This overview of the Role of Information Technology in Operations Management was prepared by Chastity N. Cyprian while an Accounting major in the College of Business at Southeastern Louisiana University.
In this article, I will look at the many roles that Information Technology plays in Operations Management. Moreover, I will review the various types of Information Technology, and how they are utilized within an organization.
The Idea in a Nutshell
Everyday, business owners are faced with the challenge of seeking ways to streamline their operation in ways that are not only cost effective and efficient, but that is conducive to increased sales as well. During the strategic planning phase, some businesses will concentrate on aggressive marketing strategies, while others will create a product that is superior to their competitors. Both plans are promising; however, regardless of what plan is selected, the key factor in determining rather either will be successful is how it reaches the end user, the consumer. Businesses must insure that all their hard work reaches its target market. Investing in Information Technology will insure success, for not only is it cost effective, but it is also efficient.
As defined by the Information Technology Association of America, Information Technology is “the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware. Information Technology (IT) deals with the use of electronic computers and computer software to convert, store, protect, process, transmit, and securely retrieve information”. In operations management, IT plays a crucial role in business transactions, without it, most businesses would go under.
Although the term IT dates back to the 1960’s, it actually begin becoming a well known concept during the 1980’s, specifically with the introduction of the personal computer. Since then, IT has skyrocketed to become very fundamental in the business world. It is difficult to finger just one pioneer of IT, as countless have assisted in pioneering some of the most savvy systems known to the business world. However, if we must bestow the honor upon just one, I would have to nominate Samuel Morse as being the father to IT, for his invention of the telegraph in 1844 began the conquest of delivering information in electrical form over long distances. To him we must pay homage. Over a century has passed, and IT has dominated our culture. Let’s review the different faces of IT in Operations Management.
The Top Ten Things You Need to Know About the Role of Information Technology in Operations Management
1. Business to Business (B2B): Information technology assists with electronic transactions between businesses usually over the internet. Before the internet, business to business transactions would take days to complete. Transactions such as sales, ordering, or the formation of contracts could only be done by either mail, or the phone system, creating a very inefficient and costly environment. Today, a mere click of a mouse is responsible for generating billions of dollars in sales,
2. Business to Consumer (B2C): Not only does Information technology assist B2B transactions, it also allows consumers to participate in the convenience of on-line transactions. A B2C transaction is another type of IT which involves electronic transactions between businesses and their customers usually over the internet. A good example of a B2C is a company such as Priceline.com which lacks a traditional office for consumers to frequent, but instead has a website that initiates the majority of its sales transactions. .
3. Internet: For those born on another planet, the Internet is a global information system of computer networks that facilitates communications and data transfers. The internet has become one of the most common IT feature known in the business world From sending e-mails to proposals, the internet is one of the most inexpensive forms of IT that can be utilized within an business.
4. Extranet: The extranet is an intranet connected to the Internet. It allows collaboration of customer and vendors, usually between B2B. It is a form of shared access with suppliers, trading partners, and customers.
5. Bar Codes: Bar Codes are a series of lines printed on packages that helps identify the product and other pertinent information when read by a scanner. Usually, this information is scanned into an inventory software system that allows business to keep account of what has been sold and what ultimately has to be re-ordered. Bar Codes are mostly used by manufacturers and retailers.
6. Customer Relationship Management (CRM): Customer Relationship Management is software used for managing interactions with customers as well as compiling and analyzing customer data. CRM is a vital tool that marketers use to help them identify target markets. For example, CRM’s provide the type of demographic information that exposed the fact retired senior citizens’ are buying more convertible sports cars than hard top Cadillac's. Moreover, it is also used to assist in improving the consumers buying experience.
7. Supply Chain Management: Supply Chain Management is software used for managing flow of goods and information among a network of suppliers, manufacturers, and distributors. Supply Chain Management is utilized heavily in the manufacturing industry where the collaboration between various businesses is critical to the operation of all parties.
8. Decision Support Systems (DSS): DSS is an information program that assists managers in making vital decisions. It includes quantitative modeling components for what if analysis. The DSS system is an accountant’s and finance analyst companion, it can also provide use for a business manager.
9. Expert Systems (ES): Expert Systems are normally used within the science industry such as: Chemical plants, Bio-laboratories, and Engineering firms. ES is a computer system that uses an expert knowledge base to diagnose or solve a problem.
10. Enterprise Resource Planning: Enterprise Resource Planning is software used for managing basic requirements of an enterprise. This includes sales and marketing, accounting, materials management, production, and human resources.
The Video Lounge
The web is filled with data regarding Information Technology. A simple Google search will provide thousands of colleges aggressively recruiting potential IT majors to attend their organization, and understandably so. The IT field continues to have a steady demand for those interested in entering the field. However, in this video Sacha Vincent provides us with the effects that Information Technology has had on China; and how it ultimately shifted sales from the United States.
Information Technology is playing a crucial role in business. Whether you are a consumer buying concert tickets, a small business owner, or a teenager with the new IPhone, you have more than likely participated in the world of Information Technology. In the 21st century, no business that is looking to succeed can run its organization without insuring that it is equipped with the necessary resources needed to survive in a competitive market.
Harrell, A. J. (2009) Information Age: People, Information & Technology, 186, 89
Russell R. (2010) Operations Management, 6, 276-285
To contact the author of “Top Ten Management on “The Role of Information Technology in Operation Management,” please email Chastity N. Cyprian at W0010509@selu.edu.
David C. Wyld (email@example.com) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. His blog, Wyld About Business, can be viewed at http://wyld-business.blogspot.com/. He also maintains compilations of his student’s publications regarding management concepts (http://toptenmanagement.blogspot.com/), book reviews (http://wyld-about-books.blogspot.com/), international foods (http://wyld-about-food.blogspot.com/).
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Top Ten Management on The Role of Information Technology in Operations Management: An Overview of The Role of It in Making The Firm Work Smarter and Operate at Its Peak Potential