Chapter 43 · Technology in Production
Explore how technology changes farming, manufacturing and services, then evaluate its costs, productivity gains, quality and flexibility.
Learning objectives
- Understand the impact of technology in production across business sectors.
- Understand the use of robotics in production and computer-aided methods.
- Understand why businesses balance cost, productivity, quality and flexibility when investing in technology.
The Impact of New Technology in the Primary Sector
The primary sector extracts or harvests natural resources, including farming, fishing and mining. Technological development can increase output per worker, reduce dangerous manual work and help businesses work more precisely. These improvements can reduce the number of workers needed for some tasks, so the consequences are not equally beneficial for everyone.
Getting Started: Driverless Tractors (Robotractors)
In a 2016 demonstration, Case IH presented an autonomous tractor at the Iowa Farm Progress Show. The concept machine used programmed routes, remote monitoring, radar, cameras, LIDAR and GPS, with safeguards for obstacles or loss of signal.
- Farmer’s benefit: a manager could supervise several tractors and use scarce skilled drivers more effectively.
- Productivity: machines can carry out tasks such as planting, spraying, ploughing and harvesting according to instructions.
- Safety: the programmed tractor can stop when it detects a hazard.
- Limitation: machines still require investment, programming, monitoring, maintenance and reliable sensing systems.
The tractor can reduce a farm’s reliance on seasonal tractor drivers, but the business must assess the purchase cost and whether it has staff capable of overseeing the machinery. Workers may need different skills rather than disappear entirely.
Agriculture: GM Crops and Drones
Other agricultural technologies include mechanical harvesters, grain dryers and automatic feeding systems. Genetically modified crops may be developed for pest resistance, improved nutrition or changes to their composition, such as vitamin, starch or oil content.
Historical US estimates put GM crop varieties at 88% of corn, 93% of soybeans and 94% of cotton seed, with 75% of Hawaiian papaya genetically modified. These figures are not current crop statistics. Drones can help farmers monitor irrigation, identify plant disease and plan fieldwork.
Mining Technology
New mining cutters can increase productivity and safety. A 2016 technology proposal from MineSense Technologies aimed to reduce water, chemicals and energy use when analysing mined materials, with an anticipated 25% improvement in recovery. That estimate was a projection, not a verified result.
Improvements in production technology can increase output and reduce waste, but the initial investment, retraining requirements and effects on employment must also be considered.
The Impact of New Technology in the Secondary Sector
In the secondary sector, businesses manufacture products from raw materials and components. Production has become more capital-intensive in many industries as machinery replaces some manual labour. New equipment can be fast, accurate and capable of operating continuously, but it can be expensive and is not appropriate for every business.
Robots
Manufacturing robots move materials, weld, paint, assemble components and inspect products. They can undertake hazardous, repetitive tasks consistently and potentially around the clock. Limitations include high cost, possible job displacement and the need for suitable tasks.
Three Types of Manufacturing Robots
| Robot category | What the robot does | Example |
|---|---|---|
| Material handling robots | Move materials, components or stock between locations | Moving goods in an automated warehouse |
| Processing operations robots | Carry out a specific production process | Spray painting or spot welding |
| Assembly line robots | Fit parts or inspect a manufactured product | Fitting caps, joining components or checking for faults |
Robots can increase worker safety where jobs involve fumes, heavy machinery or hazardous chemicals. However, a specialist robot may have little use when demand is unpredictable or highly customised.
Computer Aided Design
CAD software produces accurate drawings and 3D designs that can be edited quickly. Designers can compare different solutions and test measurements or dimensions before building a physical prototype. Applications include vehicles, plastic containers, furniture and clothing. CAD can cut development time and the expense of mistakes.
Computer Numerically Controlled Machines
CNC equipment can cut, mill, drill, weld, sew or print with repeatable precision. This can reduce human error and waste. Co-ordinate measuring machines (CMMs) help check dimensions and other product characteristics during inspection.
Computer Aided Manufacturing
CAM connects computer systems to manufacturing operations, including production control, handling, transport and storage. Following accurate digital instructions can improve speed and reduce waste; examples include manufacturing toys and packaged foods.
Computer Integrated Manufacturing
CIM is broader than a single computer-controlled machine. It connects functions such as design, production planning, purchasing, cost accounting, stock control and distribution. Staff continue to supervise, monitor, manage exceptions and maintain equipment. The main difference is the extent of integration between business operations.
| Technology | Main role | Key distinction |
|---|---|---|
| CAD | Designs and tests the product | Before and during product design |
| CNC | Controls a particular production machine | Performs programmed physical tasks |
| CAM | Uses computers to manage manufacturing | Links computer design and production operations |
| CIM | Coordinates the entire production system | Integrates many production and business functions |
Activity 1: Robots in Production (Sewbo)
Soft cloth has traditionally been difficult for robots to handle. Sewbo, developed by Jonathan Zornow in 2015, demonstrated a method of temporarily stiffening fabric with a water-soluble coating so a robot could manipulate and sew it. Washing then restored the fabric’s normal flexibility.
A historical demonstration suggested that Sewbo could make a shirt in about 30 minutes. Potential benefits include more consistent production and fewer dangerous or repetitive tasks, but automation may also reduce employment opportunities. The demonstration does not establish current commercial output.
A manufacturer must balance increased precision and potential reductions in repetitive work against large upfront costs, job displacement, workforce retraining and the suitability of the technology for different materials.
Halfway questions
Answer each question before opening Show suggested answer. Use evidence from the chapter, and show your working when calculating.
Identify two ways that the Case IH driverless tractor navigated safely in the historical example.
Show suggested answer
It used technologies including radar, cameras, LIDAR and GPS to update its route; it stopped if it detected an obstacle or lost its GPS signal.
Explain one potential benefit and one disadvantage of new technology to farmworkers.
Show suggested answer
Mechanisation can remove difficult or dangerous work and create technical roles, but it can also reduce demand for manual or seasonal workers, making retraining important.
Describe one way drones can support agricultural production.
Show suggested answer
Drones can monitor crops, reveal irrigation or disease problems and help farmers choose more suitable planting and treatment strategies.
Distinguish material handling robots from processing operations robots.
Show suggested answer
Material handling robots move goods or parts; processing operations robots carry out manufacturing jobs such as welding or spray painting.
What is the difference between CAD and CNC?
Show suggested answer
CAD is used to design and refine products on a computer. CNC machines follow programmed instructions to perform physical production tasks such as drilling or cutting.
Why did Sewbo use a temporary fabric coating?
Show suggested answer
The coating made soft cloth stiff enough for a robotic arm to handle and sew accurately; the coating was washed out afterwards to return the fabric to normal.
The Impact of New Technology in the Tertiary Sector
The tertiary sector supplies services. Technology can automate transactions, extend the reach of a business and reduce routine administration, even where personal service and skilled workers remain important.
Financial Services
Bank customers can use ATMs, electronic transfers, phone or internet banking and EFTPOS (electronic funds transfer at point of sale). These methods reduce dependence on physical cash and some face-to-face transactions. They may improve convenience, although customers still need secure and reliable services.
Marketing and Advertising
Computers make it easier to collect, store, analyse and present market research. Online research can gather responses quickly and at lower cost. Television advertisements can use sophisticated visual effects, while websites and internet promotion allow business information to be updated regularly and reach wider audiences.
Retailing
EPOS (electronic point of sale) technology records a transaction when goods or services are purchased. At checkouts, bar codes or customer-operated scanners record sales, produce receipts, update stock records and help identify purchasing patterns. These systems can reduce waiting times and support automatic reordering. EFTPOS deals with the electronic payment; EPOS covers the wider sales-recording system.
Leisure and Administration
Online reservations and electronic boarding passes can reduce paper tickets and administrative expense in the leisure industry. Office computers and databases make invoicing, billing, editing, storing and sharing information faster. Communications between employees, suppliers and customers can take place almost instantly across different locations.
E-commerce and E-tailing
Business-to-consumer (B2C) describes selling from a business to an individual consumer; business-to-business (B2B) describes trade between businesses. Some products can be downloaded electronically, but physical goods still need to be delivered to customers. Online sales can expand access to markets while increasing the need for reliable payment, fulfilment and data systems.
Historical Online Retail Sales
| Year | Estimated online retail sales (US$bn) |
|---|---|
| 2014 | 1,319 |
| 2015 | 1,592 |
| 2016 | 1,888 |
| 2017 | 2,197 |
| 2018 | 2,489 |
The historical figures illustrate growth in online retailing: US$2,489bn − US$1,319bn = US$1,170bn, an estimated increase of 88.7% from 2014 to 2018. The 2018 figure was a projection and should not be presented as current sales data.
The Costs and Benefits of New Technology
Businesses must compare the advantages of investment in technology with its financial and human costs. Not every technology creates greater profit: buying equipment can increase fixed costs even if it lowers unit costs or improves quality. The advantages also depend on staff skills, reliable operations and sufficient demand.
Table 43.1: Benefits and Costs
| Potential benefits | Potential costs or disadvantages |
|---|---|
| New products can offer customers more choice. | High purchase and set-up expenses. |
| Higher productivity and potentially lower costs. | Technology breakdowns can be costly. |
| Less waste of materials and resources. | Possible redundancies and conflict. |
| Improved health and safety. | Existing employees may need retraining. |
| Tasks become easier for workers. | Reduced motivation for workers on automated lines. |
| Faster and better communications. | Some businesses lose flexibility. |
Many benefits can occur together: precise machines may waste fewer materials while producing consistent goods more quickly. However, workers may fear redundancy and technology can become obsolete or break down. An organisation must plan for financing, installation, maintenance and retraining.
The Sewbo case highlights both sides: automation might reduce repetitive and poorly paid sewing work, but widespread use could also threaten employment unless businesses and workers prepare for new roles.
Balancing the Cost, Productivity, Quality and Flexibility of Technology
An important point is that decisions to introduce new machinery should evaluate four competing factors: cost, productivity, quality and flexibility. A productivity gain alone does not prove that the purchase is suitable.
Balancing the Business Decision
- Cost: purchase, installation, borrowing, maintenance and retraining may be expensive. Machines should generate benefits worth more than their overall cost.
- Productivity: machinery can increase output per worker and reduce unit costs, but only if enough extra products can be sold.
- Quality: computer-controlled production can improve consistency, although some buyers prefer the individuality of handmade goods.
- Flexibility: specialised equipment may only produce standardised goods, whereas advanced modern machinery may be reprogrammed to offer a variety of specifications.
- Employees: redundancies, changes to tasks and the need for new training can affect morale and the ability to operate safely.
For example, automated motor-industry lines can now assemble cars with different specifications on the same line. This shows that better productivity and product variety are not always opposing objectives. However, a small business making handmade clothing may not benefit from an expensive, highly standardised machine.
Would a business expect enough extra sales or cost savings to pay for the investment? Would customers accept the resulting products, and could the business adapt its equipment to changing needs? These questions are central to the chapter’s evaluation.
Large vs Small Businesses
Large businesses may adopt advanced technology more readily because fixed costs can be spread across greater output and finance may be more accessible. Smaller businesses can still benefit, for example by leasing equipment or using specialised technology in a small practice.
| Larger businesses | Smaller businesses |
|---|---|
| Can spread expensive machines over a larger production volume. | May face higher machine costs per unit if sales volumes are low. |
| May have finance and specialist IT or engineering teams. | May lease modern equipment instead of purchasing outright. |
| May automate integrated production systems. | May be able to respond quickly and choose highly specialised tools. |
| Have more employees who may need retraining. | Must ensure any investment fits a narrower cash budget. |
End-of-chapter questions
Answer each question before opening Show suggested answer. Use evidence from the chapter, and show your working when calculating.
Identify the three types of manufacturing robot covered in this chapter and give one use for each.
Show suggested answer
Material handling robots move components; processing operations robots weld or spray paint; assembly line robots fit components or inspect products.
Explain the difference between CAD, CAM and CIM.
Show suggested answer
CAD designs products; CAM links computer systems with manufacturing operations; CIM connects and controls the wider production system, including planning, stock and distribution.
How might CNC machinery improve a manufacturer’s productivity and quality?
Show suggested answer
Programmed machines can work quickly and accurately, repeat tasks with fewer errors and reduce wasted materials, although set-up and maintenance are expensive.
Explain one advantage and one disadvantage of replacing manual sewing with Sewbo-style robotics.
Show suggested answer
Robotics might remove repetitive and poorly paid tasks and raise consistency; however, machines are costly and workers may lose jobs or require retraining.
What is the difference between EPOS and EFTPOS?
Show suggested answer
EPOS records the sale and can link to stock and customer information; EFTPOS transfers the customer’s payment electronically.
Distinguish B2C and B2B e-commerce.
Show suggested answer
B2C is a business selling to consumers online. B2B is one business selling goods or services online to another business.
Calculate the increase in estimated online retail sales from 2014 (US$1,319bn) to 2018 (US$2,489bn).
Show suggested answer
Increase = US$2,489bn − US$1,319bn = US$1,170bn. Percentage increase = 1,170 ÷ 1,319 × 100 = 88.7% approximately. These are historical estimates.
Give two benefits and two costs of adopting new production technology.
Show suggested answer
Benefits: higher productivity, reduced waste, improved quality or safety. Costs: high set-up expense, breakdowns, job losses, retraining and possible loss of flexibility.
Explain why improving productivity may not be enough to justify buying expensive machinery.
Show suggested answer
Increased output will not necessarily pay back the purchase if demand is weak or if maintenance, training and finance expenses are very high. Quality, safety and customer requirements also matter.
Explain two possible benefits of installing robotic cutting equipment in a food-processing factory.
Show suggested answer
Robots may reduce the risk of injury during dangerous cutting tasks, improve accuracy and hygiene, and reduce waste. These benefits must be weighed against training and capital costs.
Evaluate the factors a business should assess before introducing expensive production technology.
Show suggested answer
Compare the total cost and finance required with expected productivity, product quality, employee skills, reliability and flexibility. Higher output alone does not justify investment if demand is uncertain or the machinery cannot adapt.
Chapter 43 recap
Technology can improve productivity, quality, communications, health and safety, and resource use in the primary, secondary and tertiary sectors. Key manufacturing methods include robots, CAD, CNC, CAM and CIM. Before investing, businesses must weigh cost, productivity, quality and flexibility alongside employment effects and likely demand.