Go into any operation and one of the first things you will notice is the process technology it employs.

In some operations the process technology makes itself very evident because it is large, noisy and sometimes dirty. For example, in a steel works, the whole operation is dominated by steel processing technology. But even in a fast food restaurant the technology is there (and often you can see it behind the counter). And just because it is not as big or as impressive as the steel processing technology does not mean to say that it is not as important. For example, McDonalds have been known to spend millions of dollars on the technology which helps to prepare their food. Saving one or two square metres of space in the kitchen area may mean sitting an extra four or five people in the restaurant area. If each of these spends $6 every 15 minutes for 356 days a year in every single McDonalds outlet, just think of the extra revenue. In fact, for most operations, process technology is becoming even more important. Information processing technologies especially are opening up new possibilities for operations managers. Internet-based technologies have created some totally new businesses and destroyed others. But while it is important for operations managers to understand technology, they do not have to be technological experts. In fact it is sometimes a disadvantage to become too deeply embroiled in the details of the technology. What is important though is that operations managers can ask enough sensible questions to understand the implications of any particular technology on their operations processes.

Your learning objectives

This is what you should be able to do after reading Chapter 8 and working through this study guide.

Identify the process technology used in any operation. Describe the significant materials-processing technologies. Describe the significant information-processing technologies. Describe the significant customer-process technologies. Understand how process technologies are chosen.

What is process technology?

Several examples are given throughout this chapter of very different process technologies. Each of these process technologies is used to create and deliver products and services. This distinguishes them from product technology which is the technology embedded within a product. In Chapter 5 we use the example of a video cassette recorder to distinguish between the technology within the recorder itself and the technology which made the recorder.

Life-cycle effects on product/service and process technology

If product/service and process technologies can sensibly be separated in an operation, they will not always receive equal attention. Sometimes developing product technology will be seen as more important than developing process technology and sometimes vice versa. One factor which influences this is the stage of the product or service in its life cycle, that is thematurity of the product. The figure below illustrates how the relative rates of product/service and process technology innovation vary as a product matures. For example, examine how the relative emphasis on product and process technology of personal computers (PCs) has changed since their introduction in the late 1970s. For the first few years after their introduction the product technologies of PCs were their main feature. The fact that a product which was capable of being so conveniently transported could also be so powerful was a major innovation in product technology. These early PCs were often assembled using the most basic production methods. Apple Computer, for example, built its first machines in a garage. That did not matter to customers who were concerned more with what their products could do. As the rate of change in product technology slowed, a little more thought was put into how PCs were to be produced. Increasing volumes made continued use of the garage approach both infeasible and uneconomic. PC manufacturers realised that further market success would depend on investing in automated production technology.

Materials processing technologies

A small number of materials processing technologies are described in the chapter. These are,

Computer numerically controlled machine tools (CNC). Robotics Automated guided vehicles (AGVs) Flexible manufacturing systems (FMS) Computer integrated manufacturing (CIM)

From this list it might seem as though all materials processing technologies are manufacturing technologies. However this is not the case. For example, Table 8.1 includes the integrated mail processing machines used by national mail collection and delivery systems as a material processing technology. It does not physically change the material, but it does sort it by its destination. Similarly, the photograph on page 233 of the conveyor belt sushi bar at Yo! Sushi processes material in so much as it moves the various dishes around customers who can then choose which item they want. Even trucks or cargo ships could be considered materials processing technologies. Again, they may not physically change the material but they do change its location.

Comparisons of advanced manufacturing technologies

The progression from conventional machine tools to FMS involves a gradual replacement of manual operations with automated operations. The figure below characterises the relationship between the degree of possible automation and some of the technologies described in the chapter. Note how the steps at the core of the

process, involving the shaping or cutting activities are the first to be automated, after which the more peripheral activities at either end of the whole process are gradually included within the capabilities of the technology.

Information processing technologies

A number of information processing technologies are described in the chapter. The most significant ones are often at the interface of conventional information technology (IT) and telecommunications. Undoubtedly we are in a period of rapid change in this particular kind of technology. So an understanding of some of the basics of IT and telecommunications technologies is vital for operations managers. Certainly the impact on operations capabilities has already been very significant. The costs savings shown in Figure 8.7 which illustrates the relative costs of different technologies in retail banking, is worth thinking about. It could be easy to read the wrong implications into this figure. One should not infer that all banking will be internet-based banking in the future. Certainly there are significant advantages both from banks and customers point of view of using the internet to manage transactions. However, there will always be customers and always certain types of transaction which the other technologies may be better at. There is also some evidence that some retail banks in Europe closed old fashioned bank branches too quickly, failed to persuade all their customers to use telephone and

internet communication, and lost market share as a result. Remember that because a new technology makes something feasible it does not necessarily make it desirable.

An office in the sky

As the technologies of data processing and telecommunications are merging, so too are the services which they support coming together. The individual television screens, now common in aircraft, provide the entertainment which keeps passengers happy on long international flights. Now British Airways has gone one step further in bringing together entertainment technology with information provision and processing. Using a hand-held control device, passengers can access dozens of TV entertainment channels, an up-tothe-minute news service, computer games and a menu of information-processing options. For example, a customer who wants to book a hotel room, reserve a hire car, order flower deliveries or buy duty-free goods, can do so via the screen and control device. Payment for the services or goods ordered is made by swiping a credit card through a slot built into the seats armrest. Confirmation of the transactions are shown on the screen. The system can also transmit a passengers own data. A notebook computer can be plugged into the system and a faxed hard copy of the information sent back to the office. Behind the new service is a communications system which includes the Inmarsat satellite and BAs central booking database in London. The database directs credit card details to the card company and, on authorization, transmits the customers orders and reservations to the respective companies. The airline views such technology as important in its efforts to provide a superior service. The concept is based on providing customers with a total media centre from their seats. We have the opportunity to provide customers with a whole range of products and services where they will be able to choose what they want to do rather than be fed with entertainment.

Customer processing technologies

Unlike materials and information processing technology, there is no universally accepted categorisation for customer processing technologies. (This is why the typology used in the third edition is slightly different to the one we used in the second edition things have moved on). Nevertheless customer processing technologies are becoming increasingly important. They do however present unique challenges for the operations manager. The main one is that many customer processing technologies require the customer to operate the technology. Customers unfortunately are not always skilled in doing this. Thus the nature of the customer technology interfaces becomes particularly important. For example, a European retail bank was concerned that its customers were getting frustrated when using its automatic telling machines (ATMs). The ATMs took the customer through a whole series of decisions, offering services, asking whether a

receipt was necessary and so on. This process enabled customers to partake of a wide range of services but was lengthy. Customers who only wanted to get money quickly still had to work through a series of questions. After testing customers reactions, they decided to simplify the ATM questions in order to speed up the process. While this may have satisfied some customers, it also upset others. The ones who were upset at the reduction in service complained more vocally than those who were (presumably) pleased that the transaction was faster. What the bank had forgotten was that, even if most of its customers did want a faster service, they had come to expect the longer but richer level of service which the old system offered. Customers had become trained. This is why the section on customer training is important in this chapter.