The Use of Information Technology in Operations Management Essay

Paper Type:  Essay
Pages:  6
Wordcount:  1632 Words
Date:  2022-06-19


Technology has transformed the global market environment and integrated the challenging concept. Every organization is governed by the utilization of more than a single application for business processing. The software systems employed by companies require to be integrated together to support and optimize the procedures adequately. Operation management entails strategies that influence the competitiveness of a company in the marketplace. The approaches include delivery speed, quality, low cost, and customization. However, technology has raised the bar and allowed companies to compete in several dimensions simultaneously. Previously, the conventional market allowed the company to excel in a single strategy. For instance, a company with outstanding customization was expected to have high prices for compensation. However, technology has integrated the approach such that a company such as Apple can produce a customized product and deliver at a faster rate with an assurance of high quality and at an affordable price. Technology has enabled organizations to operate in a "superior" performance curve. Therefore, the article will evaluate the utilization of information technology in the field of operation management and its influence on business operation.

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Information Technology

A manufacturing business requires their products to be in a specific desired level and meet particular requirements in an appropriate time. Therefore, manufacturing companies need an advanced organizational system to keep track of production, inventory, and sales. Manufacturers are capable of managing the requirements depending on the company size, complexity of manufacturing procedures, and industrial vertical among other factors. Therefore, organizational systems applied include material requirements planning (MRP), a software that facilitates planning, scheduling, and entire control of materials utilized in the manufacturing process. Additionally, enterprise resource planning (ERP) integrates organizational requirement such as accounting, marketing, human resources, and supply chain management (Chen, 2001). Supply chain management entails flow of products from the manufacturer to the consumer within the appropriate time and in excellent condition.

The companies with intensive manufacturing process require multiple applications and thus, they integrate them into working effectively. The applications include ERP, MRP, SCM, and APS (advanced planning and scheduling), the systems tend to maximize the production and supply procedures (Manetti, 2001). The networks have their specific functionality and features, but they overlap at a particular stage. When the applications are integrated to work together, the return on investment is increased, and business operations are optimized, thus generating the organization substantial value on investment. Therefore, the article will analyze each application on their basis and expound on their influence on business processes.

Supply Chain Management

Supply chain management tends to evolve every day as the international markets become aggressive in competition and dependent on the capability of manufacturing and customizing their products while delivering them to the clients effectively and faster. According to Stadtler (2015), the primary function of SCM entails managing the flow of information, products, and money between consumers, suppliers, producers, warehouses, and logistics. Every SCM connection has strategic, tactical, and operational categories. Therefore, SCM aims towards delivering the organization with maximum revenues with minimal expenses during the entire procedure.

SCM ascertains that transparency about every component of the supply chain network is achieved while maintaining the focus of attaining the short-term and long-term goals of the business. It is the liability of the corporation to comprehend its products and market regarding consumer demand and product lifecycle over the long term. When the industry is definite concerning their long-term objectives, SCM application induces the process of achieving short-term goals and aligning them to the purposes of the firm.

The SCM application can be divided into two categories namely SCP and SCE; SCP system consists of sales and operations planning, demand, supply network, and long-term goals entailing strategic planning capacity (Stadtler & Kilger, 2002). The SCE system involves logistics and transportation and execution capabilities. SCE tracks the physical status of the products, resource management, and information about the finances of every party involved in the business operation.

Enterprise Resource Planning

ERP tends to oversee and integrate the back-office operations that include finances to human resources, manufacturing to sales. Therefore, ERP facilitates the business resources and reconciles the financial transactions of the firm in the general ledger. The system is developed around several business activities, meaning that the modules associated with each other through core database and data between departments are shared (Shehab et al., 2004). The ERP makes the entire business operations to be manageable and ensure all the functions executed correlate with each other. Therefore, the single applications link all services and information of an enterprise.

Material Requirements Planning

ERP and MRP complement each other that one cannot be discussed without the mention of the other. Majority of international companies operating in a corporate dimension require MRP system for streamlined operations of their functions. MRP was the pioneer of ERP. ERP amplified the functioning of MRP and advanced the system to MRP II. MRP application highlights what raw materials the firms require, what they need to manufacture, and where to outsource and purchase the raw materials (Ivanov, Tsipoulanidis, & Schonberger, 2017). MRP input utilizes three sources of information including master schedule, bill of resources file, and an inventory records. The master schedule involves the demand and deadline for products. Therefore, it highlights when the product should be produced, the lifecycle, and order. Bill of materials entails the constitution of resources; it expounds on the materials required, sub-assemblies, and compilations of manufacturing a single product. Inventory records file involves the data status of a product such as gross requirements, expenses incurred, and revenues expected. MRI output composes of primary reports and secondary reports. The primary statements include production, inventory planning, and management. The planned orders indicate the amount and timing of the future output.

Advanced Planning and Schedule

APS system manages logistics and manufacturing procedures of the business. It takes responsibility for both short-term and long-term planning horizons. Ivert (2009) posited that the application utilizes advanced mathematical algorithms to simulate and optimize logistics and intensive business procedure, such as demand, production scheduling, distribution planning, and logistics scheduling. The primary goal of APS system entails delivering best solutions for planning and scheduling concerns depending on optimum cost-benefit exploration for demand, supply, capacity, and logistics.

APS applications facilitate immediate responses to market transformation, advanced input, prompt delivery periods, increased inventory levels, and quality customer services composing low investment expenses. However, APS application does not replace other operational management systems; it complements other systems (Hvolby & Steger-Jensen, 2010). It is a subset of an SCM software suite that is fast and manages the computation database. Furthermore, it eliminates specific constraints and facilitates simulation data to develop maximum recommendations.

How the Systems Differ

Despite the MRP, SCM, APS, and ERP enabling and facilitating the operation of an organization such as manufacturing, processing, planning, and delivering, they perform distinct responsibilities and purposes. Due to the different functions of the systems, the outcomes depend on the structures implemented by the organization when integrating, employing, and utilizing them. According to Akkermans, Bogerd, Yucesan, and Van Wassenhove (2003), APS system majors in the planning and scheduling, SCM application focuses on transparency, incorporating, and maximization of the supply chain network and an ERP system disseminates the demanded informations and corporate regulations for several industry tasks.

APS and SCM applications are utilized in executing strategic decisions concerning the firms since they provide a better comprehension on what requires to be planned and scheduled for optimal functions. However, it substantial to note that ERP and MRP systems cannot be employed while making strategic decisions. ERP system oversees the planning process for demand, supply, resources, production, logistics, and operation of the business. Therefore, ERP system deals with less visibility and its constraints are not highlighted among business operations. However, APS and SCM involve simultaneous processing of limitations in actual time; thus, creating an understanding concerning the influence of each business operation (Ivert, 2009). For instance, when the delivery date for a customer's product is adjusted, SCM application has to compute how communication between the supplier and the consumer will be executed, make the changes about the manufacturing procedure to contain the date changes, for instance, the warehousing of the product.

ERP systems are transactional systems that function in multiple tasks. About the date adjustment for the customer's product, it is best to analyze how that will influence the business operations. With the assistance of APS system, an evaluation will be conducted concerning the influence an order adjustment will have on other consumer's products. APS application has the capability of computing the optimal solution regarding resources, quantity, and logistics challenges. Therefore, ERP applications do not provide details concerning the customer's order; thus, most firms are integrating SCM and APS applications to improve and streamline planning, sourcing, manufacturing, storage, and supply procedures.

How the Systems Complement each other

Regardless of the applications operating distinctly, the deliver high-quality outcomes when integrated together. SCM and APS systems require ERP applications because of its centralized data stores enabling them to perform when there are demand and supply adjustments. Organizations majoring in manufacturing, supplying, and logistics require applications that can execute real-time computations to ascertain optimal costs, revenues, and appropriate pricing of items. Additionally, ERP lacks the capability of considering customer needs, challenges, and preferences against several businesses and locations. However, APS systems provide a logical manner of satisfying customer wants to start from the ordering stage to the delivering stage by considering scheduling resources, capacity, and transportations (Shehab et al., 2004). Therefore, APS and ERP operate simultaneously to provide favorable strategy considering challenges, raw materials, and quantity. ERP application derives an approach from APS application and contains requirements for several sections of the firm (finance to storage).

Impacts of the Information Technology on Business Technology

The integration of the systems and advancement of technology has led to optimal automated devices, voice recognition applications, and faster data dissemination. The applications have benefited the manufacturing industries because of the vast available data that...

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