Impact of Information Technology on Production and Operation Management

Impact of Information Technology


Production and Operation Management

In last few years, technology has changed the way organization conduct their business. Advent of technology in operation management has increased productivity of the organization. The scope of technology has evolved over a period of time and has moved from development of products into design, management and improvement of operating system and processes. Over the years, advances in technology have transformed key aspects of operations management. New tools and technologies have been incorporated into the design and operation of service and production systems.

Usage of technology in operation management has ensured that organizations are able to reduce the cost, integrate suppliers with the organization, improve the delivery process, standardize and improve quality and focus on customization, thereby creating value for customers. Areas of major impact are discussed below:

1. Supply Chain Management

2. Reduction in Costs

3. Customer Relations Management

4. Productivity

5. Decision Making

6. Globalization

7. New Business Processes


1. Supply chain management

A well-managed supply chain links the suppliers, manufacturers, distributors and customers by a suitable information system for controlling across boarder in order to achieve optimum productivity, overall satisfaction and joyful relation at cheaper cost. Quick and effective information system helps manager to understand the customer response, their demands, inventory in the stock, how much to be produced and where to deliver and when to deliver? Here comes the role of Internet, which is considered as a cheapest inter-organizational information system, which helps in aligning the interdependent strategies to achieve cooperative rather than competitive role of Supply chain management partners. To achieve integration and effective information sharing across and beyond the organisations, IT in SCM is required.  The organisations are moving towards the virtual supply chain with help of rapid changes in technology and IT applications viz; Electronic Data Exchange (EDI), Radio Frequency Identification (RFID), Bar Code, Electronic Commerce, Decision Support system, Enterprises Resource Planning (ERP) package, etc. It is also easily applicable in curbing the e-risks.

2. Reduction in costs

It is possible to gather data of costs of materials from various sources and also to compare it in real time. No longer does one have to carry out a manual search for sources, call for quotations, or wait for replies in a slow postal system. The internet gives access to ready information across the globe and materials can be obtained from the cheapest sources. Similarly, production processes can be performed globally wherever labour costs or costs of production and operation are the lowest. This has resulted in the considerable reduction of transaction and operations costs.

3. Customer relations management

It is possible to track the preference of every customer with the latest technology that is available. Data about customers can be mined and systems designed not only to meet customer satisfaction but also offer customer delight. Greater customization of products is possible. For instance, Dell Computers can assemble and deliver computers according to the specifications suggested by the customer in a matter of hours.

4. Productivity

 The growth of information technology has improved productivity because of inventions of new tools and software. That makes productivity much easier and less time consuming.

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