Production and Operations Management Automation

MASTER OF BUSINESS ADMINISTRATION

PRODUCTION AND OPERATIONS MANAGEMENT

PRESENTATION REPORT
ON

PRODUCTION TECHNOLOGY AND

TECHNOLOGY MANAGEMENT
(AUTOMATION)

BY
GROUP NO: 4

SUBMITTED TO:

Ms. PRATIBHA SHETTY

LECTURER
AIBA

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ALOYSIUS INSTITUTE OF BUSINESS ADMINISTRATION

GROUP NO: 4

GROUP MEMBERS:

NEETHA RAO 0816091

PRAVEEN JACOB 0816098
GURU DARSHAN 0816081
ARLEEN 0816065
CHANDRASHEKAR 0816073
ABHIJEETH POONJA 0816096

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Sl. No CONTENTS PAGE NO

1. Meaning of technology 4-5
2. Role of Technology in POM 5-6
3. Classification of Technology 6-7
4. Choice of technology 7-8
5. Primary Areas of Technology 8-10
6. Design Technology 11-14
CAD
CAD/CAM
8. Production Technology 15-23
9. Automation Issues 23-28
10. Management of Technology 28-30
11. Creating and Applying Technology 31
12. Technology Strategy 32-33
13. Technology Choice 32
14. Guidelines to implementation of technologies 32
15. Technology Integration 33-34
16. Deciding on Automation Alternatives 34-35
17. Managing Technology in Global Environment 35-36
18. Bibliography 37

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Technology is a resource of profound importance not only in production but also

profitability and growth of the entire business organisation. Technology drives
productivity and also drives change in this world. Technological change is a major factor
in gaining competitive advantage. The development and innovative use of technology can
provide a firm distinctive competence. Competitive advantage can be achieved not just
from creating new technology but also by applying and integrating existing technologies.
Technology is a significant ingredient in virtually all production and operations
management decisions^ Advances in computer technologies (both hardware and
software), automation, robotics, lasers, information and communication technologies
have had broad-reaching impact across all industries. To stay competitive, manufacturing
and service organisations must adopt new technologies.
Firms that have used technology as a competitive weapon have effectively
integrated their technology strategy and business strategy. As these firms invent and
develop new technologies, they offer new products and services.

THE MEANING OF TECHNOLOGY

Technology is defined to be the know-how, physical things and procedures used
to produce products and services. Know-how means knowledge and judgment of how,
when and why to employ equipments, processes and procedures. Knowledge includes
craftsmanship and experience, physical things are equipments and tools, procedures are
the rules and. techniques for operating the equipment and performing the work.
Technologies require a support network to be implemented. A support network
consist of physical, informational and organizational relationships that make a technology
complete and allow it to function as intended.
Advanced technology refers to the application of the latest scientific or
engineering discoveries to the design of production and operations processes.
Technology and technique do not mean the same. Technique is the totality of
methods rationally arrived at and having absolute efficiency whereas technology is the
organisation and application of knowledge for the achievement of practical purposes.
Some of the examples of technology are manufacturing or production technology, design

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technology, computer technology, communication technology, nuclear technology,

satellite communication technology, space technology, missile technology, laser
technology and the like.

ROLE OF TECHNOLOGY IN PRODUCTION AND

OPERATIONS MANAGEMENT
Advances in technologies create new products and services and reshape
processes. Technology takes many forms, beginning with ideas, knowledge and
experience and theft, utilizing them to create new and better ways of doing things.
Technology provides distinctive competency and competitive advantage to a firm over
others. The impact of technology is pervasive.
Influence of technology on the production organizations: A vital factor in production
organizations is whether the technology involves capital intensive operations (i.e., large
investment in plant and machinery) or labour-intensive operations. Technology will
affect:
(i). the organisation of production,
(ii). the capital investment in plant and equipments, building etc.,
(iii). the scale or volume of production operations,
(iv). the influence of labor relations in production operations.
Influence of technology on production strategy: The management of production is
vitally concerned with the technology of the production process. It must organize
according to the technology adopted and by the adoption of productive system which is
either capital intensive or labour intensive. Also, it must design a highly sophisticated
production control system for batch production, or a materials management system for
high capacity assembly line operations.
Technology and organizational structure: The organization is not simply a technical or
social system. It requires structuring and integrating human activities around various
technologies. The technical system is determined by the task requirements and shaped by
the specialization of knowledge and skills required, the types of machinery and

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equipments involved, then information processing requirements and the layout of

facilities.
Any change in the technical system affects the organizational elements. The
impact of technology on the organization- its goals, structure, psychological system and
managerial system will be quite significant.

CLASSIFICATION OF TECHNOLOGY

Technology can be classified as:

 Manual technology: Use of muscular power to do work which was prevalent
before industrial revolution.
 Mechanized technology: Use of machine power in place of man power and is the
first step towards automation. E.g., would include power operated tools, tool
changing devices, powered materials handling equipment such as conveyers, jib
cranes for loading and unloading heavy jobs.
 Automated technology: This is any form of equipment or machine which will
carry out a preset program or sequence of operations and at the same time
measure and correct its actual performance in relation to that program.
 Current technology: Is any technology currently used by a firm for its
operations.
 Appropriate technology: This is the technology that meets the requirements of
time, place and objectives of the firm at a particular point of time.
Appropriateness is an inherent quality in technology
 State of the art technology (Proven technology): Is the modern technology
which has been adopted by many developed countries in the world. This
technology will enable the firm to produce state of the art products using state of
the art designs.
 Advanced technology: Latest technologies based on latest scientific or
engineering discoveries and used in the design and production process. E.g., are
space technologies, missile technology, and information technology and so on.

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 Obsolete technology: Is an outdated technology replaced by superior technology,

thereby resulting in obsolescence of the old technology which has been replaced.
 Capital intensive technology: Is that which involves huge investments in capital
assets such as equipment and machinery, materials handling and storage systems,
information handling (storage and retrieval) systems, communication system and
office automation equipments.
 Labour intensive technology: Is that which does not involve investment in huge
capital intensive systems, but makes use of abundant labour (man power)
available in the Country. For example in India, textile and mining industries adopt
labour-intensive technologies.

CHOICE OF TECHNOLOGY

The choice of technology depends on several factors, both internal and external to
the organisation choosing the technology. The various internal factors are:
(i) availability of funds for investment,
(ii) product life cycle and technology-life cycle position,
(iii) present plant capacity and technology adopted (i.e., current technology).

Technology can be quite capital intensive and require high investment in equipments,
machines and processes. The question is whether the firm can afford to invest in a new
technology which may be highly expensive. Also, the change to a new technology is not
advisable when the product is in the saturation or decline stage in its life cycle. New
technologies for processing may be best suited for developing and manufacturing new
products.
The new technology chosen should be capable of matching with the existing
technology and plant capacity so that there will be a synergy effect on the plant capacity
when a new technology is adopted.

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The external factors involved in the choice of technology are

(i) government policies and regulations, availability of resources such as raw
materials, energy, skilled labour etc., required for using the new technology,
(ii) market scenario (market demand, customer requirement of product quality
etc.).
Technology life-cycle: Like a product has its life cycle, technology also has a life
cycle. The various phases or stages in a technology life cycle are:
(i) Innovation in which stage a new technology (product or process technology)
is developed,
(ii) Syndication during which stage, the technology is demonstrated and slowly
commercialized,
(iii) Diffusion stage in which a new technology gradually replaces the current
technology and
(iv) Substitution stage in which the current technology becomes obsolete and is
completely, replaced by the new technology.

PRIMARY AREAS OF TECHNOLOGY

Three primary areas of technology are :

(i) Product technology: Product technology translates ideas into new products
and services for the firm's customers. It is developed primarily by engineering
and research groups when creating new products and services. They develop
new knowledge and ways of doing things, merge them with and extend
conventional capabilities and translate them into specific products and
services with features that customers value. Developing new product
technologies require close co-operation with marketing, to find out what
customers really want, and with operations to determine how the goods and
services can be produced effectively. Product technology also requires the
design of systems to support field installation and maintenance.

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(ii) Process technology: The methods by which an organisation does things rely
on the application of process technology. Many process technologies used by
an organisation are unique to a functional area and some others are used more
universally. Some of the examples of process technologies are computer-
integrated manufacturing, computer aided design and computer aided
manufacturing, laser beam welding, automated guided vehicles, automated
storage and retrieval systems, robotics, electronic reservation systems in
hotels and railways, optical mail scanners, electronic fund transfers in
banking, autopilots and ship navigation systems in transportation services etc.
(iii) Information technology: Managers use information technology to acquire,
process and transmit information so that they can make more effective
decisions. Information technology pervades every functional area in an
organisation. Office technologies include various types of telecommunication
systems, word processing, e-mail, computer graphics, the Intranet and the
Internet.
(iv) Design technology: Design technology includes tools and techniques
provided by the information science to contribute to better, cheaper and more
rapidly designed products. For example, computer-aided design (CAD), and
exchange of information standard known as STEP (Standard for the Exchange
of Product Data).
(v) Production or Manufacturing Technology: It includes numerical control,
process control, vision systems, robots, automated storage and retrieval
systems, automated guided vehicles, flexible manufacturing systems and
computer-integrated manufacturing.
(vi) Technology in Services: Technology in services include the following:
a. Credit and debit cards, electronic funds transfer and automatic
teller machines in financial services.
b. Multimedia presentations and internet in educational services.
c. Optical checkout scanners, automatic reservation systems in
hospitality services.

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d. Electronic publishing, interactive T.V., voice mail, 'notepad'

computers & cellular phones in communication services,
e. MRI/CT Scanners, sonograms, patient-monitoring systems, on-line
medical and information systems in health-care services.
f. Satellite directed navigation systems and automatic ticket
reservation systems in transportation services.
g. Point-of-sale electronic terminals, bar-coded data and automated
security systems in wholesale/retail trading services.
(vii) Virtual Reality Technology: Virtual reality is a virtual form of
communication in which images substitute for the real thing, but still allow
the user to respond interactively. It is an extension of the computer-aided
design technology, for example, virtual reality technology is used to develop
3-D layouts of everything from restaurants to amusement parks.
(viii) Disruptive Technology: A disruptive technology is the one that
a. has performance attributes that are not valued yet by existing customers or for
current products
b. performs much worse on some performance attributes that existing or future
customers value but will quickly surpass existing technologies on such
attributes when it is refined.

(ix) Advanced or High-tech Production Technology: Advanced or high-tech

production technology means applying the latest scientific or engineering
discoveries to the design of production processes. New production technology
almost always means that information technology and automation have been
integrated into production processes.

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DESIGN TECHNOLOGY

The recent development in the technology of product design comprises certain

tools provided by the information sciences that contribute to better, cheaper and faster
design of products. They are:
(i). Computer-aided design (CAD)
(ii). Computer-aided design and manufacture (CAD/CAM)
(iii). Standard for the exchange of product data (STEP)
(iv). Virtual reality technology

Computer Aided Design (CAD)

It is an electronic system using computers for designing new parts or products or
modifying existing ones, replacing the traditional drafting work done, by a draftsman on
a drafting board. The CAD consists of a powerful desktop computer and graphics
software that enables a designer to manipulate geometric shapes. The designer can create
drawings and view them from any angle on a display monitor. CAD software have been
developed for designing electronic circuits, printed-circuit-board design, designing and
drafting three dimensional drawings, and also for analysis of heat and stress in
mechanical designs.

Advantages of CAD are:

a) Allows designers to save time and money by shortening design and development
cycle time.
b) Eliminates prototype model building to prove the designs
c) Allows designers to determine costs and test such variables as stress, tolerance,
product variability, interchangeability and serviceability.
d) Low cost of design even for a custom-built, low volume product.
e) Eliminates manual drafting completely

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f) Makes review of numerous options in designs possible before final commitments

are made because of the speed and ease with which sophisticated designs can be
manipulated
g) Faster development, better products and accurate flow of Information to other
departments
h) Product cost can be determined at the design stage itself.

Two extensions of CAD technology are

a) Design for manufacture and assembly (DFMA): DFMA software focuses on
the effect of design on assembly. It enables designers to examine the integration
of product designs before the product is manufactured or assembled.
b) 3-D object modeling: 3-D object modeling allows the building of small models
which is useful for prototype development. It rapidly builds up a model in very
thin layers of synthetic materials for evaluation and considerably reduces the time
and cost required for prototype development using a manufacturing process.

Computer Aided Design and Manufacture (CAD/CAM)

Computer-aided-manufacture (CAM) refers to the use of computer software to
direct and control manufacturing equipment. When computer-aided-design (CAD)
information is translated into instructions for computer-aided-manufacturing (CAM) the
result of these two technologies is referred to as CAD/CAM system.

Advantages of CAD/CAM systems include:

(i). Product quality: CAD permits designers to investigate more alternatives and
evaluate the designs from the point of view of potential problems, and
dangers.
(ii). Shorter design time: A shorter design phase reduces costs and enables a
faster response to the market
(iii). Production cost reduction: Reduced inventory, better use of personnel
through improved scheduling and faster implementation of design changes
lower costs.

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CAD CAM

GEOMETRIC NC/CNC
MODELLING MACHINES

ANALYSIS ROBOTICS

DATABASE GEOMETRIC
KINEMATICS
MODELLING
AUTOMATED FACTORY
DRAFTING MANAGEMENT

NC- Numerical Control

CNC- Computer Numerical Control

(iv). Database availability: Accurate database can be built up to provide the same
information for use by all concerned.
(v). New range possibilities: The ability to rotate three dimensional design
drawings to check clearances, to relate parts and attachments etc., will
provide new capability to manufacturing.
(vi). Minimum involvement of direct workers, because CAD informations are
directly translated into instructions for automated production machines.
(vii). Higher quality and productivity.

CAD/CAM implies a merger of CAD and CAM and an interaction between the
two systems which results in the automation of the transition from product design to
manufacturing.
The integrated CAD/CAM enables analysis and interchange of information
rapidly between a “CAD system” and a “CAM system”. It is a totally integrated package
for computer aided design and manufacturing. It considers manufacturability aspects of
parts such as processing steps, machine capabilities, tool changes, holding fixtures
requirements and assembly requirements while designing the product. The new product
designs can be stored in a common database and through CAM, the new products can be

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manufactured quickly and economically and introduced into the market. Thus
CAD/CAM promises great product flexibility, low production costs and improved
product quality.

Standard for the Exchange of Product Data (STEP)

STEP provides a format allowing the electronic transmittal of three dimensional data
(design information) to be exchanged internationally, allowing geographically dispersed
manufacturers to integrate design, manufacture and support processes. STEP enhances
collaboration, using talent whereever it is in the world, and at the same time reducing
design lead time and development cost.

Virtual Reality Technology

Virtual reality is a visual form of communication in which images substitute for the real
thing, but still allow the user to respond interactively. It is based on computer-aided
design system which holds design information in electronic digital form. Using suitable
softwares, a “virtual aircraft” or a “virtual car” can be assembled by projecting the
images on the floor and developing 3-D model of what the inside of the design of the
product look like. This technology is used to speedup product development, reduce costs
and improve products.

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PRODUCTION TECHNOLOGY (OR MANUFACTURING

AUTOMATION)
In addition to the developments in design technology, a number of advances are in
technology used to enhance production. Some of these advancements in production
technology are:
(i). Numerical control and computer numerical control (NC and CNC)
Many machines such as lathe, milling, drilling and boring machines are new designed
for electronic control called numerical control (NC). The numerically controlled (N/Q
machines have control systems which read instruction and translate them into machine
operations. When these machines are programmed through their own minicomputers and
have memories to store these programs, they are called computer numerical control
(CNC) machines.
Advantages of NC machines:
(i) Smaller machine set up time,
(ii) Machine motions and tool changing are controlled by instructions
on a control system,
(iii) increased productivity and higher quality,
(iv) Suitable for low volume production.
Advantages of CNC machines:
(i) Instructions may be stored and handled more efficiently,
(ii) Micro computer system controls the machine settings and operations
rather than human beings,
(iii) Real time and off-line diagnostic possibilities may be built into the
CNC system,
(iv)Machining data and operator instructions may be displayed on the
screen of computer.
Application of NC/CNC machines: These machines are used to machine parts
(i) with complex machining requirements,
(ii) requiring high precision,
(iii) in developmental stages where many changes may be needed,
(iv)normally requiring extensive tooling,

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(v) requiring fast or slow machining speeds,

(vi)made from expensive raw materials and
(vii) required in small quantities of repetitive batches.

(ii). Automated process controls: Automated process control makes use of information
technology to monitor and control a physical process. It is also used to determine
and control temperatures, pressures and quantities in petroleum refineries, cement
plants, chemical plants, steel mills, nuclear reactors etc. Process control systems
operate in a number of ways:
a. Sensors collect data,
b. Analog devices read data periodically (say once a minute or once a
second),
c. Measurements are translated into digital signals which are transmitted to a
digital computer,
d. Computer programs read the digital data and analyse the same,
e. The resulting output may take numerical forms which include messages on
computer controls or printers, signals to motors to change valve settings,
warning lights or sirens etc.

(iii). Vision systems (Automated inspection systems): These are machines or

equipments that have been integrated into the inspection of products for controlling
quality. They combine video camera and computing technology to take physical
dimensions of parts, compare the measurements to standards and determine whether
the parts meet quality specifications. Vision systems are also used for visual
inspection in food processing organizations. Automated inspection systems
facilitates 100 per cent inspection which will lead to improved product quality and
reduced inspection costs.

(iv). Robots: Robotics or robotry is a fast developing field of technology in which human
like machine performs production tasks. A robot is a reprogrammable
multifunctional manipulator designed to move materials, parts, tools or specialized

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devices through variable programmed motions for the performance of a variety of

tasks. Robots are machines which are flexible, have the ability to hold, move and
grab items. They are controlled by microcomputers which when" programmed guide
the machines through their predetermined operations.
Advantages : Robots
(i) do not strike work,
(ii) do not mind hot, dirty, dusty weather conditions,
(iii) can work at high speeds,
(iv) will not sue if injured,
(v) can work long hours without breaks,
(vi) can be used for welding, painting, assembly work, loading,
unloading, material handling and other repetitive,
monotonous work.

(v). Automated identification systems (AIS): These use bar codes, radio frequencies,
magnetic stripes, optical character recognition and machine vision to sense and input
data into computers. These systems replace human beings to read data from
products, documents, parts and containers and interpret the data. An example is the
system used to identify and read the bar code on an item in the check-out counters at
grocery stores. A scanner reads the identification number from the bar code on the
item, accesses a computer data base, and sends the price of the item to the cash
register and updates the inventory data in the inventory system.

(vi). Automated storage and retrieval system (ASRS): Computer controlled

warehouses use ASRS which provide for the automatic placement and withdrawal of
parts and products into and from designated storage places in the warehouse. Such
systems are commonly used in distribution facilities of retailers.

(vii). Automated guided vehicles (AGV): These are automated materials handling and
delivery systems which can take the form.; of mono-rails, conveyors, driverless
trains, pallet trucks and unit load carriers. AGVs are electronically guided and

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controlled vehicles used to move parts and equipments. AGVs usually follow either
embedded guide wires or paint strips through operations until the destinations are
reached.
(viii). Automated flow lines: An automated flow line includes several automated
machines which are linked by automated transfer machines and handling machines.
The raw material feeders automatically feed the individual machines and operations
are carried out without human intervention. After an item is machined on one
machine on the line, the partially completed item is automatically transferred to the
next machine on the line in a predetermined sequence, until the job is completed.
Major components such as automobile rear axle housings are produced using
automated flow lines.
These systems are also known as fixed automation or hard automation because the
flow lines are designed to produce only one type of component or product. These
systems are suitable for products with high and stable demand because of very high
initial investment required and the difficulty of changing over to other products. But
production systems which provide greater flexibility (for example, Flexible
Manufacturing Systems) are more favoured than fixed automation.

(ix). Automated Assembly Systems: In this system, automated assembly machines or

equipments are linked together by automated materials handling equipments.
Examples of automated assembly equipments are robotic welders or component
insertion units which are used to join one or more parts or components or
assemblies. The partially assembled product is moved to the next assembly
equipment automatically by the automated materials handling equipments and this
process is repeated until the whole assembly is completed. Automated assembly
systems require unique product designs which are suitable to these systems, unlike
product designs suitable for manual assembly operations. Some of the principles that
are applied while designing products for automated assembly are:
a) The amount of assembly required must be reduced: For example,
use of castings or plastic mouldings (single part) instead of making the

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part by assembling two or more sheet metal parts fastened together by

bolts and nuts or by rivets.
b) The number of fasteners required must be reduced: Joining two or
more parts by welding is preferred to joining by fasteners such as
screws, rivets, bolts and nuts. Product designs should facilitate this.
c) Components must be designed to be automatically delivered and
positioned: Hoppers, slotted chutes, vibratory bowls etc. are used to
feed the parts and orient them to deliver to the assembly equipment
and position in the proper place for assembly to be done automatically.
Product designs should facilitate this.
d) Products must be designed for layered assembly and vertical
insertion of parts: Product design must facilitate build up of assembly
from a base upward in layers and the components inserted vertically
into the assembly.
e) Parts must be designed such that they are self aligning: Design
should facilitate aligning of parts as and when they are inserted into
assemblies.
f) Products must be designed into major modules for production
(Modular design): Each module is assembled in an automated
assembly system and then the modules are assembled into the final
product.
g) Quality of components should be high: High quality components
avoid jams in feeding and assembly mechanisms.
The advantages of automated assembly units are low production cost per unit,
high product quality and higher product flexibility.

(x). Flexible manufacturing systems (FMS): A flexible manufacturing system (FMS)

is a configuration of a group of production machines (or work stations) connected by
automated material handling and transferring machines and integrated by computer
system which can give instructions to produce hundreds of different parts in
whatever order specified.

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An FMS is a type of flexible automation system which builds on the programmable

automation of NC and CNC machines. Materials are automatically handled and loaded
and unloaded for machining operations. Programs and tooling setups can be quickly
changed and production can be quickly switched over from one job to another with no
loss of change over time.
Key components of an FMS are:
 Several computer controlled machining centres or workstations having CNC
machines.
 Computer Controlled transport system (AGVs) for moving materials and parts
from one machine to another and in and out of the system.
 Computer controlled robots for loading and unloading stations,
 An automated storing & retrieval system.

All above subsystems of FMS are controlled by a control computer with the needed
software. Raw materials are loaded on the AGVs which bring them to the work centres as
par Vie sequence of operations unique to each part. The route is determined by the
control computer. The robots lift the materials from the AGV and places on the work
station where the required operations are carried out. After the completion of operations,
the robots unload the job and place it on the AGV to move the job to the next workstation
as per the sequence of operations.
The FMS is suitable for intermediate flow strategy with medium level of product
varieties and volumes. Also FM’s can produce low variety high volume products in the
same way as fixed automation systems.

Advantages:
 Improved capital utilization
 Lower direct labour cost
 Reduced inventory
 Consistent quality
 Improved productivity
Disadvantages:
 High initial capital investment

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 Limited ability to adopt to product changes

 Substantial preplanning, tooling & fixture requirements
 Standardization of part designs needed to reduce numbers of tools required
 Requires long planning & development cycle to install the FM’s

(xi). Computer integrated manufacturing (CIM): Computer integrated

Manufacturing is a system which acts as a bridge or umbrella to integrate product
design and engineering, process planning and manufacturing using complex
computer systems. It integrates CAD, CAM, FMs, inventory control, warehousing
and shipping. A computer-aided drafting generates the necessary electronic
instructions to run a direct numerically controlled (DNC) machine and any design
change initiated at a CAD terminal can incorporate that change in the part produced
on the shop floor within a few minutes. When this kind of capability is integrated
with inventory control, ware housing and shipping as a part of a flexible
manufacturing system, the entire system is called Computer-Integrated
Manufacturing.

Production &
Operation Top Management
Management
(POM) Computer Aided
Design (CAD)

Computer Aided Management

Manufacturing Information System
(CAM) (MIS)

Robots

Automated Storage &

Retreival System

ASRS & Automated Guided

Vehicles (AGV’s)

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The CIM systems works as follows:

1. Top management decides to make a product based on market opportunities, the
company's strengths and weaknesses and formulates its strategic plan based on
competitive advantage.
2. Production/operations management implements the production process, supplier
coordination, material planning, scheduling operations, delivery schedules and cost
controlling functions.
3. Computer-Aided-Design facilitates the design of the product, its quality analysis,
planning the manufacturing process, designing tools and fixtures and machine
loading programs.
4. Computer-Aided-Manufacturing allows fabrication of raw materials into parts to be
sent to the assembly lines.
5. Automated storage & retrieval systems (ASRs) & automated guided vehicles
(AGV’s) facilitate storage retrieval movement of incoming materials & parts, work-
in-process & finished products.
6. Robots assemble the subunits into final products, test them with automated
equipments & put the finished products into containers for shipment.
7. Management information systems (MIS) integrate all the elements of the computer
integrated systems among themselves & also with the top management of the
organizations.

(xii). Enterprise resource planning (ERP): ERP systems comprise latest comprehensive
software packages to automate a number of business processes. These softwares
integrate most of the business functions in an organization ERF systems have
automated manufacturing processes, organized account books, streamlined corporate
departments such as human resources and facilitate business process reengineering.
ERP systems need complex set of software programs and heavy investment to
implement them. Several FRF software packages have been developed by leading
software companies such as SAP, Oracle, J.D, Edwards, People soft and Baan.
The latest development in ERP systems has been the integration of e-business
capabilities.

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E-business uses the Internet to conduct or facilitate business transactions such as sales
purchasing, communication, inventory management, customer service, placing purchase
orders and checking the status of purchase orders etc. ERP software packages were
modified with additional features to facilitate e-business.

AUTOMATION ISSUES
Some of the issues to be deliberated in the use of automation are:
 Not all automation projects are successful.
 Automation is not a substitute for poor management.
 Some automation projects may not be worth-while based on economic analysis.
 Some operations are not technically feasible to be automated.
 Small and start up businesses may not be able to invest for automation projects.

The major area requiring decisions in automation are:

 High tech, mid tech, or low tech production.
 Building manufacturing flexibility.
 Justifying automation projects.
 Deciding among alternatives and
 Managing technological change.

These issues are briefly discussed below:

 High tech, mid tech or low tech production:

One of the issues to be resolved related to high tech, mid tech or low tech
production. This is a serious problem, because there are factories using very old
technology but doing well. There are others with latest technology but performing
poorly. This does not mean that production technology has no impact on a
company’s profitability. The following conclusions are relevant in this context:
» Automation, however advanced it may be, cannot be substitute for good
management.

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» It is not technically feasible to automate some operations. For example, in

garment industry cutting, assembling, sewing are not yet automated.
» Some automation projects may prone to be failure. Companies which
embark on automation may poorly manage the implementation of the
automated machinery. Consequently, they probe to be worse off than they
were before automation.
However, it may be concluded that all companies must keep their
production processes updated as production technology advances. To do
otherwise, means that the future of the companies would be in jeopardy, because
they must assume that the competitors will seize the strategic advantage offered
by switching to advanced technology.

 Building manufacturing flexibility:

Manufacturing flexibility is the ability to maintain or improve market share of a
firm by following:
 Delivering customer orders soon after receipt of the orders, even if there is
an extraordinary request for a customer for a quick delivery.
 Shifting the production quickly from one product to another to match the
customer’s “product-mix” requirements in small batch quantities.
 Increasing the production capacity to respond to the peak market demand
at any time period.
 Developing new products quickly and introducing the same into
production quickly and economically to respond to the changing market
needs.
Two types of manufacturing flexibility are:
Volume flexibility which is provided by the use of overtime, finished goods
inventory and designing production processes having variable production rates or
excess capacity. Volume flexibility can be achieved by having enough capacity to
respond to peak market demands.
Product flexibility is provided by having a process focused production system
even though at a relatively higher production cost per unit. Recent advancements

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in production technology have made product flexibility possible with low

production cost per unit.

 Justifying investments in automation:

Product improvement and product process changes often take a long term (say 5
years or more) even though the product design and manufacture are automated.
The pay – back period, net present value, internal rate of return and other capital
budgeting approaches may look inadequate to base major product and process
design or redesign decisions. Such approaches do not consider new facilities and
new production technologies.
Investments in product and process technology innovation must be
considered as long term strategic choices for the company rather than evaluating
the investment decision based on immediate return-on-investment. In this case,
the returns on investment must be considered in terms of improved product
quality, faster delivery of customer orders, increased market share and so on,
which are possible due to innovation in product design and production
technologies.

 Deciding among Automation Alternatives:

Three approaches used for deciding among automation alternatives are:
 Economic analysis which involves cost comparions of processing
alternatives using the concepts of break even analysis anf financial
analysis.
 Rating scale approach considering the following factors:
i. Economic factors such as cash flows, annual fixed costs,
variable cost per unit, average production cost per unit or total
annual production costs st the forecasted production levels with
intention of determining the direct impact on profitability,
ii. Effect on market share,
iii. Effect on product quality,
iv. Effect on manufacturing flexibility,

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v. Effect on labour relations,

vi. Time required for implementation,
vii. Effect on on-going production,
viii. Amount of capital required.
The rating scale approach requires decision makers to weigh the factors
for each alternative.
 In the relative aggregate scores approach, scores are assigned to each
factor for automation alternatives and weightages are also assigned to each
factor considered. The weighted scores (product of factor score and its
weight) are computed and aggregated to get the total weighted score for
each alternative. The alternatives which has higher total weighted score is
chosen.

 Managing technological change:

Any change is resisted and technological change is no exception. Management
will find automating a plant is more expensive and more difficult than expected.
The following suggestions, however, help implement raw projects with less
difficulty and least resistance.
i. Have a master plan for automation. The plan should indicate what
operations to automate, when and in what sequence to automate each
area of the business and how the organization and its products,
marketing and other business units will have to change because of
automation.
ii. Recognize that there are risks in automation. Two risks which need
recognition are the risks of radical obsolescence and the danger that
competitors will easily copy new technology.
iii. Have a separate technology department. This unit will disseminate
information about new technology; become an advocate for new
technology adoption; lead the way in educating and training others

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about new technology and provide technical assistance necessary for

the installation and implementation of advanced technology
equipment.
iv. Allow enough time for learning how to install, tool, debug, programme
and otherwise get an automated machine up to production speed. Do
not rush through the completion of automation projects.
v. Automating everything at once is not wise. Phasing out installation is
advantageous so that what is learnt from one project can be applied to
another project. By allowing plenty of time, frequency of missed
scheduled dates, organization frustration and pressure to compress the
schedule are somewhat reduced.
vi. Realize that it is the people who can make automation projects
successful. Educating and training of employees must be an ongoing
activity. Participation of all employees is a must. Union representation
is essential in any automation.
vii. Finally, if companies move too slowly in adopting production
technology, they are likely to be left behind. An advice that companies
need to be cautious about automation does not mean that they must go
slow. Any delay in implementation is sure way of giving in to the
competitors.

Advantages and disadvantages of automation:

Advantages:
 Increased output and higher productivity.
 Improved and uniform quality.
 Reduced costs.
 Fewer accidents.
 Better production control.
 Dangerous and unpleasant tasks can be performed by robots.
Disadvantages:
 Heavy capital investment.

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 Displacement of labour.
 Loss of suggestions from employees.
 Design specifications for raw materials can not be relaxed.
 Cost of shut down of automated plant due to shortage of materials is quite high.
 Dehumanization.
Factories of the future:
The features of factories of the future are:
 Stress on high product quality.
 Greater emphasis on flexibility.
 Faster execution and delivery of customer orders.
 Change in production economies – fixed costs will become variable and
variable costs will change to fixed costs.
 Product will be designed using CAD/CAM which forms the basis for process
planning. Also CIM systems will be extensively used.
 Organizational structure changes with line personnel becoming staff personnel
and vice versa. The main stream activities will be maintenance, quality
assurance, product design and engineering, managing technology change,
software development etc.
The factories of future will be driven by computers used in CIM systems.

MANAGEMENT OF TECHNOLOGY
Management of technology links R & D, engineering and management to plan,
develop and implement new technological capabilities that can accomplish corporate and
operations strategies. It means identifying technological possibilities that should be
pursued through R & D, choosing from both internal and external sources the
technologies to implement and then following through their successful implementation of
products, processes and services.

Technology and the manager:

What should a manager know about technology? One view is that the manager
merely needs to understand what a technology can do, including its cost and performance

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possibilities. An alternative view is that such understanding is not enough, that the
effective manager must also understand how the technology works and what goes on in
the technology “black-box”.
Technology choice is an extremely important decision and one that is of interest
to managers in all functions. These functions are not only technical in nature, they affect
capital, human resources and information system. Thus all managers should be interested
in the choice of technology and how it affects the business as a whole. Whatever the firm,
managers are less effective when standing at arm’s length from the technologies that
make up a firm’s current and future core competencies. They must invest the time to
learn more about these technologies and at the same time develop good sources of
technical advice within the firm.

Role of technology in improving business performance:

Technology is probably the most important force driving the increase in global
competition. Companies that invest in and apply technologies tend to have stronger
financial positions than companies that don’t. For example, IBM and Sun Microsystem,
Inc, believe that java technology holds the key to new business opportunities.
As the investment in R & D for technology increases, so does profitability and
new product introductions. A large number of manufacturer’s world wide have focused
more on process technologies and demonstrated the strong link between financial
performance and technological innovations. Companies with excellent performance in
annual sales, inventory turns and profits had more experience with multiple advanced
manufacturing technologies and demonstrated more leadership in technological change.
At the same time, the relationship between technology and competitive advantage
is often misunderstood. High technology and technological change for its own sake aren’t
always best. They might create a competitive advantage, be economically justifiable, fit
with the desired profile of competitive priorities, or add to the firm’s core competencies.

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Role of information technology in production/ operations management:

Information technology is crucial to operations everywhere along the supply chain and to
every functional area. Computer based information technology, in particular, has greatly
influenced how operations managed and how offices work. It makes cross functional co-
ordination easier and links a firm’s basic processes. In a manufacturing plant, information
technologies can link people with the work centers, data bases and computers.

Components of information technology:

Information is made up of 4 sub- technologies:
Hardware: A computer and the devices connected to it are called hardware. Improved
hardware memory, processing capability and speed have, in large part, driven recent
technological change.
Software: The computer programs written to make the hardware work and to carry out
different application tasks are called software. Application software such as those
provided by Microsoft, Sun Microsystems and others are what computer user’s work
with. Software is available for use with almost all the decision tools including statistical
process control techniques, forecasting models, production and inventory control systems
and scheduling techniques. Software is essential to many manufacturing capabilities such
as computer – aided design and manufacturing, robots, automated material handling,
computerized numerically controlled machines, automated guided vehicles and flexible
manufacturing systems. Software also provides various executive support systems such
as management information systems and decision support systems.
Databases: A database is a collection of interrelated data or information stored on a data
storage device such as a computer hard drive, a floppy disc or a tape. A database can be a
firm’s inventory records, time standards for different kinds of processes, cost data or
customer demand information.
Telecommunication: Fibre optics, telephones, modems, fax machines etc., make
electronic networks possible. Such networks and the use of compatible software, allow
computer users at one location to communicate directly with computer users at another
location.

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CREATING AND APPLYING TECHNOLOGY

Applying new technologies in ongoing challenges for all organization. The
innovation process focuses technological and scientific efforts on better ways of meeting
needs. There are various ways this can be done. One way for a firm to acquire new
technology is the firm’s own research and development efforts which create new
knowledge of materials and processes and then apply them to create and introduce new
products and production processes.
The various stages of R&D projects include (i) basic research stage,(ii) applied
research stage and (iii) development stage.
Basic research stage involves work that explores the potential of narrowly defined
technological possibilities to generate new knowledge and technological advances.
Applied research involves work geared toward solving practical problems and its results
more likely to lead actual improvements in products, processes and services
Development involves activities that turn a specified set of technologies into detailed
product design and process. Product and processes are developed taking into
consideration ease of production and marketability.
Technology fusion refers to the process of combining several current technologies and
scientific knowledge to create a hybrid technology. Adding one technology to another
results is synergic effects. For example, in machine tool industry NC, CNC machines are
the result of fusion of electronics and mechanical technologies.

TECHNOLOGY STRATEGY
Because technology is changing so rapidly and because of the many technologies
available, operations managers more than ever must make intelligent, informed decisions
about new product and technologies. Such choices affect the human as well as the
technical aspects of the operation. How technology should be chosen and hoe these
choices link with strategy to create a competitive advantage are to be examined. An
appropriate technology is one that fits corporate and operations strategies and gives and
the firm a sustainable advantage.
Technology strategy deals more than technological choice. It also deals with
whether an organization should be a leader or a follower in technological change and how

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to evaluate radically new technologies when conventional financial analysis won’t do the
job.

Technology as a competitive advantage

A new technology should create some kind of competitive advantage. Competitive
advantage is created by increasing the value of product to a customer or reducing the
costs of bringing the product to the market. The most obvious cost-reduction strategy is
that of reducing the direct costs of labour and materials.
On the other hand sales can increase, quality can improve by reduction of
human errors, delivery times can become shorter due to reduced processing times,
inventories can become smaller, the environment might improve-all owing to improved
or new technologies.
Of course, new technology can also have its shortcomings. Investment in new
technology can be forbidding. The investment can also be risky because of uncertainties
in demand and profit per unit. Implementation of new technology may generate employee
resistance, lower morale and increase turnover.

TECHNOLOGY CHOICE

The choice of technology should not only consider net present value of the
investment made but also the effect on consumers, employees and the environment.
When technological alternatives are evaluated, they should be considered with the respect
to the do-nothing alternative. In other words what happens if no investment is made and
the competitors make the investment instead?
To conclude, it may be said that investment should support a comprehensive
technology strategy aimed at achieving or maintaining a competitive advantage.
Managers in all functions should work together to get develop technology strategy that
not only consider issues but human resource effects, financial consideration and market
operations and market impacts. Developing technology strategy on cross functional basis
will ensure that all of these factors are properly considered.

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GUIDE LINES TO IMPLEMENTATION OF TECHNOLOGIES

Managing technology means more than just choosing the right one. It is also implies
supporting the chosen technology throughout its implementation. Managing
technological change well is vital to maintain job satisfaction and positive attitude among
the employees. Some useful guide lines for implementation are related to technology
acquisition; technology integration, the human side and leadership.
Technology acquisition is concerned with the functions of basic research, applied
research and development activities to secure new technologies. The options for
acquiring new technology includes
 Internal resource (own R&d)
 Interfirm relationship
 Suppliers.

TECHNOLOGY INTEGRATION
Today cross functional teams are responsible for implementation of new technology by
an approach known as current engineering to bridge the gap between R & D, product
development and manufacturing. This approach is referred to as “technological
integration”
The human side: technology determines how the jobs are done by the people. When
technology changes, jobs also will change. New technology may eliminate some jobs,
add some jobs, upgrade or downgrade some other jobs. Employee training, education and
involvement help a firm identify new technological possibilities and prepare employees
for the new technologies.
Leadership: manager’s role in implementing new technologies is a crucial one. They
must hold to tight budgets and schedules, plan implementation projects, continually
monitor the program, assess the risk, costs and benefits of new technologies, have
technical vision, be committed to the project and have everyone focused on
implementation of new technologies. They should act as catalysts to bring-in
technological advancement and implement them successfully.

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MANAGING TECHNOLOGICAL CHANGE

Some of the suggestions to production managers on how to manage changes in
production technology and how to manage the implementation of major automation
projects are given below:
 Have master plan for automation
 Recognize the risk in going for the automation
 Establish a new production technology or technology development department
 Allow plenty of time for the completion of automation project
 Do not try to automate everything at once.
 People are the key to the successful implementation of automation projects
 Companies moving too slowly in adopting new production technology, may be
left behind others.

Consequences of Industrial Automation

Industrial automation results in the elimination of workers' jobs; for example
robots replacing welders, painters or NC/CNC machines replacing the machine setters or
operators, AGVs replacing operators driving the material handling equipments and so on.
But in the long-run automation also creates some new jobs in engineering, selling
& servicing new technology products. Workers need to be trained to occupy new job
positions created by automation. However, some white collar and blue collar workers
may lose their jobs and will have to search for new jobs because not all companies
provide for retention or retraining of displaced workers.

DECIDING ON AUTOMATION ALTERNATIVES

Managers, while considering automation decisions, must evaluate automation
alternatives. Economic analysis is an important if not a predominant factor in choosing
among automation alternatives. The various factors to be considered are:
(1)Economic factors: The focus is on cash flows, annual fixed costs, variable cost per
unit, average production cost per unit or total annual production costs at the forecasted

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production levels. But the main intention is to determine the direct impact of automation
on profitability. Break-even-analysis and financial analysis are used for this purpose.
(2) Effect on market share: Some automation alternatives may require product redesign
or product specialization which may affect sales. Even if some alternatives permit more
product variety and greater customer appeal, the net effect of such changes on market
share is difficult to assess.
(3) Effect on product quality: Impact of automation alternatives on product quality is
difficult to measure directly even though scrap rates, market share changes and
production costs may reflect the effect of changes in product quality resulting from
automation alternatives.
(4)Effect on manufacturing flexibility: Measures of product flexibility and volume
flexibility are difficult to develop even though cost of machine change-over, overtime
labour costs and market share changes can be used as measures of the effect of
automation alternatives on manufacturing flexibility.
(5) Effect on labour relations: The number of workers to be laid off, the amount of
training and retraining needed and the availability of skilled workers required to operate
automated equipments are factors affecting the choice of automation alternatives.
(6) The amount of time required for implementation: Different automation
alternatives may require different time durations for implementation because of
differences in technology, availability of competent personnel and different kinds of
changes in the rest of production system caused by the automation alternatives.
(7) Effect of automation implementation on ongoing production: Even while
automation projects are being implemented, regular production must go on because
delivery of products to customers can not be postponed. The extent to which the ongoing
production gets affected depends on the type of automation alternatives.
(8) Amount of capital investment required: Availability of capital for inventory in
automation project is an important factor to be considered because almost all automation
alternatives are highly capital intensive. This factor can be a prodominant consideration
in automation decisions.

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MANAGING TECHNOLOGY IN A GLOBAL ENVIRONMENT

The present global business environment requires a firm to be able to switch products
quickly and economically. It should also be able to coordinate with an international
supply-chain. Organization should have ability and learning as priorities in their
operations to compete m the global market Agile organizations are quick and flexible in
their response to changing customer requirements. Such organizations are learning
organizations that manage change by combining a vision, a participative management
environment and the application of technology. Only agile organization will survive in a
global environment in which technology and economy are fast changing.
Agile companies operating internationally need effective information systems for
managers in any part of the world to communicate and share information.

Understanding technology and how it influences your firm is a demanding task; as is

implemented and managing it. Firms which achieve competitive advantage through
technology are successful because of the following reasons:
 They have strategic vision.
 They plan for a more distant horizon.
 They have a focused-product line and know their products and customers
exceedingly well.
 They tie strong internal technical capabilities to their strategy.
 They build effective organization which can effectively implement the change
necessary for the constructive use of technology.

Effective managing technology can enable production/ operation managers to hit all
three strategic targets-low cost, differentiation and rapid response.

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BIBLIOGRAPHY
 Production and Operations Management by K. Ashwathappa & K. Shridhara
Bhat, Himalaya Publishing House

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