At every stage of the production process there is the potential for technology to be applied to improve efficiency and quality, such as using machines to make manufacturing more accurate.
Some form of technology is used in operations to make every good, so changes in technology have a big impact on transformation processes, affecting the mix of inputs, as well as creating new opportunities for outputs. Technology also has an important impact on operations management because electronic systems can be used to better plan, monitor, control, and manage the operations process. For example, technology can be used to design products and sequence production tasks more efficiently.
Technological impacts on inputs
Many forms of technology are used as inputs in the production process, such as microchips, synthetic materials, and machinery. These technologies can often be substituted for other resources. For example, synthetic products can replace raw materials, and machines can do the work of humans. As technology advances and becomes cheaper, more reliable, and easier to use, these kinds of substitutions become more likely. The replacement of humans by machines (called 'automation') is a particularly big issue as labour accounts for about 60% of all production costs. Machines can often be much cheaper than people.
New technology can often be expensive to adopt, so a business might feel pressured by the market to make the change (for instance, because new technology is perceived as fashionable or higher quality), but be reluctant to do so because of cash f low problems or doubt about long-term benefits. Also, there can sometimes be initial problems and bugs with new technology, and workers may have to learn new skills to be able to use technology properly.
Technological impacts on the types of outputs
New technology presents wonderful opportunities for businesses to make new kinds of products and old products with new features....