Business Functions and Processes - Essay Example

Business Functions and Processes Introduction Technological advancements have affected almost every business and operations management is one of the business functions, which have been influenced most. From automation and robotics to IT in forms of JIT (just in time), MRP (manufacture resource planning) and ERP (enterprise resource planning) system and internet, technology has dramatically transformed the process, where both services and manufacturing operations are managed and designed (Brown, et al., 2005). Technology should be considered as a tool and not a solution by itself as it can be beneficial only with proper implementation and usage. For instance, installing a technology in a firm whose overall internal structures and infrastructure are not compatible with application of the same is wastage of time, money and human resource. Equally important is that fact that technology can be sometimes the only measure, providing means to meet customer needs in the present competitive environment (Shaughnessy, 2013). Operations are strategized in a manner whereby organisation can compete in a competitive marketplace. For instance, these strategies can be in terms of quality, low cost, customisation and delivery. Traditional challenges in operations management such as, choice of only one strategy, are no longer tolerated as performance standard has been raised though technology and its applications. Nevertheless, for proper integration and implementation of technology in any organisation, it is essential to understand relevance of technology (Heizer and Render, 2011). Risks and challenges of technology The business environment is filled with examples of failed attempts while installing technology such as, ERP systems. For instance, Hershey Foods faced numerous problems in its product distribution system after implementation of R/3 system of SAP. This resulted in a huge demand-supply gap and Hershey was not able to supply candies during peak seasons of Christmas and Halloween. Similarly, Whirlpool faced shipping delays due to failed implementation of its ERP system. An interesting point to be noted here is that many of the challenges faced in context of ERP in present business scenario are similar to those faced by managers during implementation of MRP 20 years ago (Shaughnessy, 2013; Brown, et al., 2005). Hence, it can be said that challenges faced during technology implementation is more related to intangible forces such as, lack of leadership, commitment, training and understanding compared to tangible forces such as, technological defects in the systems. Few of the major challenges encountered during technological installation and implementation are as follows; 1. Lack of commitment from top management Proper installation and implementation of technologies such as, ERP and JIT, is an organisation-wide phenomenon, which involved similar participation from all departments and functions. So, it is essential that top management takes the lead and provide a direction for rest of the management. For example, Chang and Ho (2006) found that security challenges in an organisation were resolved with higher engagement of top management as the amount of resources spent on security went higher and overall confidence among employees and manager regarding security and its benefits also increased. Similarly, it has also been seen that lack of commitment from higher level managers resulted in improper technology implementation. 2. Insufficient resources Requirements of proper resources for effective integration and implementation of technologies are often underestimated. Apart from that, companies fail to realise the actual cost of software implementation and usage including outside consultation cost, labour costs, cost incurred during shifting from old software to new software and assigning new managers for projects. Thus, final revenues and profits are at times miscalculated or misjudged (McGraw Hill, n.d). 3. Ineffective training facilities It has been observed that in the rush to convert new systems into usable formats, companies often give less relevance to training of staff and employees at each level. Proper training is critically needed so that each employee is able to understand the technology from organisational as well as user’s perspective. While IT departments need training for providing proper technical support, business functions require the same for data management and generation of useful reports (McGraw Hill, n.d). 4. Communication Error A major technological challenge occurring in operations management is ineffective communication. While some organisations such as, IT and finance, are updated about every change, other departments such as, legal, sales and HR, are often neglected in the process, thereby resulting in a wide knowledge gap among departments in the same organisation (McGraw Hill, n.d). 5. Issues in Data quality While implementing any technology, quality and relevance of the data is extremely important. As globalization is spreading at a faster rate and technologies are becoming obsolete more than ever, it is important for organisations to constantly upgrade their technology. This is another major challenge in the operations management. While small and medium organisations cannot afford to upgrade at a constant pace, bigger organisations face even more competitive environment. Other common data quality issues are timeliness, accuracy, consistency and completeness (Chang and Ho, 2006). Addressing technological issues in Operations Management Before addressing the technological issues in operations, it is critical to understand the manner in which technology is viewed in organisations. Basically, it is divided into hard technology and soft technology. Hard technology refers to equipments and machineries, which are tangible and is pipeline for material flow. Soft technology includes the information and software system and pipeline for information flow. It is influenced by factors such as, information, data, analysis and knowledge. Therefore, it is important to understand and integrate both the above technologies in operations management for better results and improved performance. Scholars and researchers have identified few solutions, which can lessen negative effects and challenges pertaining to technology in operations management. The most important and widely recognised solution is proper integration of technology in the organisation. As it is clear from the issues, improper integration of any software or new technology can yield devastating results. Few of the strategies are described below; 1. Integrating technology with the organisation’s production and manufacturing system Technology helps in increasing organisational efficiency by increasing overall productivity. Nevertheless, a precursor to enhanced productivity is successful integration of technology with production, design and manufacturing processes. The first step will be technology acquisition. Here, operations managers as well as top management should indulge in extensive research of industry and competitors so as to know the technology or software aligning with their organisation’s infrastructure and functioning. The next step should be integration in all production aspects such as, labour, capital as well as customer. A solid integration of technology with production can only result in coordination of various departments involved as well as transfer of information regarding changes and up-gradation. The third stage is verification of technology, where operational effectiveness and return on investment is monitored at regular intervals. Similarly, integration of technology in design and manufacturing divisions is essential. This integration can be facilitated through computer aided design facilities, manufacturing systems and product data systems. 2. Compatibility and acceptance of the entire organisation A strong compatibility between structure and systems in an organisation is required. It is important to involve not only senior managers, but also middle and lower level managers in any decision related to technological changes. It is also essential for these middle and lower level executives to understand the bigger picture, and not merely the functional changes. So, organisations communicating both short-term and long-term benefits of technological integrations are able to house more confident and engaged employees. Employee involvement and engagement is crucial for the fact that an employee with little knowledge and information about technology may not understand its full benefits and consider the same as irrelevant. Similarly, it is essential for management to fully understand the perception of employees regarding any new business functions or processes. In order to manage successful integration of technology, companies should engage customers from the start. This should include regular information dissemination through intranet and internal newspaper, regular meetings with heads of departments so that they can subsequently transfer important messages to lower level staff and executives. Technology integration might result in shuffling of roles and responsibilities and consequently, companies should make sure that vertical and horizontal transfers occur as per employee demand and expectations. 3. Training facilities An important factor responsible for success or failure of technology in operations management is knowledge among its users. So, providing appropriate training facilities is extremely crucial for proper integration, implementation and usage of operations technology. Training can be categorised on the basis of skills such as, soft skills and hard skills. Critical training subjects can be information such as, data reporting, equipment and software handling and process management. Apart from that, providing quality training is also important for supporting employee activities. Good operations management training should include simulation exercises, role plays and workshops along with real life applications and issues regarding technology and its integration. Studies in training and learning have revealed various shortcomings during organisational training. For instance, majority of training revolves around operating technology in ideal situations. Even so, little training is provided for real life issues and employees find it difficult to deal with these issues in a correct manner, given their level of knowledge and skills (Scott, 2000). An effective solution prescribed by managers and operational executives is documentation of the training process. This might help in following procedures and steps in future and also aid employees when they have little or no technical support. 4. Staffing and Management of resources An important aspect of technology and implementation in organisation’s operations is management of assets and staffing. Various criteria can be followed to evaluate competency levels of IT staff (Judge, 2001). While necessary technical and software applications training is provided by majority of organisations, interpersonal and communication skills should be a prerequisite for those working in the technology department. Regular monitoring of their work progress will not only keep the top management informed, but will also motivate employees and staff to constantly upgrade along with new information. Staffing decision should also include overall knowledge of business operations, adaptability to changes at departmental, team and organisational level and awareness regarding external and internal knowledge. To ensure that individuals managing the operations technology are well-equipped with knowledge and skills, companies can also opt for annual training and cross-training facilities and quarterly and annual performance appraisal, in terms of knowledge and skills (Burke, 2005; McGraw Hill, n.d). Technology resources can be inventory assets such as, software, system licenses and hardware. It is important to regularly update them. Management of resources basically means improvising the technology processes and business functions according to market needs, changes in industry and demand of organisation. Companies should also make sure that these updates and change process are quick, minimising loss of time and energy (Xu, et al., 2002). An important method of managing technological assets is integration with operating budgets and department capital. At the same time, operation managers should determine overall profit and loss from these changes. For instance, the operational department of an organisation might need to change its internal software and be confused as to upgrade the software or change it altogether. In this case, the best strategy is to determine total expenditure of changing or upgrading and comparing with the immediate benefits and long-term revenues, before the system becomes obsolete again (McGraw Hill, n.d). 5. JIT and MRP integration MRP (Materials Requirement Planning) can be considered as computerised system for production planning and inventory control. Traditional systems such as, MRP, are plagued by inefficient control and ineffective management. There are people issues such as, education, training and understanding, complex planning process and inaccuracy in stock records. While training facilities can enhance understanding and usage, it is also critical to enhance efficiency of the technology system and minimise errors. An effective solution can be transformation from MRP I (Materials Requirement Planning) to MRP II (Manufacturing Requirement Planning) and integration of JIT systems (Xu, et al., 2002). MRP II has greater implications and is independent of any resource in the production system such as, machines, manpower, materials and money. The system also has a real time feedback system enabling corrections and adjustments for immediate modification and system up-gradation. Integration of MRP system with JIT has shown to increase operational productivity. While JIT is mostly used for higher usage products, MRP controls items of lower usage, expensive and large items. Similarly, MRP is push system and JIT is demand-pull system. As a result, MRP and JIT can be complimentary and implemented together for higher efficiency. For instance, MRP’s strength is its planning process and that of JIT is its execution system. Thus, combining the strengths of both JIT and MRP can provide better solution for an organisation’s operations management (Xu, et al., 2002). 6. Integration of technology with research and development Research and development form an important function in any organisation. Some organisations outsource this function to external research agencies, while most of the bigger organisations have their own R&D departments. Integration of technology in an organisation’s research and development is essential for overcoming numerous issues such as, gaps in new product development and communication, difference in demand and supply of services and products and customer satisfaction (Burke, 2005). Companies can build a technology roadmap with important features such as, changes in product or service line, technology platforms and IP (Intellectual Property) rights. Building technology platforms can help R&D in answering important questions related to base/core service or products. For instance, technology can enable research facilities to gather relevant information, data and knowledge at every stage of product or service development process (McGraw Hill, n.d). 7. Communication and involvement of top management As stated earlier, many technology systems fail because of ineffective communication and minimal involvement and enthusiasm from the top management. According to Hill and Jones (2009, p14), “Since operations accounts for some 60-70 per cent of assets, expenditure and people, operations managers must be more involved in strategic decisions and senior executives must fully appreciate their arguments”. Top management should involve themselves in important activities such as, picking appropriate teams for leading technological implementation in business functions and processes, establishing long-term vision among employees as well as managers, creating a sense of importance and urgency in organisation and setting the tone and pace for newly established technology processes. The role of top management should be prominent and they should conduct regular meetings, conversations and discussions with departments such as, IT, finance and operations (Xu, et al., 2002). Conclusion The objective of the current paper was to analyse the risks and challenges associated with technology function in operations management and evaluate strategies and tactics whereby these challenges can be removed or minimised. There are various issues faced by operations managers while installing and implementing technology in the organisation. For instance, it is important that managers understand efficient application of the newly installed technology in their organisation’s operational processes. Businesses often fail to create strategic units focussing solely on managing technology, resulting in failure of the technology altogether. Currently, in business sectors, major technologies implemented for faster and more efficient operations management are JIT, MRP and ERP. Other important challenges include lack of training and resource management and that of enthusiasm from top management. It has been inferred that integrating technology with important departments such as, production, design and R&D, is beneficial for overall development and growth of an organisation. Reference List Brown, S., Bessant, J., Jones, P. and Lamming, R., 2005. Strategic Operations Management. Oxford: Butterworth-Heinemann Burke, W. W., 2005. Organization change: Theory and practice. Thousand Oaks, CA: Sage Publications. Chang, S.E. and Ho, C.B., 2006. Organizational factors to the effectiveness of implementing information security management. Industrial Management & Data Systems, 106(3), pp. 345 – 361. Heizer, J. and Render, B., 2011. Operations Management. Upper Saddle River, New Jersey: Prentice Hall. Hill, C. and Jones, G., 2009. Strategic Management Theory: An Integrated Approach. London: Cengage Learning. Judge, P., 2001. Customer Service: EMC Corporation. Fast Company, 6, pp. 138–45. McGraw Hill, n.d. The Role of Technology in Operations. 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