IT for Improving the Organizational Productivity - Essay Example

IT for Improving the Organizational Productivity Introduction Operation is related with the administration of the procedures used by organisations to produce services or products and provide value for the consumers. In operation, technology is beneficial for handling and developing practices in both product and service distribution and comprehensive supply chain management. In present days, efficient process administration becomes essential for transitioning from traditional to modern industrial economy. The information flow related with the operational processes is a key motivation for employing more and more information technology (IT) based initiatives. The prime motive for implementing IT in operations management is to increase the speed, flexibility, dependability, and quality of operation procedures such as supply chain management, production management, quality management, and inventory management. IT can help to decrease the cost of excess time by reducing unnecessary operations in business (University of Virginia Darden School of Business, 2011). Technology in Operations Management The improvements in technology have changed the crucial features of operations management in several organisations. Modern tools and technologies have been integrated in the plan and the operation of service and production systems. The ubiquity of IT including computers and internet has become obvious for many operations (Lari, 2002). Technology in Manufacturing Operations In current days, the technological advancements have presented new prospects for organizations to generate competitive advantage. Through employing technology in manufacturing procedure, organisations try to respond quicker to the requirements of customers, accomplish extensive selection of product offering and preserve high level of output. In the operations management of the manufacturing sector, technology can deliver exclusive benefit to organizations by providing superior products and services to the consumers. Technology can provide following benefits for manufacturing operations: Better machine operation: Technology based system can allow organisations to use machine to their highest capacity for manufacturing product faster Flexibility: Technology often improves the flexibility in arranging various works in an orderly way and it allows organisations to respond to the changes rapidly Simplicity of production change: Through technology, organisations can accommodate any modifications in production plan or procedure. Technology enables organisations to manage compound manufacturing operations with lesser effort and preferred quality Expansion of production: Technology helps organisations the flexibility to expand their production with response to the growing demand of market (Mahadevan, 2010). Analysis of Proctor & Gamble Proctor & Gamble which is one of the leading organisations in consumer products seeks to decrease the manufacturing expenses and increase the productivity of the organisation. To sustain in the leading position, Proctor & Gamble (P&G) needs to manufacture products quicker with less overhead expenses. It was necessary for minimizing the manufacturing cost of products. Thus, Proctor & Gamble had employed Predictive Adaptive Control (PAC) technology and ‘Overlapping Feed Technology’ in their manufacturing operations for achieving better speed and constant accuracy on production. P&G selected the Lima manufacturing facility for first implementation of those technologies to improve the material transfer procedure. As a result of PAC and Overlapping Feed Technology the production speed has increased and it successfully saved ‘batch cycle time’ of production. The following table will describe the production speed and the time saved by employing PAC technology: Source of Saving Batch Cycle Time Saved (in %) Time Saved (in minutes) Total Batch Cycle Time (in minutes) PAC Technology Single Speed (faster feed) 30 36 84 Improved Accuracy 7 8.4 75.6 Overlapping Feed Technology Simultaneous Material Addition 8.6 10.3 65.3 Total 45.6 45.7 54.5 Source: (Mettler-Toledo, 2010). Presently, the Lima manufacturing facility of P&G produces above 120 million Pounds of finished products in a year. The savings of P&G due to implementation of technology in production operation was calculated as almost 5 million USD in the year 2010. Use of technology resulted in better production capability with less incremental expenses. Technology has also eliminated the extra capital investment for satisfying the market demand (Mettler-Toledo, 2010). Technology in Quality Management Quality improvement impacts on operational performance in several ways, such as, increasing returns, minimising expenditures and improving productivity of organisations. Organisations attempt for constant development in productivity through several ways of quality management. The Total Quality Management (TQM), Business Process Re-engineering (BPR) and Just-in-Time (JIT) among others depend on IT. IT helps to measure the output, acquire correct information rapidly, develop communication links and enable employments of innovative tools, methods and modelling techniques. More advanced organisations make larger use of IT in their operations management and it also impacts on the TQM. Information technology is used in organisations for managerial tasks, communications, and decision making processes and to regulate the production systems which in turn help to manage the quality (Martínez-Lorente & Et. Al., n.d.). Through the use of technology, organisations can improve the product or service quality. Computerised equipment decreases the product inconsistency by eliminating human effort. Technology is aimed to execute similar tasks constantly, and thus implementation of technology in operations management process can certainly result in better quality. Computer Aided Design (CAD) Computer Aided Design (CAD) is used in organisations operational activities. It is used to interactively plan the products and formulate manufacturing documentations. Big enterprises have always faced difficulties in ensuring that products are made appropriately and with good quality because different people in an organisation might have different plans for making a product. CAD can store information in electronic format and transmit it to the production equipment such as CNC device or Flexible Manufacturing System (FMS). In several organisations, the operations are paperless and every production plans are generated by using CAD system. CAD is one of the most commonly employed advanced manufacturing technologies used in large organisations (Boyer & Verma, 2009). Technology for Quality Improvement in Ford Ford, which is one of the leading vehicle manufacturing organisations, uses computer technology for testing and evaluating the working conditions so as to improve the quality of products. Through this technology, Ford can generate cybernetic plant and product components so that virtual employees can assemble them and recognise difficulties during the computer imitation process rather than post - development of the product. This system helps Ford to generate data with respect to product condition, security and quality. Through this data, Ford certainly makes the production task much easier within allocated cycle time and also can decrease the rate of injury during production. This approach has been used since 2000 and in the year of 2007 Ford has experienced 11% improvement in the product quality (Boyer & Verma, 2009). IT in Supply Chain Management Supply Chain Management is the combination of the actions which obtain materials and services and convert them into final products, and distribute them to the consumers. The supply activities include defining the transportation dealers, credit and cash allocations, account payables and receivables, warehousing and inventory management, order fulfilment, sharing information and forecasting among others. IT can support the process of supply chain management in several ways. By the use of internet, organisations can easily share information for better management of supply chain process in operations management. The use of IT in supply chain management can be used in several ways such as: Electronic Data Interchange (EDI) Electronic Data Interchange (EDI) allows organisations to transmit information for business purposes. Big enterprises employ EDI technology for distributing and getting orders, providing early delivery notice and checking ordering status among others. EDI technology is very cost effective for organisations for managing huge volume of business transactions. EDI technology is developed for efficient operations in back office businesses. Through EDI technology, organisations can easily communicate with each other. EDI system has the ability to control the type of information they can share with each other (Hugos, 2011). Functions of EDI System EDI system can mechanically interchange organized commercial papers within several application programs. Through EDI, organizations can have complete control over the operations of product, money and information interchange process. Organizations employ EDI system to manage difficult supply chain operations and synchronize with every prearranged logistical procedure between the companies and the dealers. EDI can perform the following functions for organizations: Generate credit records Estimate delivery Adjust purchase order Valuing products Check sales order Manage packaging materials (Providence Network & Solutions, 2011) Enterprise Resource Planning (ERP) Enterprise Resource Planning (ERP) technology collects data from numerous operations of an organisation. Through ERP technology, organisations can easily observe order status, production plans, raw material acquisitions and finished goods records. This technology supports process based outlook of business which cuts across diverse functional divisions (Hugos, 2011). Procurement Systems Procurement systems concentrate on procurement actions of organisations and dealers. The procurement technology helps to modernise the procurement procedure for making it more effective. Though this technology, organisations can maintain record of product numbers, costs, purchasing records and dealers performances. It allows organisations to compare and contrast the abilities of different dealers. Through implementing procurement systems in the operations management, organizations can dispose the traditional catalogue system for information regarding product or service and introduce databases which encompass all required information about products which organizations purchases from other dealers (Hugos, 2011). Uses of Procurement System in First Choice First Choice, which is one of the biggest global travelling organizations, has developed procurement application to effectively manage the whole process of operation. Traditionally, First Choice had several procurement systems for operations in different divisions, such as, paper oriented system, MS-Excel system, MS-Access database system. Using different systems in organization resulted in difficulties in management and there was less visibility to determine the total procurement at a certain period. It was also very difficult to trace the authorization procedure or position of procurement in the traditional system. As there was different procurement methods, First Choice also had to bear additional overhead expenses. To remove these difficulties, First Choice has employed IT oriented web procurement system in their operations. The advanced procurement system has helped First Choice to keep close track about the orders and the procurement statuses, and effectively manage the complete procurement process with less cost. IT, in procurement operations has enabled First Choice to satisfy their business needs (Harris, 2011). Transportation Planning System Transportation planning system has the ability to compute the volume of raw materials needed to be transported to a certain location at certain time for better supply chain management. This technology allows organisations to equate different ways of transportation, roads and shippers on the basis of distance, fuel expenses, and carriage tariffs among others. This technology helps to make the transportation plan for organisations (Hugos, 2011). IT in Supply Chain Management of McDonald’s In the year 2002, McDonald’s faced extreme forecasting difficulties. As a result of increasing demands the company had to increase the order for their products which led to deficiencies of raw materials and thus increased cost. The main reason for this difficulty was ineffective supply chain system. McDonald’s has several thousand franchises that functions individually by means of manual ordering system which was unable to provide information to the company headquarters on timely manner. Thus, McDonald’s employed IT in their supply chain and started online ordering system in their operations. The system was first employed in the European outlets. It provides more flexibility, dependability and speed in the supply chain process as information regarding product can be shared within franchises accurately and in timely manner. As a result of employing IT, the wastage of surplus raw materials has been decreased by 30%, inventory storage has been minimised by 30% and transfer of products within different stores has decreased to 4%. As the speed increased, the time required for order was minimised by 50%. In a week, 1 hour time had been saved due to online ordering system. The yearly savings due to speed of ordering was calculated as 5,585 USD per outlet, which is equivalent to 11.5 million USD in 2,072 outlets across France and Germany (Boyer & Verma, 2009). IT in Inventory Management It is the duty of operations manager to effectively manage the inventory. Effective inventory management can help organisations to provide better customer service because unless there is appropriate number of products in the inventory, organisations cannot provide the desired product of customers and as a result customers will be dissatisfied and organisation will lose revenue. The implementation of IT in inventory management can increase the forecasting accurateness of products. IT studies the transaction records of any particular product and classifies it properly. Afterwards, the past records are tested with respect to the demand of that particular product and the information is used for forecasting. Thus, by employing IT, organisations can easily manage the inventory forecasts mostly in response to the trends and seasonality of products. Information technology has enabled organisations to analyse the real-time inventory status easily and it helps to reduce the loss of money because of avoiding unnecessary or excess safety stock. IT has the capability to automatically determine the optimum level of safety stock required for organisations (Activant Solutions Inc., 2003). The improved inventory management helps to provide quality customer service in numerous ways. By employing IT, organisations can put more emphasis on the product which has higher demand and organisations can always be aware about customer satisfaction. Technology can help to set goals for products and according to the goals IT can automatically define the correct level of safety stock. Better inventory management will provide better customer satisfaction and reduction of excess purchase of inventory which will assist organisations to maintain the buying capability. Furthermore, with the implementation of IT in the inventory management, organisations will be able to better recognise their inventory and can easily get the graphical views of past trends and future forecasts of the products (Heizer & Et. Al., 2009). IT Solution for Inventory Management in OrthoRehab Inc. OrthoRehab Inc. is one of the leading suppliers of rehabilitative products and services in the USA. It has above 17, 0000 sections of equipments and require effective inventory management. The traditional paper oriented inventory management was very unproductive for OrthoRehab. The billing procedure in traditional paper oriented system was very slow which forced the company’s services to lag behind by two to four weeks. Thus, OrthoRehab had employed IT solution from BlackBerry for managing their inventory effectively in the year 2003. The IT solution comprised of barcode scanning technology and electronic application procedures. The employees of OrthoRehab were prepared with the new technology so that the Continuous Passive Motion (CPM) elements could be scanned rapidly and saved in electronic format. IT had helped to share information wirelessly to the company headquarters (Tower, 2004). Traditionally, OrthoRehab always tracked the inventory by paper oriented technique. The service agents used to fill the application form manually each time when the CPM elements were shifted to a patient, hospital or treatment center. The application form was delivered to the regional centers or headquarters where it was transmitted to an electronic billing record. As there were lots of equipments it resulted in delayed services. Due to absence of accuracy, approximately 2000–3000 devices were missed throughout the inventory period, costing OrthoRehab loss of time and money. As a result of employing IT solution from BlackBerry the speed and dependability of inventory operations increased. Technology had minimised the paperwork and improved correct reporting of inventory. Speed billing process has increased the efficiency of organisation and has provided better inventory tracking. IT has enabled OrthoRehab to minimise the administrative tasks which in turn has increased organisational productivity and improved the quality of patient care. IT has eliminated the rate of human mistakes, e.g. unreadable information or inappropriate recording of product serial number. Thus, the dependability of information has increased and it has become easy to track up-to-date inventory status. With the increase in effectiveness of inventory operations, OrthoRehab is able to save 250,000 USD annually because of information technology (Tower, 2004). IT for Improving the Organizational Productivity The major goal for employing IT in operations is to increase the productivity of organisation. The productivity in organisation can be improved in two methods: Minimising the inputs by keeping output constant Increasing output by keeping input constant Both methods can improve the productivity of organisation. Through IT, organisations can reduce the cycle time for producing one unit which can help to increase the productivity by producing more products in less time (Heizer & Et. Al., 2009). IT in Starbucks for Improving Productivity Starbucks, which is one of the leading coffeehouse organisations in the world, has improved their productivity through employment of IT in their operations. To increase the speed of production, Starbucks employed advanced espresso machine which has the ability to produce espresso at high speed. As a result, Starbucks has saved almost 12 seconds per espresso. Due to the speed of operations in the Starbucks outlets, the organisation’s productivity has increased by 200,000 USD in the year 2005, which accounts for 27% productivity improvement (Heizer & Et. Al., 2009). Conclusion In present days, organisations attempt to improve their operations to differentiate their products or services from other competitors. Gaining competitive advantage becomes important for sustained growth and it can be accomplished through improvement in the organisational operations, such as, supply chain management, production management, quality management and inventory management among others. Thus, organisations are aggressively following creativities to better manage their operations. Several companies have expanded their scope of operations management through employing IT. Investment in technology for managing operations effectively has become a valuable way for obtaining competitive advantage. The major advantage for employing IT in any area of operations is speed. IT can increase the speed of operation by reducing the human effort for performing repetitive work. Thus, through implementation of IT organisations can gain more flexibility and dependability on organisational tasks. IT can improve the quality of products or services and it also can prove as cost saving mechanism. From the overall discussion, it can be seen that big organisations employ IT in their operations to increase the rapidity of operations and save extra cost. In modern day organisations, implementation of IT in operations has become necessary as it can help to make customers satisfied by appropriate management and can help the organisations to maintain their desired positions in the markets. 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