Commerce And Production: Production: Effects Of Digital Technology On Production (Copy)

1.2 Production

1.2.5 Effects Of Digital Technology On Production

Introduction

• Digital technology has revolutionised production processes across industries worldwide.
• From automation in factories to real-time communication with suppliers, technology has increased efficiency, accuracy, and speed in production.
• It also reduces human error, lowers costs in the long term, and helps businesses remain globally competitive.

Impact Of Automation On Production

Meaning Of Automation

• Automation is the use of machines, robotics, and control systems to carry out tasks with little or no human intervention.
• In production, automation covers areas like robotic assembly, computer-aided manufacturing (CAM), and artificial intelligence (AI).

Use Of Robotics In Production

• Robots are programmed to perform repetitive, dangerous, or precision-based tasks.
• They are widely used in industries such as automobiles, electronics, pharmaceuticals, and food processing.
• Examples:
  • Car manufacturers like Toyota and Tesla use robots for welding, painting, and assembling vehicles.
  • Pharmaceutical companies use robotic arms to package medicines safely.
  • Coca-Cola uses automated bottling plants where robots fill, seal, and label bottles.

Advantages Of Automation

• Increased Productivity: Machines can run 24/7 without fatigue.
• Improved Quality: Robots perform tasks with high precision and uniformity.
• Cost Efficiency: Although expensive initially, automation reduces labour costs and wastage.
• Safety: Workers are protected from hazardous tasks such as handling chemicals or heavy lifting.
• Flexibility: Advanced systems can be reprogrammed for different production lines.

Disadvantages Of Automation

• High Initial Investment: Costly to purchase, install, and maintain machines.
• Unemployment Risk: Reduces the need for manual labour, especially in repetitive tasks.
• Dependence On Technology: Breakdowns can disrupt the entire production process.
• Skill Gap: Workers must be retrained to operate and maintain advanced machinery.

Written And Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions And 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course

Impact Of Digital Communication With Suppliers

Meaning Of Digital Communication In Production

• Digital communication involves the use of modern technology to exchange information quickly and accurately between businesses and suppliers.
• Ensures smoother coordination in supply chains and reduces delays in production.

Electronic Data Interchange (EDI)

• Definition: EDI is the computer-to-computer exchange of business documents such as purchase orders, invoices, and shipping notices in a standard electronic format.
• How It Works:
  • Instead of mailing or faxing orders, businesses send them directly to suppliers’ computer systems.
  • Reduces paperwork and eliminates human errors.
  • Transactions are completed within minutes, not days.

Examples Of EDI In Action

• A supermarket chain automatically re-orders stock from suppliers when inventory levels fall below a set point.
• An automobile manufacturer sends electronic instructions to parts suppliers, ensuring delivery exactly when needed for assembly.
• Amazon uses EDI to manage its vast supplier network for books, electronics, and household goods.

Advantages Of Digital Communication With Suppliers

• Faster Transactions: Reduces time delays between order placement and delivery.
• Accuracy: Minimises errors from manual data entry.
• Cost Reduction: Saves paper, postage, and labour costs.
• Better Relationships: Strengthens trust and coordination with suppliers.
• Integration: Helps create just-in-time (JIT) production systems where parts arrive only when required, reducing storage costs.

Disadvantages Of Digital Communication

• High Setup Cost: Initial investment in software and system integration.
• Technical Dependence: Breakdowns in IT systems can delay operations.
• Cybersecurity Risks: Sensitive data may be hacked or leaked.
• Training Required: Employees need technical skills to handle new systems.

Written And Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions And 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course

Combined Impact On Production

• Efficiency: Automation and EDI reduce production cycle times.
• Flexibility: Businesses can quickly adapt to changes in consumer demand.
• Global Competitiveness: Firms using digital technology can compete with international rivals.
• Cost Savings: Lower labour, storage, and error-related costs increase profitability.
• Sustainability: Reduced paper usage (via EDI) and optimised resource use (via robotics) support eco-friendly production.

Real-World Case Studies

Case Study 1: Toyota Production System

• Uses automation (robots in assembly lines) and just-in-time production with digital communication.
• Suppliers deliver parts precisely when needed, reducing storage costs and wastage.

Case Study 2: Amazon Warehouses

• Employs robotics to move products in warehouses.
• Uses digital systems to communicate instantly with suppliers and customers for re-stocking and deliveries.

Case Study 3: Zara Clothing Chain

• Uses EDI to link its stores with factories and suppliers.
• Production schedules update daily, allowing Zara to release new fashion items within weeks.

Written And Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions And 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course

Conclusion On Digital Technology In Production

• Digital technology, through automation and communication systems, has made production faster, more reliable, and more efficient.
• It reduces costs and errors, while allowing businesses to respond quickly to global market changes.
• However, reliance on technology requires careful investment, skilled workers, and strong cybersecurity measures.