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CIM: getting set for implementation.

Changes in national and international competition, coupled with the mass application of new technologies, are revolutionizing production. Consumers are demanding quality, and manufacturers are being forced to provide it. After two decades of neglect, the factory is re-emerging as the focal point of corporate strategy, and computer-integrated manufacturing (CIM) is viewed as the key element in global competitiveness.

American executives in increasing numbers are waking up to the importance of CIM as a competitive weapon. Table I presents the results of a survey of 139 US managers and executives in manufacturing industries on attitudes towards CIM. Lower manufacturing costs, higher product quality, greater production control, and faster responsiveness to the market are considered as chief benefits of CIM. A majority of the survey respondents admitted that their companies had a long way to go to realize complete implementation of CIM fully. A full 64.0 per cent of respondents stated that their companies have a long-term strategy for implementing CIM and 50.1 per cent stated that they are just getting started. Almost 24 per cent noted that their CIM programmes are well under way and 6.4 per cent thought they were "quite advanced" (Sheridan, 1989).

During the past ten years, many US manufacturers have accepted and implemented CIM into their manufacturing process. There are several examples of firms where CIM implementations have been successful and where primary CIM benefits mentioned in the survey of managers and executives have been realized. The 1993 Industry Week's "Best Plants" finalists offer such evidence. On the average, the 25 finalists boosted productivity by 64.5 per cent in five years, while reducing inventory by 46.3 per cent and manufacturing costs by 30.4 per cent. All but two reported increased domestic market share and increased plant-level profitability (Sheridan, 1994).
Table I

Ranking of CIM benefits

Benefits                                 %

Lower costs                             53.9
Quality improvements                    50.0
Production control                      44.6
Responsiveness to the market            41.0
Flexibility                             37.4
Reduced inventories                     37.1
Small lot manufacturing                 25.9

Source: Sheridan (1989)




However, despite all the money spent by companies trying to implement CIM, it is still an unfulfilled promise for many. Why is it that for all the elegant hardware and software in place on the factory floor, there are few actual successes on the shopfloor? Some blame lack of properly developed technologies, while others attribute the problems to the difficulty of implementing CIM in an organization.

This paper presents cases in which US firms successfully applied CIM and capitalized on the advantages of such an advanced technology. Barriers to factory automation and steps for successful implementation will be addressed. Finally, the paper will examine technologies that enhance CIM implementation.

Case application in the USA

In the 1980s, several novice companies viewed CIM as an important cornerstone of worldclass manufacturing. They realized that real CIM potential goes beyond just robotics and automation. Real CIM potential lies in creating a network of people and activities to accelerate decision making; minimize waste; speed up response to customers while producing a high quality product. Following are examples of some US firms that capitalized on the advantages of CIM to fend off predators and achieve the required standards of quality, consistency, cost and delivery.

Motorola

A frequently mentioned CIM success story is Motorola's Bandit Plant in Boynton Beach, FL. In June 1986, in response to its competition, Motorola formed a cross-functional 24-member group nicknamed "Team Bandit" to establish a world-class CIM operation within 18 months. The result is a $6 million high volume CIM operation that produces BRAVO numeric-display radio pagers in lot sizes as small as one. Order entry literally activates production. A group of 27 programmable robots handles all of the production process including, parts inspection, soldering, assembly and inspection. Despite the customized nature of the product, manufacturing cycle time has been cut from several days to about two and a half hours. Motorola's Bandit Plant is a "paperless manufacturing". Changing the data around in the order-fulfilment parts of the system turns on and off the physical process of manufacturing the product. Entering a rush order can activate the first robot in as little as 17 minutes. Quality has improved dramatically. A defect problem is found in 20 minutes compared with several days using conventional process. Today, Motorola is the sole US survival in paging equipment market, which has seen intense competition from the Far East (Sheridan, 1988).

Allen Bradley

In 1983, Allen Bradley, a subsidiary of Rockwell International Corporation, formed a CIM task force to manufacture motor contactors conforming to world standard. A fully CIM plant was in operation in Milwaukee by 1986. Today, the facility is capable of producing over 600 units per hour in any of more than 1,000 variations in lot sizes of one with zero defects and zero direct labour. Allen Bradley's CIM showcase uses stockless production, advanced machine diagnostics and next-day shipping. As a stockless production operation, the facility minimizes material handling and warehousing needs. Once an order is placed, the CIM facility automatically manufactures, tests, packages, and ships the product within 24 hours. Building on the success of the CIM contactor facility, Allen Bradley's new automated printed circuit board centre is another company showcase. Milwaukee's newest "plant within a plant" has reduced production introduction time from two to three years to as little as five months. Circuit board throughput has been reduced to one day resulting in greater customer responsiveness. Inventory turnover has been increased from 2-4 per cent per year to more than 12 per cent per year contributing to just-in-time (JIT) production and lower inventory costs.

Texas Instruments

Texas Instruments' plant in Louisville, TX, is using CIM to build the guidance and control sections for the US Navy and Air Force HARM missiles. A total of 250 computers control an assortment of plant systems. These plant systems include an automated material handling network which utilizes nine "smart" conveyor systems linked to material planning and work in process tracking and control systems. CIM operations make extensive use of vision-aided robotics for inspection and assembly tasks. Laser inspection units check the 2,000 solder joints on each printed wiring board and do so 15 times faster than a human. Since 1985, when a CIM HARM team was established, the plant has boosted production tenfold while employment has risen only threefold. CIM has reduced the cost of each missile by 58 per cent and the missiles have been delivered on time for seven consecutive years (Sheridan, 1989).

Tandem Computers

Tandem Computers of Watsonville, CA, builds 1,000 printed circuit boards per day utilizing an integrated CIM network. Many of the board components are inserted automatically on machines capable of handling up to 12,000 parts per hour. Tandem's plant is almost a "paperless environment". Production workers use hand-held barcode readers to scan identification numbers on circuit boards before completing operations. The scanners trigger a host computer to download instructions to a robot to insert pins. Tandem has combined CIM with elements of JIT to increase its productivity while reducing manufacturing floor space. Since 1983 Tandem's sales has increased 500 per cent, while the space required for PC board operations has shrunk by 40 per cent (Sheridan, 1989).

Barriers to CIM adoption

Despite all the money, energy, and time spent by companies trying to automate their factory, CIM is still an unfulfilled promise for many. Managers have continually struggled with the problem of successfully putting the pieces together to get the most out of CIM technology. In the past few years, several surveys have attempted to investigate the problem and identify the primary obstacles to more rapid adoption of CIM technology. Some of the findings are identified below.

Management perception and attitude

In late 1970s and early 1980s, as CIM advanced quite rapidly in the USA, disillusionment with automation has surfaced. According to a survey by Deloitte and Touche, "Only 29 per cent of the respondents ... of 759 senior executives in North America manufacturing firms expressed a belief that the use of advanced manufacturing technology yields 'significant' benefits" (Zammuto and O'Conner, 1992).

Frequently, top executives viewed CIM as just technology - a master computer controlling many robots and automated machines. They are wrong; if CIM were just technology, there would not have been as many companies having difficulty implementing it. CIM is more of a concept; it is a way to use technology and techniques to integrate a business. CIM is the management of technology rather than a technology itself. It is the integration of people and functions utilizing the computer and communication networks to transform automation into interconnected manufacturing systems.

CIM requires a new perspective on the part of management - maybe even a new philosophy. Top management, manufacturing and industrial engineers must change their way of thinking and develop new skills. To make CIM a reality, no longer can they think only in terms of individual processes; rather they must think in terms of optimizing the entire process. CIM users now realize it is not the panacea that US manufacturers were looking for. Operations managers have relied on CIM as an end in itself rather than focusing on the use of CIM as one means of furthering more basic objectives. Purchased technology influences the kinds and amount of flexibility, which in turn constrain strategic objectives of the company. Without a shift in orientation, operations managers are likely to be disappointed with their CIM performance.

Top management commitment

In many companies where CIM does not fail to realize its potential "top management's commitment and ongoing support" is cited as a major reason (Sheridan, 1989). The magnitude of undertaking can be a great problem if there is not major and absolute commitment by management of the necessary time and resources. CIM installation must start from the top with a commitment to provide the necessary time; money; and other resources needed to make the changes which CIM requires. A problem of commitment and people's issues can easily develop during CIM utilization. The issue of people and how to relate them to the technology are a constant potential pitfall for consideration. A well thought out organization plan must exist for CIM to succeed and to avoid many of the problems.

Lack of planning

In a recent survey of presidents and CEOs of manufacturing industries, "inadequate planning or lack of vision" was referred to as one of the chief obstacles to more rapid adoption of CIM (Sheridan, 1989). CIM success requires deliberate and careful planning of the technical element in conjunction with training from day one. Lack of understanding of the technology and suitable infrastructures to support the new technology, inappropriate matching of technology to organizational strengths and weaknesses will all contribute to top management's failure to appreciate the promise of CIM. Organizational design is an integral part of CIM, promoting or inhibiting the implementation.

Integration challenge

Experts agree that the important issue to be addressed before CIM can become a reality is integration. J. Tracy O'Rourke, CEO of Allen Bradley, quoted in the Harvard Business Review, put forth: "The high risk, we concluded, was not in the machines. It was not in designing the contactor. It was not in getting the parts to fit together ... The risk was in integrating our information system with our control system. That had never been done" (Avishai, 1989). The ultimate objective of CIM is the integration of all parts of the organization across the major functional boundaries. If the company environment is right, CIM can even assist in pulling together teams of people to work on project. To take full advantage of CIM's benefits, the entire manufacturing process from product design to procurement, production scheduling, management, production and delivery must be integrated.

Organizational structure

CIM requires flexible organizational structure. There is a growing consensus that old-fashioned approaches to manufacturing and rigid corporate rules are a significant barrier to CIM (Zammuto and O'Conner, 1992). The majority of manufacturing organizations in this country were designed to support specialization as opposed to integration. The existing infrastructure of the organization must be altered to facilitate co-operation and to cross functional barriers between engineering, marketing, manufacturing, accounting and information services departments.

Indeed, highly successful Japanese and US firms have flattened their pyramid organizational structure. There is still a clear-cut chain of authority, responsibility, and decision making, but information access is faster and more efficient. Each individual within these organizations has the same focus (customer satisfaction) and clearly knows their areas of authority and responsibility. Directions, instead of decisions, come from the top. One of the expected benefits is the organization's ability to become flexible and responsive - enabling faster response to market and competitive dynamics (Bahrami, 1992).

Short-term thinking

Inadequate cost-justification methods and uncertainty about the resulting benefits also hinder rapid adaptation of CIM technology in the USA. Many manufacturers tend to focus on the short-term "quarterly earning reports" and are looking for CIM return on investment as quickly as possible. CIM is a highly capital incentive and its paybacks are usually strategic. Management is often reluctant to make long-term commitment to CIM unless there is a strong assurance that the company's required internal return on investment will be achieved.

Cost-benefit analysis

Because of past failures or limited success of CIM in terms of resulting savings, most projects must be cost justified in order to obtain management approval to succeed. Many costs-accounting systems no longer reflect the manufacturing process. They were developed years ago and have not evolved or kept pace with changes in the production environment. Direct-labour-based cost-accounting systems and traditional financial techniques are not adequate tools to quantify and track productivity improvements resulting from CIM. These systems do not incorporate the intangible benefits generated from flexibility, improved efficiency, and higher productivity.

Direct labour pool is declining and is no longer the driver for production control. As a result, measured direct labour may no longer be the appropriate basis for allocating or assigning fixed indirect costs (overhead) to products. For many companies, manufacturing overhead is now 400 to 500 per cent of direct labour and is growing. For this reason, cost-control efforts need to be redirected with added focus to be placed on indirect costs such as maintenance, material handling, and quality control. The problem is worsened because in many companies, traditional cost management systems are not well integrated with other manufacturing information reporting. These management systems hinder performance-based manufacturing management. In a recent article, John Shank and Vijay Govindarajan introduced the idea of strategic cost management. This idea, which is an extension of Porter's work on technology and competition, puts forward three dimensions of cost-analysis approach - value chain analysis, cost-driver analysis, and competitive advantage analysis. It is a long-term cost-analysis tool that looks all the way back to raw materials and all the way forward to the end consumer (Shank and Govindarajan, 1992).

A related problem is traditional financial techniques that are inappropriate for CIM planning. Return on investment and payback calculations only evaluate previously identified projects. They do not identify potential CIM improvements. These techniques also only assess financial feasibility and ignore the usability of technology. As a result of these fundamental problems, many companies are experiencing difficulties in developing cost patterns to define specific objectives and provide focus to the CIM effort.

Keys to successful implementation

The computer-integrated manufacturing environment is a reality in today's manufacturing. Implementing CIM technology is a slow, gradual process. You can win with CIM, but there are some important steps that cannot be ignored.

Management commitment and employee acceptance

Development of the CIM system is a long-term effort that requires co-ordination and participation of many functional groups. The co-ordination must be planned for and receive top management support and involvement. To implement a successful CIM, the entire corporation must be involved. Strong commitment at all levels is essential because the changes caused by the new system will affect everyone in the company. Everyone in the company must learn the larger scope of the project, and then learn where they fit into that scope. This will create understanding and co-ordination for the project. Top management has to understand user need and opportunities, and must get middle managers involved in the system specification.

Prior to making any commitment, top management needs to address the question of whether a CIM system is appropriate for the company's manufacturing environment. In this evaluation, the management should be willing to risk short-term operational results for the sake of longer-term improvement. Top management must allocate adequate financial support, must authorize a start-up CIM project, and must devote key management and staff personnel to the CIM project.

The employees play an equally important role in the success of CIM. Management needs to understand that CIM implementation will not simply affect the blue-collar worker. It will reach deep into the white-collar world as well. Employee fears about job displacement need to be alleviated or at least explained. To prepare workers for their new roles, management needs to begin an education and training programme before CIM arrival. Workers need to be educated about the future impact of CIM technology. They need to know what roles machines will assume and what roles will be opened up for employees. Whether through shop seminars, in-house classes or study towards an advanced degree, employees need to have the opportunity to retrain themselves to complete effectively those new tasks that are required of CIM technology.

Business and automation plans

An important prerequisite for the adoption of CIM system is the establishment of business and manufacturing goals. The organization must know its customers, its competitors, and its suppliers. A business plan must be developed on where the company "is" and where it wants to "go". Once the business plan is developed, an automation plan should be established. The automation plan should be based on the company's business plan and should include measures taken to improve production, quality, flexibility, response to market, and cost reduction.

The strategic needs of product diversity, product quality, product innovation, and customer satisfaction must become a driving force that dictates certain manufacturing flexibility. The desired flexibility in turn influences the selection of compatible CIM process. Ted Weston, of Colorado State University, states: "The question of 'what to change' must begin with an assessment of where the constraints to higher performance lie and then develop a CIM strategy with a focused approach on actions required to lead the organization to an elevated status" (Livingston, 1990).

Analysis of manufacturing process

The most important step (after business and automation plans) is a detailed analysis of the current manufacturing process and supporting operations. The objective is to understand better how automation and integration will achieve both businesses and manufacturing goals. To accomplish this, detailed process analysis must be accomplished, organizational structures must be evaluated, customer requirements clearly established, and traditional ways of thinking must go by the wayside. US firms which successfully applied CIM "departed radically from old courses and changed fundamental notions about their business and its processes. It isn't good enough to automate what you do. When you automate, automate what you should do" (Rasmus, 1994). Process analysis should be performed for every part of your production, control, and support process in the organization. As an organization, every aspect of every process must be clearly understood. How are people utilized and how is their performance measured? Who is affected by each decision? Without this foundation, failure should be expected.

CIM steering committee

Once business and manufacturing goals are identified and a detailed analysis of the current manufacturing process is performed, a CIM committee should be formed. The head of committee should be chosen from manufacturing, engineering or MIS. Committee members should be drawn from all major operations within the firm. They all should be somewhat familiar with the CIM system and what lies ahead of them.

Integration model

The committee needs to develop a business model that details the company's environment and business objectives. The committee should identify "as is" and "to be" conditions of each functional area. Included should also be identification of high cost and low performance functions that usually represent the greatest opportunity for improvement. The committee should create the vision of CIM project for the company, and how to turn that vision into reality. System interfaces, database requirements, types of information to be shared and timeliness of the information should also be included. The committee should then specify the integration steps. The integration process should be able to connect all parts of organization across functional boundaries.

Specific CIM vendor selection is also considered as an important part of this phase. Issues such as types of support; reputation; track record; commitment to customers; ability to tie your existing system into their proposed equipment, and type of communication technologies the vendors use need to be addressed. Finally, setting up a time schedule to implement the major components of the CIM processes should be drawn up. This phase represents the most crucial aspect of implementation. It is on this "blueprint" that the success or failure of the initial CIM implementation hinges.

Employee training

CIM is proving the importance of people. Employees must learn to accept the CIM technology, understand, and use it. They must learn to identify potential problems before they occur and make quick adjustments to prevent costly errors or downtime. They must also be able to share data about processes, products, orders, shipping, etc.

CIM success requires deliberate and careful planning of training in conjunction with the technical elements from the beginning. A thorough skills' assessment of the workforce should be undertaken. The analysis should determine what skills are needed and what changes have to take place. Resources must be committed to the CIM training effort. A team of experts used to implement the CIM training is essential. The team should be from a cross-section of the organization and have representatives from every functional area of the company. This will guarantee full participation and "buy in" from all sections of the company. The training itself should begin long before any equipment is installed to ensure that the human element is prepared for the CIM utilization. Most of the training should occur as part of the employee's required time on the job. This will create more royalty to the system. Support must be provided at all stages for those who are being trained on new equipment. The training programme must be evaluated to assess whether it is focused on what is to be learned. Finally, the training should be seen as ongoing endeavour.

Enhancing implementation: what the future has in store for CIM

World factory experts agree that the 1990s will be seen as the beginning of the "Golden Age of Manufacturing". Drop in computer cost spurring on CIM, coupled with high technologies such as super sensors and robotics systems, will enhance a plant's flexibility, improve productivity, improve quality and reduce costs. The implementation of CIM can be enhanced and supplemented by other technologies. Some of the promising areas contributing to successful implementation and market acceptance of CIM are identified below.

Electronic data interchange (EDI)

One of the most promising areas for realizing the successful application of CIM is electronic data interchange (EDI). It is computer-to-computer exchange of business documents without human intervention. EDI enables companies to exchange business documents such as invoices, purchase orders, payments, or even engineering drawings electronically via a direct communication link, with no human intervention and in a precise format. The major payback of this technology is realized when EDI information is integrated into the company's CIM system. For example, the information from customer's MRP systems can be fed into suppliers' purchasing and manufacturing systems, which adjust those operations accordingly. EDI will also help to reduce inventories, foster JIT management, promote engineering data interchange and improve work scheduling.

Companies that have successfully implemented EDI have reported general benefits of faster purchasing process, reduced business cycles, higher inventory turnovers, faster response times and overall improved service. EDI has become standard business practice in the automobile industry. The big three automakers have requested suppliers to implement EDI. Their primary suppliers in turn have made EDI a condition for their vendors. Ford invested $20 million on EDI to connect 78 of its plants to 3,400 supply points electronically. It is estimated that EDI will save Ford $200 per car (Boudette, 1989).

Engineering data management (EDM)

Another development contributing to market acceptance of CIM has been the emergence of engineering data management (EDM). During the 1980s, while management was successfully automating specific tasks with computers, it was ignoring a bigger issue how to handle the growing output of automated systems. Somehow, management decisions were based on out-of-date information; some parts and manuals were produced from obsolete drawings or engineers wasted time looking for information. The result has been a management bottleneck in the manufacturing and design process and a roadblock to CIM. EDM provides new efficiencies in the handling of automated system output. The main objective is to get data to the right people at the right time. EDM helps to supervise the amount of data that needs to be managed, controlled and integrated across the organization. It is the information management tool that helps manufacturing convert raw data into finished products on a real-time basis. Without an effective EDM technology, successful implementation of CIM is virtually impossible.

Software evolution

Another force that has boosted market acceptance of CIM technology is the emergence of "user configurable" application software packages. These packages enable manufacturing engineers to tailor applications to their needs without having to rely on a system integrator. It allows the engineers to design much more complex systems.

Communication networks such as Manufacturing Automation Protocol (MAP) that tie systems together, will become more standardized in the future. This standardization will allow users to select equipment without regard to vendor or compatibility. Standardized MAP will also enable the users to adopt CIM incrementally because the new equipment can easily be attached to other equipment.

Conclusions

Today, CIM technology is evolving very rapidly. Many companies that could not previously afford the technology are now finding that CIM is within their financial grasp. In addition, CIM is becoming more "user friendly". The technical barriers are being removed at a rapid rate making CIM much easier to achieve for more corporations. Technologies such as EDI, EDM, coupled with "user configurable" application software packages are enhancing CIM implementation. The bottom line is that CIM is now less expensive, easier to apply and easier to maintain.

As previously outlined, there have been many CIM successes and quite a few failures. The important point is that when CIM is properly employed, CIM produces dramatic increases in productivity and quality. Shortened product cycles and quick changeover times are providing companies with a competitive edge - better satisfying customer needs. A progressive company that wishes to adopt CIM into its production system must take into consideration the strategy and compatibility of CIM with the overall goals of the firm. Successful integration requires planning, support and commitment by both management (top, middle, line) and employees.

CIM is not a quick-fix programme. It is a long-term strategic bet that will involve lots of hard work. As important as it is to understand how to embrace CIM, it is vital to understand how to avoid pitfalls. Issues such as lack of enterprise-wide commitment towards CIM, inadequate planning, rigid organization structures, inadequate costs' justification methods and uncertainty about the CIM benefits could hamper proper implementations.

To be competitive in the global market, successful firms must have a complete understanding of their processes and absolute control over their information systems. The firms that set the correct foundation for CIM and embrace it early, will set themselves apart from the rest. The reason is simple: successful adoption of CIM gives the firm a detailed understanding of every process within their organization. It also provides the means to control and disseminates the massive amount of information now being generated by advanced manufacturing technologies. CIM implementation is both challenging and rewarding. It requires strong leadership, visionary thinking, proper planning, employees' involvement and support, and an entrepreneurial spirit willing to work on the edge.

References

Avishai, B. (1989), "A CEO's common sense of CIM: an interview with J. Tracy O'Rourke", Harvard Business Review, January-February, pp. 110-17.

Bahrami, H. (1992), "The emerging flexible organization: perspective from Silicon Valley", California Management Review, Summer, p. 34.

Boudette, N. (1989), "Electronic data interchange", Industry Week, August, pp. 52-5.

Livingston, D. (1990), "CIM to the rescue", Systems Integration, November, p. 60.

Rasmus, D.W (1994), "The once and future CIM", Manufacturing Systems, March, pp. 64-6.

Shank, J.K. and Govindarajan, V. (1992), "Strategic cost analysis of technological investments", Sloan Management Review, Autumn, pp. 39-51.

Sheridan, J.H. (1988), "State-of-the-art CIM in 18 months?", Industry Week, 5 December, pp. 76-7.

Sheridan, J.H. (1989), "Toward the CIM solution", Industry Week, 16 October.

Sheridan, J.H. (1994), "How do you stack up?", Industry Week, 21 February, pp. 53-6.

Zammuto, R.F. and O'Conner, E.J. (1992), "Gaining advanced manufacturing technologies benefits: the role of organizational design and culture", Academy of Management Review, October, pp. 710-28.
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Title Annotation:computer-integrated manufacturing
Author:Attaran, Mohsen
Publication:Industrial Management & Data Systems
Date:Jan 1, 1997
Words:4835
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