Strategic and Organizational Implications of Computerized Manufacturing Technology

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NOT FOR QUOTATION WITHOUT PERMISSION OF THE AUTHOR

SIXATEGIC AND ORGANIZATIONAL IMPLICATIONS OF COMPUTERIZED MANUFACTURING TECHNOLOGY

Donald Gemin

September 1984 CP-84-43

Collaborative Papers report work which has n o t been performed solely a t t h e International Institxte For Applied Systems Analysis a n d which has received only limited review. Views or opinions expressed herein do not necessarily r e p r e s e n t those OF the Lnstitute, i t s National Member Organizations, or o t h e r organizations supporting t h e work.

INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS 2361 Laxenburg. Austria

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In t h e a r e a of science a n d technology our Institute i s trying t o identify a focus where we can build some comparative advantage and where knowledge, useful for o u r constituency, can be derived.

For a few y e a r s a strong candidate has been t h e problems of flexible manufacturing systems, diffusion, a n d related policy issues on different levels of t h e national economy. Even t h e m u c h less than exhaustive bibliographical s e a r c h reveals t h a t in t h e r e c e n t past several govern- m e n t s a n d institutions a r e exploring this problem, a n d searching for proper policy i n s t r u m e n t s t o enhance their introduction.

This paper by Dr. Gerwin gives a substantial overview of t h e most r e c e n t problems (and their potential solutions) t h a t a corporation e n c o u n t e r s when introducing computerized manufacturing technology.

There a r e several important messages in t h e paper b u t their common denominator is perhaps t h a t t h e introduction of this technology needs qualitative changes not only in t h e necessary skills of t h e factory personnel working on t h e shop floor but also in t h e procedures and value judgement a t every level of t h e company hierarchy.

The introduction of flexible automation is connected with many technical, economic and even social traps t h a t t h e management of a suc- cessful company m u s t avoid. It is research t h a t has t o deliver t h e neces- s a r y knowledge. This paper is a s t e p in this direction.

Boris Segerstahl Deputy Director

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I gratefully acknowledge the support received for writing this paper during a stay ay t h e International Institute for Applied Systems Analysis (IIASA), Laxenburg. Austria.

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The new competitive conditions of t h e 1980's have thrown American and European maunfacturing into a turmoil. Computerized process technology can help ease t h e problems through increasing productivity, quality. a n d flexibility. However, its benefits will not be realized unless manufacturing m a n a g e r s a t t e n d to the technology's s t r a t e g i c and organizational implications. Issues in specifying t h e connections between computerized processes a n d strategic objectives a r e discussed. A con- ceptual framework is proposed which identifies some of these connections. Determining the appropriate work organization a n d compatible systems and procedures a r e also discussed. Recommendations a r e made for dealing with these issues.

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CONTENTS

INTRODUCTION

APPLICATIONS OF THE TECHNOLOGY STRATEGIC IMPLICATIONS

Connections Between Strategy and Technology Capital Appropriation Decisions

ORGANIZATIONAL IMPLICATIONS Work'Organization

CONCLUSIONS REFERENCES

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!TRWI"I'GIC AND ORGANIZATIONAL I WLICATIONS OF COMPUTERIZED MANUF'ACTURING TECHNOLOGY

Donald Gerwin

School of Business Administration, The University of Wisconsin-Milwaukee, Milwaukee, Wisconsin 53201. U.S.A.

INTRODUCTION

Just fifteen years ago the major problems of American and European manufacturing appeared to be solved and interest was turning t o our rapidly developing service sectors. Since then the pendulum has swung back with an impact t h a t has left us in turmoil. Clearly, fundamental changes a r e needed in t h e management of manufacturing and i n manufacturing's relationships with the rest of the 6rm.

Considerable attention is being paid to solving our manufacturing problems through the introduction of computerized production technology. Productivity, quality and flexibility should all be improved a s programmable automation works its way into design, fabrication, material handling, assembly, storage, inspection and production control. Com-

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p u t e r aided design (CAD), c o m p u t e r aided manufacturing (CAM), robotics, a u t o m a t e d guided vehicle systems (AGVS), and computerized material r e q u i r e m e n t s planning a r e becoming essential ingredients of t h e modern factory.

However, we have been slow to learn t h a t increases i n manufacturing effectiveness c a n n o t r e s u l t automatically from t h e introduction of new technology. Computerized automation m u s t be i n t e g r a t e d with h u m a n activity in virtually every c o r n e r of the factory if i t is t o realize i t s potential. Changes will be required in skills, a t t i t u d e s , systems, procedures, s t r u c t u r e s a n d even business policies. They will affect managers, workers and technical specialists; t h a t is just about everyone i n the factory n o m a t t e r t h e function or hierarchical level.

In t h i s paper I discuss s o m e of these strategic a n d organizational implications of computerized manufacturing technology a n d recommend s o m e ways of dealing with them.

APPLICATIONS

OF

THE TECHNOLOGY

Figure 1 provides a compact way t o understand i m p o r t a n t aspects of t h e new technology and where t h e y a r e having t h e i r impacts. The manufacturing world is divided i n t o four c o m p a r t m e n t s which specify t h e n a t u r e of t h e t a s k t o be performed (fabrication a n d assembly) a n d t h e type of manufacturing process (batch a n d m a s s productibn). The a r e a s of b a t c h assembly a n d mass fabrication have been less affected t h a n t h e o t h e r two. Yet t h e y a r e likely to witness significant future developments if c u r r e n t r e s e a r c h is a reliable guide. In t h e United

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Rgure 1 A schema for computerized manufacturing applications.

FABRICATION

States, research is already being conducted into automated assembly for small motors, a n d machine tool builders a r e developing c o m p u t e r numerically controlled (CNC) transfer lines for t h e auto industry.

Perhaps t h e m o s t sophisticated example of t h e considerable i m p a c t on batch manufacturing is t h e flexible manufacturing system (FMS).

With an FMS i t is possible t o automatically produce a mix of r e l a t e d parts, change t h e composition of t h e mix over time, reroute production if a machine breaks down, handle engineering design changes for a c e r - tain part a n d machine different p a r t s in random order.

An FMS is a highly customized manufacturing system which typi- cally has several general-purpose and specialized CNC machine tools, an a u t o m a t e d material handling system a n d a c e n t r a l computer. The p a r t s t o be machined a r e fixtured a n d loaded onto vehicles which a r e individu- ally routed through t h e system by t h e computer. When a machining des-

ASSEMBLY

BATCH PRODUCTION

MASS

PRODUCTION

L

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tination is reached t h e p a r t is transferred and the designated operations a r e performed under computer control. For Further details see Cook (1975).

The application of programmable automation in m a s s assembly is illustrated by t h e mechanizing of body framing in a u t o plants. Body framing is t h e most critical assembly operation because none of t h e sub- sequently a t t a c h e d components will fit properly unless t h e body is dimensionally correct. h automated system, when compared t o manual framing, offers increased productivity and quality while preserving some of the flexibility.

In one of t h e U.S.'s m o s t advanced assembly plants body framing is under hierarchical control by programmable controllers. First. the underbody and sides a r e loosely fit together mechanically using a tran- sportation system whose c a r t s have individual drive mechanisms.

Depending upon t h e body style t h e subassembly is t h e n conveyed to either of two special framing units. It is automatically fixtured and critical welds a r e placed by robots. The next operation is rooF welding. Then the entire body is re-spotted using robots.

SllUTEGIC IMPLICATIONS

It is now well accepted t h a t advanced manuracturing technology has significant implications For company strategy. However, t h e r e has been virtually no research which indicates the n a t u r e of t h e s e connections.

What characteristics of t h e technology impact on which aspects of strategy and in what way? Until some answers a r e provided managers will

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have difficulty understanding how to utilize programmable automation effectively.

In order to provide some intitial answers it is useful to consider the changing n a t u r e of the manufacturing sector's environment. Changes in tastes, in foreign competition, in governmental regulations, in technology, and in fuel prices a r e creating highly uncertain competitive conditions. Now t h e r e is a premium on the ability t o adjust t o uncertainty through s h o r t e r production runs, customer specials a n d wider product lines. New production equipment must offer flexibility as well as low cost a n d high quality. It is flexibility which has the g r e a t e s t potential for influencing strategic objectives.

For small firms engaged in one of a kind or small batch production this is merely an intensification of a situation they a r e already used to living with. However, many large concerns engaged in large batch and mass production face novel problems in learning how to adapt. As Skinner (1984) observed, t h e American auto industry needs to learn how t o bring out a new model every two or three years r a t h e r t h a n every six or seven, and t o do so it m u s t replace its rigid capital equipment, which h a s kept i t s product strategy captive to its operations technology.

Connections Between Strategy and Technology

The link between strategy and process technology arises from flexibility. What is flexibility and how does it function to connect t h e two?

Table 1

recognizes six different kinds and relates each to a primary strategic

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Table 1 Relationships between flexibility and strategy.

Flexibility Dimensions

I

Primary Strategic Objectives Mix

Component Modification Rerouting Volume Material

Diverse Product Line Product Innovation Customer Responsiveness Customer Due Dates

Meet the Production Schedule Product Quality

objective. Given a priority ordering of strategic objectives, t h e r e is an associated order of flexibility dimensions. Knowledge of these constraints can help specify the design of a manufacturig technology. This design would include technical components such as hardware, software and layout, and social aspects such as people, tasks and work organization.

In Table 1:

Mz

f l e z i b d i t y is the ability of a manufacturing process t o produce a number of different components a t t h e same point in time. I t is associated with the strategic objective of a d i v e r s e p r o d u c t Line.

Component f l e z i b i l i t y is t h e ability of a process to substitute new components for those currently being manufactured. I t facilitates the strategic objective of p r o d u c t i n n o v a t i o n .

Modification f l e z i b d i t y is the ability of a process to implement design changes in a given component. The associated objective is r e s p o n s i v e - ness to c u s t o m e r n e e d s .

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Rerouting flezibility f a c i l i t a t e s t h e strategic objective of m e e t i n g c m - tomer due dates. I t is t h e d e g r e e to which t h e sequence of m a c h i n e s t h r o u g h which a given c o m p o n e n t passes can be changed.

Volume flexibility is t h e ability to make changes in t h e aggregate a m o u n t of production of a m a n u f a c t u r i n g process. It is associated with t h e objective of meeting the production schedule.

Material flexibility is t h e ability t o handle unexpected variations in a process' raw m a t e r i a l inputs. I t facilitates a p r o d u c t quality objective.

Examination of t h e t a b l e indicates t h a t e a c h type of flexibiIity r e p r e s e n t s t h e creation of v a r i e t y whether in t e r m s of components, r o u t - ings, volume or raw m a t e r i a l s . One manufacturing process is m o r e flexible t h a n a n o t h e r on a p a r t i c u l a r dimension i f i t handles a wider r a n g e of possibilities. However, a s S l a c k (1983) h a s indicated, t h e cost a n d t i m e of moving from one possibility t o a n o t h e r m u s t also be considered. Two technologies may be able t o a d j u s t production volume t h r o u g h o u t t h e s a m e r a n g e b u t t h e m o r e flexible one will accomplish t h e changes with lower t i m e a n d cost.

The strategic objectives a r e oriented toward c u s t o m e r service.

Goals s u c h a s product variability, on-time delivery, volume and quality reflect m e e t i n g t h e m a r k e t ' s needs. They a r e obtained a t t h e expense of s h o r t r u n efficiency a s i s evidenced by t h e absence of cost r e d u c t i o n f r o m t h e list. Research by Abernathy (1978) in t h e American a u t o indus- t r y supports t h i s view. He found t h a t t h e connection between products a n d production processes evolved from one emphasizing product variability t o one stressing c o s t efficiency.

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The relationships between the two columns of Table 1 a r e undoubt- edly much more complex than depicted there. While each flexibility dimension is associated with a main objective in the table, it may also have secondary impacts on other ones. Material flexibility has t h e main impact on quality. However, rerouting flexibility c a n adversely affect quality if emergency sequences do not insure precise machining.

Modification flexibility permits minor design changes which can improve quality. Determination of t h e complete web of interrelationships requires a good deal of Further research.

The dynamic aspect of t h e technology-strategy connection also needs to be considered. Over time t h e market conditions faced by a firm may change. A company with strategic adaptabdiiy will be able t o change t h e priority ordering of i t s objectives to take advantage of the new situation. I t will also need t o possess pexibdiiy responsiveness, t h e ability to adjust t h e ordering of i t s flexibility dimensions. This in t u r n requires t h a t the manufacturing technology be designed so t h a t altera- tions can be made.

Gerwin (1983) utilized aspects of t h e above Framework t o investigate t h e impact on manufacturing flexibility of the l a t e s t computerized processes for body framing in two U.S. a u t o assembly factories. Respon- d e n t s were asked t o indicate, using a scale, how much of each of t h e six flexibility dimensions had changed. Comparisons were made with conventional body frarning processes t h a t either had existed or were existing in t h e same plant.

The changing n a t u r e of flexibility in auto assembly was uncovered.

Modification flexibility ha$ increased due mainly t o t h e ability t o

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reprogram t h e robots. Volume flexibility has increased because of very high capacity limits. Mix flexibility in terms of the potential for handling a number of different kinds of c a r bodies has also increased, but t h e bodies a r e more similar t o each other t h a n before. Rerouting and material flexibility have decreased, t h e l a t t e r due t o t h e reduction in human inputs. The change in component flexibility varied depending upon the rigidity of t h e conventional process t o which comparisons were made. In one plant t h e r e was a n increase and in t h e other a decrease.

The findings d e m o n s t r a t e t h a t it is unwise to talk about changes in manufacturing processes leading t o either increases or decreases in flexibility per se. The introduction of computerized automation can have conflicting impacts on t h e various aspects of flexibility. Consequently, manufacturing m a n a g e r s m u s t have a clear idea of which flexibility dimensions they need a n d which can be sacrificed. Then they must actively e n t e r i n t o t h e process of design and selection of manufacturing systems t o see t h a t t h e company's flexibility needs a r e met. The traditional approach of analyzing capital proposals solely in financial t e r m s is no longer appropriate.

Capital Appropriation Decisions

Why, as Skinner (1984) put it. does t h e introduction of advanced manufacturing technology with all of its strategic advantages often take a back s e a t t o new product development and marketing management?

For one reason, not enough attention is paid t o the interface between strategic planning a n d capital budgeting. A need exists t o identify capi-

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t a l projects in relation to strategic objectives. This can not be done where managers have trouble with the equipment's technical complexity, and where they rely on a narrow, quantitative approach to selecting projects.

Computerized manufacturing systems exhibit a great deal of technical complexity. An M S , for example, produces interactions between machines, computers, material handling equipment, software, h u m a n s a n d the components being manufactured. It is little wonder t h a t managers are often unwilling, due t o lack of time and training, to inquire into the technical aspects of equipment proposals (Skinner, 1978). Often t h e r e is not a complete understanding of what the equipment can do, how it functions, and what it requires. Consequently, they cannot judge whether proposed machinery is compatible with strategic objectives.

As a n illustration, consider the large U.S. firm discussed by Gerwin (1982). It adopted CAM technology with t h e single-minded intention of manufacturing a specific part. When demand slackened i t was not prepared t o add new ones. It rushed t o come up with new tooling, fixtures, and parts programs while idle t i m e mounted.

In order to avoid coping with technical complexity, strategic managers may rely too heavily on their main a r e a of expertise, financial analysis. Proposals become analogous t o investment opportunities in a Anancial portfolio rather t h a n alternative means of satisfying strategic goals. However, managers may soon discover t h a t traditional financial tools, such as discounted cash flow, can not provide a comprehensive understanding of whether or not to invest (Hayes and Abernathy, 1980;

Kaplan, 1983). The main strategic benefits of computerized technology

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t e n d t o be intangible. The advantages of flexibility a r e difficult t o quantify because it i s n o t known what p a r t s will be machined i n t h e f u t u r e o r when. Inevitably, a too narrow application of financial analysis t e n d s t o favor conventional e q u i p m e n t over t h e new technology.

For evidence, consider t h e r e c e n t study by Rosenthal a n d Vossoughi (1983) of American vendors a n d u s e r s of CAM technology. Eighty-one p e r c e n t of t h e vendor r e s p o n d e n t s r e p o r t e d t h a t incomplete understanding of t h e technology was (very) significant in t h e decisions of potential u s e r s n o t to buy t h e i r equipment. Seventy-six p e r c e n t said inability t o quantify t h e benefits was a (very) significant factor.

An alternative t o t h e single-minded p u r s u i t of maximizing efficiency is t o minimize disaster. Adherence t o this c r i t e r i a leads t o consideration of flexibility a s a m e a n s of coping with unwelcome surprises. The company studied by Gerwin (1981) explicitly adopted minimizing disaster i n selecting an FMS over a modified t r a n s f e r line for a new product line.

When it b e c a m e c l e a r t h a t reliable sales forecasts could n o t be m a d e , c o n c e r n c e n t e r e d on reducing t h e i m p a c t of a n y s a l e s disaster. If t h e new product line t u r n e d o u t t o be a c o m m e r c i a l failure, a n FMS would b e able t o m a c h i n e a redesigned one without a g r e a t deal of difficulty.

ORGANlZATlONAL

IMPLICATIONS

Little is c u r r e n t l y h o w n a b o u t t h e implications of computerized technology for t h e social s t r u c t u r e of t h e factory. However, bits a n d pieces of r e s e a r c h a r e beginning t o e m e r g e which eventually can form a c o h e r e n t picture. This section c o n c e n t r a t e s on two a s p e c t s of s t r u c t u r e ,

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work organization and systems and procedures.

Work Organization

The appropriate work organization for computerized manufacturing depends in p a r t on t h e n a t u r e of t h e technology but also on t h e individual and social needs of those people assigned t o t h e equipment. While t h e r e has been a g r e a t deal of speculation on needs in this context, little empirical work h a s appeared. Elurnberg and Gerwin (1984) however s t u - died supervisors and workers on a n American FMS in order to l e a r n about perceived job characteristics, satisfaction, and stress.

The work organization was in t h e traditional m a n n e r with man-to- m a n supervision a n d specialized tasks. Each of the two shifts had a supervisor, a mechanical maintenance man, a tool s e t t e r , four loaders, a n d t h r e e operators t o monitor t h e machines. Eighteen of t h e twenty m e n responded t o a s t r u c t u r e d questionnaire. Results were compared to those for existing normative samples.

The findings for workers on perceived job characteristics indicated t h a t most of t h e m viewed t h e i r tasks negatively. On autonomy, t h e degree t o which t h e job provides freedom in determining procedures, all four job classifications h a d scores below t h a t of the normative sample.

Three groups were below t h e norm for experienced responsibility. t h e degree to which t h e employer feels personally responsible.for results, a n d on task identity, t h e degree to which t h e job requires completion of a n identifiable piece of work. Two groups were below on each of t h e remaining characteristics. Mechanics were above t h e norms on seven

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out of t h e eight factors a n d tool s e t t e r s were above on four. However, operators were below on all of t h e dimensions and loaders were below on all but one.

The job satisfaction findings demonstrate t h a t most workers were dissatisfied with important aspects of their jobs. At least t h r e e of t h e four job groups had scores below t h a t of the normative sample for every satisfaction factor except one. This applied to satisfaction with comfort (all four), resource adequacy (all four), challenge (3), promotions (3) a n d relations with co-workers (3). Mechanics scored higher than the norms on a majority of dimensions but the other t h r e e groups were dissatisfied with practically every factor.

In general, t h e workers found t h e i r jobs stressful. At least t h r e e of t h e four job groups scored below t h e norms on a majority of t h e characteristics. This applied t o s t r e s s resulting from inability to use valued skills (all four), resource inadequacy (3), a n d likelihood of job loss (3).

Mechanics suffered t h e least, being above the norms on four of t h e five factors. The other t h r e e groups were each below on four out of the five.

The two FMS foremen had t o cope with high performance pressures a n d loss of control. The large initial investment in t h e system prompted demands for high machine utilization. The equipment's technical complexity reduced machine reliability, a problem which could only be han- dled by technical specialists. Although performance pressures were not measured directly, i t was found t h a t supervisors were t h e only occupational group t o score below t h e normative sample on all five stress factors. Lack of control is suggested by their having the second lowest score on autonomy. Thus, a t t h e same time t h a t more is expected from

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t h e m t h e y have lost s o m e of t h e i r freedom to maneuver.

The a u t o m a t e d n a t u r e of production requires t h a t foremen have solid technical skills. They m u s t have a good working knowledge of t h e equipment s o t h a t t h e y c a n decide on when i t is necessary t o call a m a i n t e n a n c e person a n d what kind of expertise is needed. The need for motivational skills however h a s not diminished. They m u s t be able t o solicit t h e cooperation of technical people responsible for maintaining a n d controlling t h e equipment. It is also necessary t o motivate workers since t h e i r activities still influence t h e cost a n d quality of production.

The relatively high perceived skill variety s c o r e of t h e foremen reflects t h e i r dual role.

I t appears t h a t where t h e work organization for an integrated manufacturing s y s t e m is based on traditional approaches problems i n motivation a n d satisfaction will occur. Moreover, those people who d o t h e most r o u t i n e tasks will have t h e m o s t problems. In the survey, operators a n d loaders, t h e only groups which worked according t o writ- t e n instructions, consistently scored t h e lowest.

The relatively self-contained n a t u r e of t a s k s i n a n integrated s y s t e m suggests t h a t a work organization based on g r o u p c o n c e p t s (Trist, 1981) m a y b e m o r e appropriate. The g r o u p might consist of operators a n d loaders with e a c h participant having a n opportunity t o s h a r e in all o r m o s t tasks. There would also be collective responsibility for job-related decisions s u c h a s m e m b e r selection a n d t h e a s s i g n m e n t of tasks. Fore- m e n would c o n c e n t r a t e less on supervising t h e workers and spend m o r e t i m e insuring t h a t t h e necessary r e s o u r c e s a r e available. Technical people would a c t a s c o n s u l t a n t s t o t h e group and be responsible for solving

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complex problems. The result should be higher scores on such factors a s autonomy, t a s k identity, responsibility, challenge, co-worker relations, utilization of valued skills and resource adequacy.

A work organization utilizing some of these principles h a s been designed for West Germany's first rotary FMS (Asendorf a n d Schultz-Wild, 1983). There is one t e a m leader and five workers per shift. The workers will be responsible for loading and machine monitoring, and some quality control, c o m p u t e r programming a n d maintenance. Each is being t r a i n e d t o perform t h e s e functions on t h e different types of hardware in t h e system. The t e a m leader will coordinate the overall system, do production scheduling a n d supply tools a n d materials.

Systems and Procedures

Technical specialists in accounting, quality control, m a i n t e n a n c e , production control, process planning a n d o t h e r functions mus t design systems a n d procedures which control and maintain computerized t e c h - nology. In doing so. they a r e forced t o cope with t h e conflicting forces illustrated in Figure 2.

The technical complexity of t h e equipment pushes for attaining s o m e desirable level of novelty in procedures. Technical constraints s u c h a s t h e s t a t e of t h e a r t a n d t h e availability of data, lack of experience with computerized equipment, a n d t i m e pressures are forces for relying on existing routines. All too often t h e result is a compromise which does n o t completely satisfy e i t h e r s e t of demands. As a result, t h e very basis for judging a n d improving operating efficiency can be endangered

(Genvin. 1981; Blumberg a n d Gerwin. 1984).

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I

1 I I 1 1

I

1

DEMAND OF ¹

P

I

TECHNOLOGY I

I I I

I 1 1 1 1 I I

r

-

.I.

^b

STATUS

DEGREE OF NOVELTY TEC&CALLY

QUO DESIRED LEVEL

Figure 2 Factors influencing t h e novelty of systems a n d procedures.

Technical complexity c r e a t e s a need for novel systems a n d procedures, as is illustrated by problems in quality control and accounting.

With an FMS t h e r e are n o n a t u r a l pauses during t h e machining sequence for manual quality control t o be exercized. Automated continuous monitoring is still too limited in scope t o perform most sophisticated tests (Senker, e t al., 1981). If quality checks a r e made a t the end of t h e machining sequence t h e r e can be too long a delay from t h e occurrence t o the detection of the defect. Difficulty in finding t h e source of a defect due t o t h e many interacting subsystems is a complicating factor.

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Consequently, t h e usual methods of exercising quality control m a y n o t t u r n out t o be appropriate.

Machine utilization is o n e of t h e basic parameters used t o control shop operations. Accountants calculate it by comparing the actual value during s o m e t i m e period t o a s t a n d a r d value. The l a t t e r usually contains a correction for time lost d u e t o normal machine breakdowns. If a machine belonging t o a n

FMS

stops running, t h e parts t o be produced can be automatically r e r o u t e d through a n o t h e r machine in t h e s y s t e m but often a t a higher cost. In o t h e r words, t h e r e is no breakdown in p a r t s production but i t is accomplished less efficiently. Under these conditions a new way of calculating t h e correction is needed (Gerwin, 1981).

Technical specialists' l a c k of experience with computerized manufacturing hinders t h e development of routines t o solve these a n d similar problems. Gerwin (1984) reported on a British motor producer with virtually no exposure which had t o schedule installation of a planned DNC system over several years. Meanwhile, a German aircraft m a n u f a c t u r e r with considerable N C experience was able t o implement i t s new F'MS m u c h m o r e quickly. Although t h e company was doubling i t s capacity, i t chose not t o build a new factory. It wanted t o take advantage of t h e experience of i t s staff personnel in t h e existing plant.

The lack of experience of operating people also r e t a r d s t h e develop- m e n t of new methods. A company studied by Gerwin (1981) purchased a n FMS. The cost of machining a p a r t could no longer be expressed in t e r m s of d i r e c t labor hours because labor h a d become a part of the burden. A machining h o u r s basis was s e l e c t e d but manufacturing managers found it difficult t o u n d e r s t a n d t h e new concepts. Their ability to control s h o p

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operations was rooted in informal procedures based on direct labor hours t h a t they had developed over many years. These were of little use in controlling t h e FMS.

When the size of t h e initial investment in a computerized system is large, management may pressure for immediate returns. If the invest- m e n t decision h a s been made on a narrow, quantitative basis the pressures will be greater. Once t h e equipment is installed, management will want it t o operate a t full scale a s quickly as possible. Technical specialists will not have a good chance to learn about t h e system's capabilities and limitations. Foremen a n d workers may not be adequately trained in how to operate it. Two of the firms studied by Gerwin (1984) noted these problems.

Finally, various technical constraints impede t h e development of new systems and procedures. The state of t h e a r t in a certain area may not be advanced enough t o m e e t the equipment's needs. Kaplan (1983) has noted t h a t new managerial accounting techniques m a y be needed t o replace the standard cost model.

Once more, data availability becomes a problem in such a novel situation. In Gerwin's (1981) study a company which h a d purchased a n FMS to build a new product line discovered t h a t t h e r e was little informa- tion available f r o m other firms or from its own shop for calculating standard cost parameters. Even after several years a completely reliable data set had not been compiled for some major cost components such as maintenance and rework.

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CONCLUSIONs

The adoption and implementation of computerized manufacturing technology is not just a technical problem of calculating rates of r e t u r n a n d installing new equipment. Strategic and organizational issues m u s t be considered if t h e equipment is to function effectively. It is little wonder t h a t Rosenthal and Vossoughi (1983) discovered t h a t over nine out of t e n of the CAM experts t h e y interviewed agreed t h a t while technical issues existed, the toughest problems a r e managerial.

Some of the more critical problems have been discussed in this paper. Strategic managers m u s t be able to identify features of new manufacturing systems which a r e compatible with company objectives.

They m u s t also insure t h a t t h e design and selection of a system reflects t h e i r priorities r a t h e r t h a n those of engineers. First line supervisors a n d workers need t o be motivated through t h e choice of a suitable work organization in order to avoid problems with job perceptions, satisfaction a n d stress. Technical specialists m u s t develop adequate systems and procedures in t h e face of technical constraints, time pressures, and lack of experience.

What c a n be done t o facilitate t h e integration of computerized technology into the factory? Vendors need t o realize t h a t the design of a manufacturing system is not simply a n engineering problem. It should also be designed t o fit the degree of sophistication of a company's infras- t r u c t u r e . Potential users should not always assume t h a t the most sophisticated equipment will provide t h e best answer t o their manufacturing problems. Less complex alternatives which are compatible with strategic needs and 'organizational capabilities may be more effective.

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Special a t t e n t i o n should be given t o having a comprehensive s t r a t e g i c a n d organizational development plan ready before t h e e q u i p m e n t arrives.

Some specific suggestions from this paper could be incorporated i n t o t h e plan. The s t r a t e g i c framework discussed h e r e is a n initial s t e p towards revealing t h e n a t u r e of t h e connections between manufacturing technology a n d a company's objectives. A work organization based on group c o n c e p t s i n s t e a d of t h e traditional approach should be considered.

Little c a n be done about t h e technical c o n s t r a i n t s faced by t h e designers of systems a n d procedures, b u t lack of experience a n d t i m e p r e s s u r e s c a n be mitigated by a gradual buildup of equipment. This m i x t u r e of new ideas a n d common s e n s e is essential if t h e potential of computerized m a n u f a c t u r i n g i s t o be realized.

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