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discussion on the available technology in operations management

| January 4, 2015

Given the globalisation of markets, increasingly complex operational landscape as well as the multiple dimensions of operational processes between partners, suppliers and stakeholders – recent advances in technology over the past few decades has elicited rapid responses from organisations across operational and transformational processes. From production to supply chain and logistics, technology plays an important function in operations management and development as it offers various advantages towards achieving organisational objectives (Clark Johnston, 2005). When asked about the advantages of technology, operation managers often say that technology helps to simplify tasks as well as foster operational performance (See: Barnes, 2008) however; the benefits and contributions of technology cannot be merely understood in such simple terms.

The aim of this paper is thus to present a discussion on the available technology in operations management and how they are used across OM’s five main areas often referred to as competitive priorities. The paper would also examine how technology contributes to the overall goal attainment of an organisation through its contribution to OM.

To put forward a succinct argument, it would be reasonable to assert that the central objective of this paper is not merely to discuss the use and contributions of technology to operations management, but also to examine modern advances in operational technologies and answer the following causal questions: To what extent does technology help operational managers and advance operations management? What are the challenges that technology poses to managers in operations management and what are the key technologies used across each areas of operation management’s competitive priorities?

These are some of the areas and issues which would be explored in this important exploratory paper. To put the discussion into perspective, it would be important to clarify that operations management has to do with the management of key processes and resources that an organization needs to produce and/or deliver to new and existing customers (Barnes, 2008, p.3). In general terms, operations management can be said to be concerned with at least five broad elements, namely: cost, flexibility, dependability, quality, and speed (Inman, 2007; See table 1 below).ty ta

These elements provide the bases upon which an organization structures its technological adoption and operations to create value for customers and succeed in the market place. An application of these elements to the present study would be predicated on determining the extents to which technology contributes to each area.

Literature Review

It is important to review extant literature to understand some of the issues and theoretical discussions from an operations management perspective with reference to technology. In this regard, scores of research in the current OM literature have had various inputs and reflection about the contribution of technology to operational processes and management. A study by America’s Forrester Research suggests that “manufacturers are increasingly adopting technology because it improves supply chain agility, reduce cycle time and helps to achieve higher efficiency and deliver products to customers fast and responsively”.

More recently, Ngai et al (2008) has stated that technology is an enabler of organisational growth and performance through business process improvement. Contrary to these views, it is shown in the work of Davenport (1998) that technology investment in operations management does not necessarily guarantee a stronger organisational performance. In a similar finding, Powell and Dent-Micallef (1997) believe that “the adoption of a particular technology can be easily duplicated by other firms and it often does not provide a sustained competitive advantage from the scope adopting firms.

Other available researches have argued that the only problem with technology in operations management lies in its implementation. Markus et al (2000) suggests that most problems concerning technology adoption include process standardization, accessibility of information, degree of centralization and information sharing as well as package customization.

Several authors in existing literatures (See e.g. Hong and Kim, 2002, Soh and Markus 1995) hold the position that to understand technology and some of its successes and challenges in modern operations management, each area of operations management’s competitive priorities must be individually studied and scrutinized. Before the next section which looks at each area of competitive priorities, the resource based view is one of the prominent theories used understanding the role of technology in operations management and across other organisational facets. According to Melville et al (2004), “the RBV holds that firm resources that are uncommon and hard to substitute are a basis for competitive advantage, in line with such view, IT resources, and capabilities are considered valuable, rare, and hard to substitute from an OM standpoint because it encompasses various dimensions, such as “IT capability and resources: IT/business partnerships, external IT linkages, business IT strategic thinking, IT business process integration, IT management, and IT infrastructure”. The importance of presenting this theory is to clarify the fact that technology is not always referred to as one single infrastructure in which managers deploy towards organisational development, but a process consisting of people, thinking, integration and a whole bunch of other important activities (See: Wade and Hulland, 2004).

Competitive Competencies and Technology

Price: – The price/cost competitive element has to do with providing customers with products or services that are competitively priced or at the lowest cost possible. The major technology employed in pricing is the enterprise resource planning (ERP) programmes and software’s. As noted by Scalle and Cotteleer (1999), ERP is an IT system which helps through the management and integration of every important aspects of an organisation to achieve operational performance and deliver company’s specific objectives.

Through the integration of data using ERP, managers are able to identify and coordinate problems which can hinder service delivery or production of goods and services. ERP also helps by eliminating counter-productive processes within operations management. Since ERP also helps to achieve the following (Davenport, 1998) it is regarded as a mechanism important for achieving better product pricing and general operational costing.

 Provides integration of supply-chain, production and administrative processes
 Helps integrate multiple sites and business units
 Is packaged with a software core that is off-the-shelf coding
 Can provide a strategic advantage over competitors

From its advantages discussed above, one very obvious factor of importance in ERP is that it fosters rapid information sharing and functional integration across organisational tasks thus helps to generate real time data which managers can effectively use to make decisions and conduct functional planning. Using the example of a supermarket as an illustration, ERP would help to reduce cost from the supply chain down to logistics and the sales department by helping to provide data which can help to plan logistics and conduct capacity planning and forecasting which are all important in saving costs and achieving long-term pricing strategy that fits well with the market (Teo et al, 2006) ASDA is an example of UK supermarket which has achieved competitive competency in its pricing through adoption of ERP as data is integrated from the supply chain, down to logistics with suppliers and the sales floor. Through ERP, Southwest airline in the US is also said to make $30 million annual savings in travel agent commissions by requiring customers to contact the airline directly through its internet e-portal which integrates order fulfillment with scheduling and inventory management with its Interface system.
Quality: – As shown in the table 1 above, performance and consistency is mostly considered in terms of quality. Garvin (1987) mentioned that there are eight dimensions of quality from an operations strategy perspective, namely: performance, conformance, features, durability, reliability, serviceability, aesthetics, and perceived quality. Taken together, these dimensions of quality are concerned with the degrees to which an enterprise, product or service is adjudged to have relatively superior standards and competes favourably when measured against similar or rival products or services. In other words, firms that compete on the basis of quality strive to offer products or services that may be considered superior to those offered by competing firms on one or more of the aforementioned dimensions of quality.

Since quality is intangible, there is no express technology used in directly measuring it. However, indirectly there are technologies which help to control and manage quality in line with the desire of operational managers. An example of such technology is the ccomputer-Aided Design (CAD). According to Wiley (2006) CAD refers to the use of computers to interactively design products and prepare engineering documentations which would guide managers through the right quality process. Through CAD product measurements are translated into digital signals, and transmitted to a digital computer while software devices within operations read data on some periodic basis, to ensure that the desired quality is achieved.

Figure 2 below shows the flow and advantages of improved quality in the operational process. In addition to CAD, other forms of technology used in managing and controlling quality are the robots (See Figure 3).himk

Although robots are primarily a form of technology used in production, however, they are also useful in quality control and management as they most often perform monotonous and dangerous tasks whilst, they tend to ensure speed and accuracy which are important factors in consideration of quality control.
Flexibility: – Flexibility from an operations management perspective has to do with the competitive capacity of firms on the basis of their ability to offer flexible or differentiated products or services. It also refers to how quickly or easily the firm can adapt its services or volume to meet the peculiar needs or demands of customers (Inman, 2007).
Inman further notes that mass customization which has become the practice today significantly requires organizations to align their operations with differentiated segments of the customers, services, and operations. He suggests that high-levels of flexibility might require special strategies such as modular designs, interchangeable components, and postponement strategies. In this regard flexible manufacturing systems (FMS) are an example of technologies used in operations management. FMS is a manufacturing technology and also a philosophy which incorporates a system view of manufacturing. Through FMS systems, it is believed that manufacturers are able to achieve customizability and improve their capability of producing different parts without major retooling while achieving that in efficient and cost saving ways (Inman, 2007). The challenge with FMS is that they often require considerable preplanning and are capital intensive. Another example of technology used to achieve flexibility is the Automatic Guided Vehicle (See figure 4).


While the technology is used for Material handling machines, it is also used to used in carrying parts & equipment in manufacturing whilst they may be used to deliver mail & meals in service facilities as well as conduct basic operational functions. Through flexible technological tools and instruments used in the National Bicycle Industrial Company of the United States (Willey, 2006) observes that the company was able to offer 11,231,862 variations of bicycle designs, models and types and delivers within two weeks at costs only 10% above standard models. Similarly, in a company called Anderson Windows the number of products offered grew was said to have grown from 28,000 to 86,000 while the number of errors went down to 1 per 200 truckloads by adopting technologies which enabled increased production and operational flexibilities.
Speed: – In table 1 above, speed is also meant by delivery which refers to rate at which customers orders are fulfilled and are responded to as well as the ability to meet delivery schedules and flows. In this regard, the ERP which was earlier reviewed is also used in organisations to maintain operational speed. This is achieved by aautomating and integrating the majority of business processes into one common enterprise information system, this provides real access to data and information in a real-time as at when needed. In modern supermarkets for example, ERP makes it possible for suppliers to have information about stock availability in real-time therefore are able to adequately and speedily plan stock replenishment as at when due. ERP also helps to speed up transportation systems by providing data which would support planning and transport management. Specifically, Transportation Management Systems (TMS) is part of ERP software used in managing speed as it enables logistic firms to automate planning and execution, connect electronically with carriers, and reduce costs though optimal mode selection. In Wal –Mart for example, irrespective of where the product is coming from stocks are replenished up to twice a week.

Dependability: – This refers to the ways and manners in which an organization is considered reliable by customers through its customer service, efficiency, rapid delivery, speed, convenience, quality and agility (Clark and Johnston, 2005). Since dependability cut across very phase of the organisation, there is no specific technology used by organisations as most smart technologies are useful in fostering organisational outputs. Quite simply, technologies used in dependability are a combination of the various software and systems employed by the organisation. The ERP as previously defined is using in helping to share real time information to foster speed and to cut costs, the ERP is also important in delivering good customer service as the availability of on-the-spot information would mean that organisations can respond quickly to customer needs and thus improving responsiveness which is also a measure of dependability. Another form of useful technology is the process control type of which aautomates storage and retrieval systems thus encourages speed and efficiency. In short to be dependable, all the technologies mentioned in this paper are those which can be considered useful in the operational management of an organization.
This paper has looked at the various technologies used across the competitive competency areas of operations management. It has documented their uses, advantages and some of their disadvantages. Of all the technologies, the most popular indeed is the ERP because ERP in a broader sense consists of various forms of software and information system technologies which integrated various operational processes and systems within an organization. At this juncture, it is important to say that the most useful area of technology across organizational operational processes is in production and the supply chain because these two areas are the most important transformational processes of any organization.
Indeed, production has one of the highest forms of technologies used in manufacturing, processing and controlling several products from raw materials to finished goods. Supply chain and logistics also has numerous and various forms of technologies which mostly help to conduct intelligent planning and control to achieve performance, cost savings, flexibility and efficiency.

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