizer or day planner that is portable, easy to use and­
capable of sharing information.
Doctors, nurses and most professional health care workers have found
this fact extremely beneficial in their practice, and hospitals, doctor's
offices and pharmacies have quickly adapted to the benefits of PDA
technology over the past decade.
By 2003, for instance, more than 50 percent of doctors were using
handheld computers in some form during their daily activities, while
an even larger percentage of residents and students used them and
showed proficiency [source: Palm Infocenter].

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

• Enterprise Resource Planning (ERP)

• systems integrate all aspects of a business—accounting, customer relationship management,
supply chain management, manufacturing, sales, human resources into a unified information
system and provide more timely analysis and reporting of sales, customer, inventory,
manufacturing, human resource, and accounting data.
• ERP combines each department’s information into a single, integrated system with a
common database so that departments can easily share information and communicate with
each other.

Two prominent vendors of ERP software are SAP and Oracle.

• SAP integrates business applications using its ERP (Enterprise Resource Planning
Software), Real time management of business processes is available using SAP.

• Oracle, an Object Relational Database Management System (ORDBMS), is used in

enterprise environments, and Oracle manages data in enterprises.

• SAP Is The Best ERP System : SAP is abbreviation of Systems Applications & Products in
Data Processing. The aim of SAP training is to enhance efficiency by reformation of the
supply-chain structure and refurbishing of the entire business functionalities of the
organization.

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posted to a publicly accessible website, in whole or in part.
 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

Cloud Computing:
at the Manufacturing-Enterprise Level At the enterprise level, cloud computing broadly
supports manufacturing enterprises’ operations including through applications such as
enterprise resource planning, data analysis, and workforce training and management.

supports 1- manufacturers’ integration into global supply, production, and value

chains. how manufacturers are effectively using cloud-based enterprise management
resource planning solutions.

manufacturers’ increasing use of cloud-based solutions to support enterprise-wide data

analytics to improve their manufacturing operations and better tailor their products to
customers’ specific needs.

For instance, large multinational manufacturers in the healthcare industry, such as

Johnson and Johnson (J&J), are analyzing big data in the cloud to efficiently drive
insights across the enterprise to better enable decision-making in business and
operations 24 With more than 260 operating units across 65 countries, J&J has data
everywhere.

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

Supports : 2-Manufacturing Enterprises’ Operations

A medium-sized manufacturer in Bozeman in Montana country in USA, that
specializes in high-end backpacks and other backpacking accessories.

The company leverages cloud-based software to manage virtually every aspect of its
operations at five contract-manufacturing locations in the United States, Vietnam, and
the Philippines, including design and engineering, production, quality control, research
and testing, manufacturing, inventory management, employee management, financials,
vendor relations, e-commerce, and sales and marketing.

The cloud helps the company manage the entire view of its enterprise operations,
“providing visibility of consumption of raw materials, time-stamping what products
have been completed, and either shipping products direct to customers or transferring
them for direct sales.

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

2-Enables Design and Development of Manufactured Products

Traditionally, product design in manufacturing was all about creating physical
prototypes, testing or experimenting with them, and then going through an iterative
refinement process until reaching a final product.

But, increasingly, cloud-hosted, computer-aided design tools are streamlining product-

development processes, speeding innovation cycles, and accelerating time to market.

Cloud computing allows computer-aided design, engineering, and manufacturing

(CAD/CAE/CAM) to be performed on high-powered supercomputers, meaning
designers and engineers no longer have to rely on powerful machines in their office or
per-seat software licenses to run ground-breaking simulations or create data-intensive
designs.

Cloud computing provides the immense data capacity and virtualized computing
power to enable this dynamic, digitally based design. And by centralizing and
bringing all that data into the cloud, engineers can have the same plans available to them
across any device.

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 CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

Digital Manufacturing and Design Innovation Institute (DMDII)

Is one of 14 Institutes of Manufacturing Innovation within manufacturing USA, is developing new
cloud-based systems that seek to democratize SME manufacturers’ access to scalable computing
resources and applications. DMDII envisions its Digital Manufacturing Commons (DMC) as a
free, open-source software project to develop a collaboration and engineering platform that can
serve as an online gateway for digital manufacturing. As a specific example, one of the most
significant manual processes involved in manufacturing is programming the measurement machine
to verify the quality of parts.

The (internet of thing) IoT used in manufacturing overlaps at innumerable points with IoT in
retail, consumer goods, healthcare, and just about everything else.
1-providing incredibly important insights that are changing the way manufacturing is being run.
2- promises cost savings, productivity, providing information about the supply chain—the quality
of parts and products being used, where they came from, and how they were grown, bought, or
created.

5G, manufacturers can begin to increase their use cloud, centralized tracking, quality inspection,
forming an “ecosystem” of smart manufacturing. a growing disparity between 5G have and have-
nots in 2020 (much like IoT). But it will undoubtedly play a larger role in smart manufacturing
moving forward.
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posted to a publicly accessible website, in whole or in part.
 Exhibit 5.2 Example Benefits and Challenges of Adopting Technology
CHAPTER 5 TECHNOLOGY AND OPERATIONS MANAGEMENT

©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or 29
posted to a publicly accessible website, in whole or in part.