At every stage of the production process there is the potential for technology to be applied to improve efficiency and quality, such as using machines to make manufacturing more accurate. Some form of technology is used in operations to make every good, so changes in technology have a big impact on transformation processes, affecting the mix of inputs, as well as creating new opportunities for outputs. Technology also has an important impact on operations management because electronic systems can be used to better plan, monitor, control, and manage the operations process.
For example, technology can be used to design products and sequence production tasks more efficiently. Technological impacts on inputs Many forms of technology are used as inputs in the production process, such as microchips, synthetic materials, and machinery. These technologies can often be substituted for other resources. For example, synthetic products can replace raw materials, and machines can do the work of humans. As technology advances and becomes cheaper, more reliable, and easier to use, these kinds of substitutions become more likely.
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The replacement of humans by machines (called 'automation') is a particularly big issue as labour accounts for about 60% of all production costs. Machines can often be much cheaper than people. New technology can often be expensive to adopt, so a business might feel pressured by the market to make the change (for instance, because new technology is perceived as fashionable or higher quality), but be reluctant to do so because of cash f low problems or doubt about long-term benefits.
Also, there can sometimes be initial problems and bugs with new technology, and workers may have to learn new skills to be able to use technology properly. Technological impacts on the types of outputs New technology presents wonderful opportunities for businesses to make new kinds of products and old products with new features. Improvements in electronic and computing technology, for example, allowed the development of smartphones and mp3 players. It also allows innovations that were previously unheard of (such as white bread fortified with calcium).
These opportunities affect business strategies, which affects operations management, which may have to adapt to produce new products. If businesses are behind the technological curve, operations management may need to play a game of 'catch up' to keep up with technological innovations. For example, as technological change allowed mp3 players to flourish, operations managers in companies stuck making old-fashioned CD players had to learn to make the new kind of music player. Technological impact on the quantity of outputs.
Technological change may allow the business to increase its efficiency, allowing it to make more products than it could previously. For example, a human might be able to make three handbags each hour. A new machine might be able to make 30 or 300 in an hour, and could potentially operate around the clock, whereas humans can only work limited hours. Similarly, electronic records mean doctors can access patients' medical histories more quickly and therefore allow potentially faster diagnoses, so they can see more patients in a day.
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